Feb
03

Labor battles and the spectre of a 12 percent fare hike

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In order to keep up with inflation and to compensate for the fact that subway and bus fares, in adjusted dollars, are lower today than they were 18 years ago, the MTA has put forward a plan for fare increases every other year for the foreseeable future. The original plan involved increases designed to raise revenue by 7.5 percent each time, but last November, the MTA lowered the 2015 and 2017 hikes to around four percent each. It was a risky move, relying heavily on the concept of net-zero labor spending increases, and one I thought the MTA made too hastily. Left unanswered, until now, is the big question: What happens if net-zeroes are unattainable?

In comments last week, MTA Chairman and CEO Tom Prendergast put forward a clear answer. Without net-zeroes, fare increases could balloon to 12 percent, far higher than originally anticipated and nearly three times as much as the hike promised last November. The Daily News had more:

Feeling pressure from its many unions, the MTA raised the possibility of a $2.75 subway ride and a $125 monthly unlimited MetroCard come 2015. Metropolitan Transportation Authority Chairman Tom Prendergast warned at a hearing in Albany Thursday that the authority’s labor problems could result in riders getting socked with a 12% fare hike next year — triple the percentage increase the authority already has in store.

Speaking at a joint legislative budget hearing — and delaying returning home following the death of his father to do so — Prendergast predicted “dire consequences” if a settlement to the MTA’s labor woes resulted in all of its workers getting raises along the lines of those that an independent mediator recently suggested be paid to Long Island Railroad employees…

The only other option Prendergast mentioned in that case would be for the MTA to slash $6.5 billion from its capital construction and maintenance program. That would translate into a loss of about one-quarter of the funding now planned for purchasing new buses and trains, replacing rails, fixing signals and overhauling stations. And even with those cuts, a fare hike of 5.25% would be needed in 2015. “This would be a terrible choice for our riders and our region,” he said of the alternative.

The 12 percent increase is a worst-case scenario, and there is an element of, as union officials noted, pitting riders against employees here. But the union has never been on the riders’ side; it’s always been on its own side, for better or worse. Furthermore, Prendergast has ever reason to put forward the most dramatic number possible in an effort to draw sympathy and negotiate through the press. After years without any contract and bitter back-and-forths between management and labor, what does he have to lose?

We shouldn’t be surprised either about the power struggle. The MTA has seen its economic forecast improve with the increase in tax revenues a healthier economy has produced, and surpluses always generate power struggles. Should the union get the money? Should the riders through the form of deferred fare hikes and better service? Ultimately, the MTA and the riding public will need the union to agree to work rule reform and other concessions if they want higher salaries, and somehow, riders shouldn’t be the ones bilked out of dollars by this fight.



19 Responses to “Labor battles and the spectre of a 12 percent fare hike”

  1. Boris says:

    With historically low productivity rates, a huge amount of debt, and the continuation of decades-old labor practices, no one deserves a wage or benefits hike just to keep doing a job poorly. However, it would make sense to institute performance or productivity bonuses, as part of a larger system of reforming the current system, which incentivizes siloing and secrecy over sharing, process over productivity, and measuring effort rather than outcomes.

  2. D in Bushwick says:

    As with Metro North, you can bet there are a good number of current MTA employees who spend most of their day not working.
    Get rid of those people proven falsifying work logs and the rest are on notice. The productivity will skyrocket and taxpayers will, for once, get more out of their tax dollars.
    Who knows, maybe they’ll even consider washing the walls once a decade…

    • Boris says:

      If only it were that simple. Few people falsify outright; more hide behind “process” and create red tape for each other to spend more time doing less. Some of the red tape is legally required (e.g. hiring, bidding process, union contracts). For example, federal and other requirements for capital projects add layers of bureaucracy and give managers excuses to avoid getting things done (which is why we should cut the capital budget to the bone and do more via the operations budget; it’s cheaper and faster). But lots of it is just of the form “we’ve been doing things this way for years, why change”.

      Also there is no one size fits all; each department has unique problems. It takes leadership and people who want to work for the benefit of society. Those are hard to find.

  3. Bolwerk says:

    Sheesh, they really could just target a number and do a ⅓/⅓/⅓ combo of changing labor rules/benefits contributions, workforce reduction (preferably through attrition), and increasing fares. Rinse,repeat at the next contract.

    Honestly, this should be done with an eye toward long-term financial stability.

    • johndmuller says:

      The 3-way split is interesting and appealing, but I doubt that it will fly well. In recent history, the union took it to the picket line and lost, at least in part due to excessive posturing and possible personality issues. This time, they have showed quite a lot of restraint and one could surmise that the idea that it is ‘their turn’ may carry some weight. There doesn’t seem to be anyone taking a particularly hard line approach on holding the salary line either.

      Lost in the noise at the moment is the idea that the non-union employees have been doing even worse than the union people. One could reasonably factor them in as well.

      Another elephant in the room is the pension/retirement costs. Some elements of a more self-sustaining approach – i.e. pay as you go into an independently administered defined contribution pension fund, thus gradually reducing the overhang of future payouts and the market uncertainty which keeps changing the future value of the current system.

      Maintenance and revenues, including regular government contributions and/or tax income could be in the formula as well, although I would try to keep capital investment out of it as some of that is other peoples (i.e. Uncle Sam’s) money.

      • Bolwerk says:

        My proposal is less about a sensible formula and more about creating the illusion of equity so we can move forward. Gotta figure a fare increase isn’t ideal right now, but it’s also inevitable in the long run. I don’t think wages are absurdly high now, rather there are just too many people doing too little productive work, but there is nothing justifying an automatic increase for people who mostly already have a dignified pay.

        FWIW, a defined benefit plan is not inherently financially irresponsible. Planned properly, it works a bit like the “risk pool” concept in ObamaCare and can lead to better returns for retirees for the same cost than the defined contribution plan. Why? Because the cost per worker is averaged across the retirement pool rather than determined individually. The catch: well, ya gotta actually pay into it; that’s basically what the boomers didn’t want to do.

      • Nathanael says:

        “Lost in the noise at the moment is the idea that the non-union employees have been doing even worse than the union people. ”

        As soon as the non-union managers are paid less than the union workers, something is going to give. Either the managers will determine to break the union come hell or high water, or they’ll demand to join the union…

  4. John Doe says:

    It’s 2014, when are robots replacing motormen??? enough is enough already, just think of all the money we could save on labor costs if we had fully automated trains, when is this happening!?!!?

  5. Larry Littlefield says:

    “The MTA has seen its economic forecast improve with the increase in tax revenues a healthier economy has produced, and surpluses always generate power struggles. ”

    There is another bubble in NY property sales, generating a temporary boost to real estate transfer tax receipts.

    The unions took the temporary money last time, with raises far in excess of inflation, and kept then when the extra money disappeared, sticking it to those who are less well off. Everyone else sacrificed although, as you say, fares remain down from peak levels relative to inflation.

    Pendergast also raised the possibility of deferred maintenance, the best possible result for all the powers in the power struggle.

    • John-2 says:

      That deferred maintenance thing worked out well from the mid-60s to the mid-80s, didn’t it? But sadly, we’re far enough out from the worst of the MTA’s early years so that the old saying about those who don’t learn from history is likely to come into play (and the whole idea for ther politicians and the top MTA officials is to not still be in office when the consequences of putting off maintenance finally come due).

  6. Matthew says:

    If the Unions want a wage increase, they need to deliver a plan to increase their productivity. Right now union work rules are such that our subway has some of the worst productivity in the world. Even the Chinese subway workers do a better job being productive.

  7. Larry Littlefield says:

    The issue is how have MTA union wage and pension costs increases compared with MTA customer wage and pension cost increases? The answer is, they’ve come out ahead. Or should I say most everyone else has come out behind.

    The don’t notice because the pension increase of 2000 is being paid for in 2014.

  8. Larry Littlefield says:

    “The only other option Prendergast mentioned in that case would be for the MTA to slash $6.5 billion from its capital construction and maintenance program.”

    How does that compute. Does Prendergast plan to use borrowed money to pay for the raises? Or does he actually have $6.5 billion in cash for the Capital Program, which would be the only cash he has?

  9. JJJJ says:

    “are lower today than they were 18 years ago,”

    Is this a problem? What about 18 years ago was so special? Was it the perfect amount? Was 1996 the best year ever for transit? ….I dont think so.

    Saying “we need to raise fares because at a time of underinvestment they were higher” is like saying the MTA should shorter trains and run less frequencies to better match peer cities like Miami and Philadelphia.

    • Larry Littlefield says:

      What is fair to say is that when you look at that massive MTA debt load, past riders got their piece.

      So did the unions, notably the massively expensive retroactive pension enhancement of 2000. Since we’ve only been paying for it for the past few years, it is no surprise there is no room for raises.

  10. normative says:

    “The 12 percent increase is a worst-case scenario, and there is an element of, as union officials noted, pitting riders against employees here. But the union has never been on the riders’ side; it’s always been on its own side, for better or worse. Furthermore, Prendergast has ever reason to put forward the most dramatic number possible in an effort to draw sympathy and negotiate through the press.”

    Its curious you note how Prendergast framed the issue in the first sentence, and then switch to a dramatic mutually exclusive binary in the second. Don’t you think even a cursory glance would disprove the claim: the union is never on the rider’s side, only its own.

    Lost in the noise, is the fact that both sides have arguments and concessions will have to be made. But, lets all be honest, we are largely throwing around generalizations for what is a difficult, complex problem.

    • Nathanael says:

      TWU Local 100 has never been on the riders’ side, only its own, since at least the late 1970s.

      The BLE and UTU locals at LIRR have never been on the riders’ side, only their own, since at least the 1980s.

      That’s since I’ve been paying attention. In the same time period, many other local unions in other cities *have* been on the riders’ side. I even vaguely remember the union locals which represented Metro-North workers being on the riders’ side within the last 40 years.

      Benjamin’s statement about the union being on its own side, and not the riders’ side, is a specific statement about the specific local union. It is not a general statement about all unions.

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