Home Transit LaborTWU Labor battle lost, MTA sees more financial pain

Labor battle lost, MTA sees more financial pain

by Benjamin Kabak

The last few weeks had been going, well, mostly smoothly for the MTA. At the end of July, the agency announced that its preliminary 2010 budget would contain no fare hikes, and on Monday, the authority released a preliminary five-year capital program for 2010-2014. Expansion and sound economics were the key phrases.

All of that planning and good will were dealt a fiscal blow yesterday when an arbitration panel granted transit union workers a series of raises and benefits that will leave the cash-starved agency searching for even more money. After a lengthy arbitration process, the panel granted transit workers, according to NY1’s Bobby Cuza, “four percent raises in each of the first two years of their contract [and] three percent in the third year.” This victory for the union far exceeded the amount allocated by the MTA in its preliminary budget proposals.

MTA officials were livid. Helena Williams, the current interim executive director and MTA CEO, issued a tersely-worded statement about the ruling. She said:

“This award is extremely disappointing and fails to recognize the economic recession in the region and the impact of this downturn on the MTA. There will be a significant impact on the MTA’s bottom line. The award suggests that the MTA raid its underfunded capital program and rely on one-shot federal stimulus funds to pay for raises. As a further disappointment, the award also rolls back a portion of the employee health care contribution that the MTA won following the 2005 TWU strike. Over the three years of the contract, the award will cost the MTA approximately $350 million more than budgeted: $10 million in 2009, $100 million in 2010 and $240 million in 2011.”

For now, according to Williams, the MTA Board will not recommend raising the fares again this year, but those promises of a 2010 without a fare hike are off the table.

Following the arbitration ruling, Mayor Bloomberg and TWU President Roger Toussaint continued their war of words. Earlier this week, Bloomberg warned that riders would suffer if the union workers received a generous package from the arbitrator. “The straphangers of today are going to pay for this increase if, in fact, the arbitration comes out that way,” he said. “I don’t see how the arbitrators can rule that way if they have to look at the ability to pay, because the straphangers don’t have the ability to pay more.”

Toussaint later pointed out that numerous city unions had received similar four percent raises and issued a statement heavy on the rhetoric. “The last time,” he said, “we saw a Mayor champion such unfair, unequal treatment of a specific group of workers was Memphis, Tennessee, and the year was 1968.” This, of course, was the sanitation workers strike that ended only after Martin Luther King, Jr. was assassinated. That’s some comparison.

Bloomberg’s response was far more level-headed. “The city’s finances are different than the MTA’s finances,” the mayor said. “The city’s workforce is different. So there’s no reason to think that if one does something, the others automatically have to get it.”

And so here we are. The MTA has to find $10 billion to cover a gap in its capital budget. It has to find a way to keep fares low and keep the trains moving. And now it has to find a way to cover an additional $350 million in labor expenses. No wonder New Yorkers are so skeptical of the city’s transit unions.

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Alon Levy August 12, 2009 - 2:48 am

Here’s a third response: higher wages in a recession are not a bad thing. They give workers more spending power, which translates to more economic stimulus. Sweden’s social democrats used this strategy to get out of the Great Depression in 1934, before any other country.

Ray August 12, 2009 - 6:48 am

A few thoughts. Four percent is a customary cost of living increase even in the private sector. Seems fair enough. What’s astonishing is that MTA planners hadn’t anticipated it in their budget projections. Foolish given that the matter had all ready gone to arbitration. Is it planning or gambling?

Given the routine reward for the workforce, the MTA should now have routine flexibility to reduce its exposure to expenses through automation, right sizing and other measures. That’s happening to other unions too, Mr. Toussaint. Most important perhaps, technology needs to take its natural evolutionary course. Yet that takes capital.

Finally, we riders have to accept the reality… FARES HAVE TO GO UP EVERY YEAR to keep up. Let’s get comfortable with the concept. It’s time we move to a new peak period single ride fare to cover the agreed upon balances needed for capital improvements and operating expenses. Resulting in a more pleasant and efficient system.

Wins all around (for most).

Chris August 12, 2009 - 9:22 am

Ray – nobody is getting raises these days in the private sector. Most companies, mine included, are in a raise freeze and hiring freeze because of the economy.

And if you think that the unions will ever accept automation and “right-sizing,” you’re kidding yourself.

Nathanael August 24, 2009 - 8:45 am

4% is a COLA increase for normal conditions.

This is a deflationary recession. The cost of living is not actually going up.

This amounts to a real wage increase. Impressive win for the transit union. If they agreed to one person train operation with no conditions, I’d say let them have it. Since they won’t, I don’t like them.
The union wins no points for defending featherbedding.

And of course you’re right that fares should be automatically inflation-indexed, and that they should be substantially higher than current (absurdly low) levels.

Working Class August 12, 2009 - 8:47 am

The MTA should be forced by law to negotiate in good faith something that they have never had to do. If they did there would not be a need for the contracts to be sent to an arbitrator.

The wage increase isn’t exactly like Ben would like you to believe either. There was NO raise of retro pay for the first 3 months of the contract and the first 2 years of the wage increases were split into halves 2% a piece which make them less valuable then the full 4% increases that every single other large union recieved last year.

Alon Levy August 12, 2009 - 9:25 am

While in a recession wage increases are useful, in times of growth the race to get faster wage hikes than other unions is a sure recipe for inflation. A good rule of thumb is that total payroll should rise with nominal economic growth, unless there’s a bout of automation, in which case total payroll should rise more slowly while payroll per worker should rise faster.

Larry Littlefield August 12, 2009 - 9:11 am

RE: The TWU Raise via the New York Times:

“The arbitration panel said the authority could use federal stimulus funds and money from its capital program to make up any shortfall in its operating budget.”

There is your precedent. By law, arbitrators are not permitted to consider the effect on the quality of public services like transit in their decisions. Nor do they consider what private sector workers are paid. Only what other public sector workers are paid, and the taxpayers ability to pay.

If the capital program can be diverted to operating costs, and it is borrowed money, therefore, the operating budget is unlimited with no effect on taxpayers.

Anyone here going to be thrilled with all the innovative studies by consulants over the next couple of decade, as the system decays and no improvements are built? Anyone even mentioning proposals for improved service shows they are willing to go along, and be unpleasantly surprised down the road, blaming future leaders.

Alfred Beech August 12, 2009 - 10:10 am

I understand that a 4% raise in a time of deflation seems out of line, but I don’t know the history here. What kind of wage increases and health care changes have the the transit workers gotten over, say, the past 10 years?

Working Class August 12, 2009 - 10:34 am

In each of the last 2 contracts the MTA had billion dollar surplus’ and the union took a 0 in the first year of one of those contracts and recieved less overall than NYPD, NYFD, Sanitation, Teachers, DC37, Corrections in wage increases. In the last contract the union became the first and only large union to pay anything into there medical coverage something that Bloomberg didn’t even ask of his unions.

The TWU contracts have historically been used to set the pattern for the large city unions. Those unions would use what the TWU received and say we have to get more and usually they do get more. This time the TWU contract was settled after all of the other unions so they told the arbitrator that they should receive comparable wage increases. They received less than all of the other unions and people are still saying it’s too much.

Nobody ever complains when MNR or LIRR get hefty wage increases and other great benefits in each and every contract.

Alon Levy August 12, 2009 - 7:51 pm

DC37 are a bunch of wankers who have the temerity to claim on the same poster that they make less money than non-union workers and hence reduce costs to the city, and that they make more money and hence provide a living wage.

Nathanael August 24, 2009 - 8:48 am

What, you haven’t read the extremely hostile criticisms of the heavily featherbedded LIRR union? The one which had two major exposes in the last year; one on work rules and one on disability scams? The one which has managed to retain STEAM-era working rules which have no relevance to the modern world *except* as featherbedding? That union is one of the few in the country which seriously deserves to be busted.

More fallout from the MTA/TWU arbitration decision :: Second Ave. Sagas | A New York City Subway Blog August 12, 2009 - 12:29 pm

[…] « Labor battle lost, MTA sees more financial pain Aug […]

Anon August 12, 2009 - 5:58 pm

President Obama signed the 2009 Supplemental Appropriations Act a few weeks ago which enabled 10% of Transit Stimulus Funds (a.k.a. the Recovery Act funds)to be used for operating assistance.

It not like the arb panel decided this on their own.
It not taking Capital Funding – it’s reallocating funding that was never there in the first place. This was done to help the Transit Workers (especially to prevent layoffs), not only for TWU benefit but transit workers throughout the country.

Bailing out the people rather than bailing out the banks and corporations seems logical.

If MTA received 2 Bil in Stimu that would be 200 Mill for the workers.

Not sure why you have a problem with that.

get past the rhetoric from the papers.

Joshua Whalen August 12, 2009 - 6:37 pm

When I was a kid, one or another municipal union was on strike every year. Transit, Sanitation, teachers, even police and fire. In those days, rent stabilisation was strongly enforced, a weeks pay at minimum wage was enough for a single person to rent a decent apartment (in manhattan), and if you had any college at all, you made the equivalent of $250,000 a year (in terms of buying power and lifestyle) today, union worker or not. The high wages and benefits unionized labor enjoyed drove wages for non union workers higher, also. So when the unions take a victory, I rejoice. I wish the strike had lasted longer. The TWU, more than any other union, has always been the muscle in NYC labor’s arms. They should use that muscle fearlessly, and frequently. I’ll happily ride my bike and drop off a donation tot he strike fund on my way to work.

Ray August 12, 2009 - 11:19 pm

Beg to differ Chris. There are still many healthy companies out there who will automatically offer routine COL increases purely for retention. Companies have culled substantial workers to save money. However, most are not stupid enough to plan for 0% wage growth over a three year plan. Not to personalize this, and I don’t know what industry you are in, but it seems even industries hard hit, such as finance, are rapidly finding their way back to routine compensation patterns. Are you certain you won’t be seeing a small increase?

Moreover, the arbitration panel compared TWU to other public unions when rendering their decision. Those other unions were granted COL increases.

My point. No one expects TWU to accept right sizing and automation. It would be no more palatable than MTA accepting the the unplanned COL increase. Perhaps there is a mechanism available for MTA to bring their requests for cost savings and worker flexibility to the same panel to have them heard?

2009: The year the money vanished :: Second Ave. Sagas | A New York City Subway Blog January 1, 2010 - 4:05 pm

[…] why transit matters in New York City. Bus arrival boards made a 34th St. debut. The MTA lost its TWU arbitration case and promised to appeal. Meanwhile, Transit dealt with the fallout from a major accident as the […]


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