Potential Transit Strike Raises Larger Issues

With a little luck, we’ll wake up on Friday morning to news that the Metropolitan Transportation Authority and the Transit Workers Union have reached a settlement and averted a strike. Regardless of what happens, the past week has forced even those of us who never set foot on a bus or subway to confront how vulnerable we are to a shutdown of the system that keeps traffic from grinding to a halt and allows businesses, schools and services to function normally.

My own memory of the last strike, 25 years ago, is of a city strangely suspended in an altered state. A day or two of fascination quickly faded with mounting frustration and the helplessness of having no idea when it would end. Perhaps the worst of it was a claustrophobic sensation that the city was cut off from the rest of the world. Although the commuter trains, airports, bridges and tunnels were still running, getting either into or out of the city required careful planning, lots of time and immense patience.

The 1980 strike occurred in a region that was quite different from what it is today. For starters, the transit network was in the worst shape in its history, with service on subways, buses and commuter rails a far greater source of aggravation than it is now following a generation of massive capital investments and improvements. Also, New York had a lot more blue collar workers who could identify with the transit workers. At that time, about one out of every five private wage earners worked in industries like transportation or manufacturing, compared to one out of ten in 2005.

One thing that hasn’t changed much is the animosity that much of the public feels for both the MTA and the union. On the one side are the executives running an agency that, despite its overall efficiency, often seems removed from issues like dirty stations or non-functioning escalators. On the other side are the bus and train operators, toll clerks and maintenance workers who have somehow managed to retain job security, pensions and health benefits that the majority of private sector workers can only envy. Each side, of course, tries to turn this to their advantage. The union appeals to public mistrust of the authority to make its case that the MTA is far more flush with cash than they admit. Management calls attention to how good its workers have it compared to similar occupations in other industries.

Even without taking sides, some light needs to be shed on a couple of the more exaggerated arguments. One is that the MTA’s $1 billion surplus for 2005 puts them in a comfortable position for making a generous settlement. Certainly, the authority is in better financial shape than it was a year ago. Along with the City and State, the MTA has continually increased its revenue projections, particularly those coming from a hot real estate market that is only now showing signs of cooling off. But this windfall only forestalls the day, probably in 2-3 years, when it again faces large and growing deficits. While the tens of millions set aside for holiday discounts have received most of the attention, the MTA’s decision to use much of the remainder to pay down unfunded pension liabilities and reduce future deficits is prudent.

Another myth is that transit workers have cushy jobs with exorbitant compensation. Leaving aside that there is no objective standard for what constitutes difficult work or adequate pay and benefits, Transit Authority employees fall somewhere in the middle of the city’s wage spectrum. Base pay averages a reported $47,000 and ranges from about $40,000 for a subway cleaner to $63,000 for the average bus or subway operator. With overtime, TA employees average $55,000 per year. By comparison, the average worker in New York City earns $65,000 per year according to the New York State Department of Labor, including both minimum wage retail and service jobs and 7-figure Wall Street executives. Similar “blue collar” industries in the private sector—transportation, manufacturing, construction and utilities—average $48,000 per year, right around what the average TA worker makes. While most TA jobs do not require college degrees, many require substantial skill and training, and most require physical labor and health and safety risks that better-paid office workers seldom worry about.

Where TA employees clearly have a better deal than most of their private sector peers is in their package of benefits—comprehensive health coverage without employee contributions and full pensions at age 55. In this regard, their advantage is similar to that of other public sector employees, who tend to have better job security and more generous benefits than workers in the private sector. At every level of government there will be increasing pressure to reduce these benefits. The looming structural deficits of states, municipalities and public authorities have a number of causes, such as more than a decade of tax cuts and shifting financial burdens to states and localities. But rising medical and retirement outlays as the population ages will be a particular target, in part because the gap with the rest of the economy is growing larger.

It’s worth noting, however, that the gap is growing not because the benefits of Transit Authority and other government employees have become more generous, but because private firms have gone much farther in cutting costs by eliminating guaranteed pensions, limiting health care coverage and increasing employee contributions. The result is an economy that is dynamic and competitive, but at the cost of reduced job and income security, less leisure time and greater income disparities.

The issues in the transit negotiations are at the heart of this larger dilemma, and they are not easily solved. Are the Transit Authority’s relatively generous provisions for job and income security an anachronism that we can no longer afford, or is it a model that we should try to preserve as one of the few remaining islands of stability for non-college educated workers? Stability—$55,000 a year with good medical and retirement benefits in this case—doesn’t mean a life of comfort and security. In New York City, it earns you passage into the “struggling middle class” trying to pay soaring housing costs and figure out how to get your kids through college.

Ultimately, this is a national problem as much as a local one. Without changes in retirement, health care and labor market policies in Washington, not to mention fiscal policies that impact state and local governments, there are limits to how much we can afford without overtaxing the regional economy. Hopefully, a fair settlement will be reached without a debilitating strike. Besides the economic costs to all sides, it would increase the acrimony and public resentment and make it even harder to solve the long-term challenges facing the MTA and its workers.

- Chris Jones, Vice President for Research, RPA
Regional Plan Association
http://www.rpa.org/

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