Archive for Transit Labor
For the past few years, through the tenures of three different MTA heads, “net zero” had become a mantra. Without a net-zero labor increase, the MTA’s budget would be deeply in the red with the costs expected to fall on the riders in the form of service cuts, fare hikes or both. As late as February, the MTA warned of steep fare hikes if they couldn’t toe the net-zero line. The Citizens Budget Commission has long since endorsed the approach, and the MTA and TWU were at war.
Then, suddenly, it was election season, and the MTA and TWU were, with the help of Gov. Andrew Cuomo, shaking hands and best buds. Without exacting much in the way of labor reform — and certainly without anything close to net-zero — the MTA gave the TWU a new contract with only a few concessions. The raises — 8 percent over five years — are deserved, and there are some givebacks. But ultimately, the MTA’s labor costs are going to increase by $411 million through 2016. That ain’t net-zero.
In a document released yesterday to bond investors [pdf], the MTA offered the public its first glimpse at the ramifications of the deal. The Memorandum of Understanding won’t be released until after the TWU votes on it, and such a vote isn’t likely until after next week’s MTA Board meeting. So what we know is that the MTA is on the hook for a lot of money. The deal includes retroactive payments of $126 million and a current bump in labor expenses of around $55 million. In 2015 and 2016, the MTA expects to spend $116 million and $114 million respectively, though some experts — notably Nicole Gelinas — believes these estimates to be low.
To cover some of the costs, the new deal includes an increase in the amount of employee contributions to health and other benefits as well as a new “wage progression schedule.” Still, someone has to come up with $411 million, and MTA Chairman and CEO Tom Prendergast insists it won’t fail to the fare paying public this time around. So how is the MTA going to pay? Read it (and weep):
MTA anticipates that the onetime payment for retroactive wages in 2014 will be funded from monies derived from released 2013 general reserves budgeted for voluntary deposits to the MTA Long Island Rail Road Plan for Additional Pensions that would have reduced the unfunded liability and future expenses. Increases in current year and annual ongoing costs are anticipated to be paid from funds budgeted for voluntary deposits to the MTA Long Island Rail Road Plan for Additional Pensions, and a portion of monies earmarked for voluntary deposit into the OPEB trust for future retiree healthcare costs.
It gets better. If other unions that do not have contracts in place sign similar deals, the MTA would have to find another $300 million. This money, the agency says, will come from voluntary deposits into the OPEB trust and a reduction of PAYGO capital funds of approximately $70 million. To say this doesn’t fall on the riders is sleight of hand accounting. In fact, this entire budget is sleight hand accounting.
But now we know: The MTA is robbing future riders to pay for the present. It doesn’t bother Cuomo because he’ll be gone from Albany before the bill comes due, but for the rest of us, this isn’t a good deal. We may not pay now because the MTA will keep those looming fare hikes low, but give it a few years. We the riders will be paying then or else the system will suffer.
Gov. Andrew Cuomo, MTA CEO and Chairman Tom Prendergast and TWU Local 100 President John Samuelson just wrapped up a press conference during which the MTA and TWU announced a tentative agreement on a new labor deal. It’s a five-year deal with raises in all five years — 1 percent retroactively for the first two and 2 percent for each of the last three years. There are no work rule reforms, but TWU healthcare contributions will increase from 1.5 percent to 2 percent. And the MTA does not expect this deal to impact its planned fare hikes or razor-thin operations margins in the out-years in its financial plan. You may be wondering how; I know I am.
We don’t yet have any of the details behind the math, but estimates are that this deal could add around $150-$200 million per year to the MTA’s operations budget. The MTA has continually noted that need to secure net-zero wage increases in order to avoid jeopardizing its capital plan, but this deal contains none of that. So where does that leave us? It leaves me concerned that the riders will bear the brunt of the costs either through more deferred maintenance, no real capital expansion plans, higher fare hikes down the road, service cuts or a combination of everything. I hope I’m wrong, but this is an election year we’re in. These are the transit politics coming from up high in Albany.
After over two years of negotiating (or barely negotiating) with various Chairmen, the MTA and TWU Local 100, its largest union, are nearing agreement on a contract, the Daily News reports today. According to Pete Donohue and Ginger Adams Otis, the new agreement grants raises to MTA workers, but it’s unclear if the MTA has moved away from the net-zero position or has wrested other concessions from the union.
Here’s the News’ take. Details are, so far, sparse:
The MTA and the union representing subway and bus workers in the city are close to reaching an agreement on a new contract that would grant workers an 8% raise over five years, according to sources familiar with the talks. Under the package now on the table, new hires would have to work for five years before reaching the top pay rate, an increase of two years, and worker contributions to health care costs would rise to 2% of base pay, from 1.5%, the sources said.
The progress in negotiations appeared to signal a break in the two-year contract stalemate, but sources said, however, that significant issues need to be overcome to produce a deal. The stumbling blocks led Transport Workers Local 100 President John Samuelsen to ask Gov. Cuomo in a letter late Tuesday to intervene and help seal the deal for the 34,000 transit workers in the union.“Absent your intervention, I do not see a path to resolving a number of difficult issues,” Samuelsen wrote to Cuomo.
Steve Greenhouse of The Times adds more color on the union’s request that Cuomo intervene to see these negotiations through. TWU officials say that finalizing their contract will give the MTA a baseline for their contentious negotiations with the LIRR and will help Cuomo avert a costly railroad strike set to begin four months before Election Day. I worry that such an impetus for a contract involves putting the short-term election cart before the long-term horse of the MTA’s fiscal stability. Already, the governor has shown that he is more than willing to sacrifice MTA finances for electoral gains.
Still, until we know the details and understand what, if any, concessions the MTA secured, it’s too early to speculate both on how this deal will impact the MTA’s ledger sheet and what this means for future fare hikes. Still, with promised raises of eight percent over five years, I’m wary. Already, the MTA has scaled back next year’s fare hikes from around eight percent to four percent, and funds are tight. The riders may have to pay more as, in flush times, everyone else is getting more of the economic pie.
In an effort to reach an agreement with the United Transportation Union Local 645 and avoid a strike for as long as possible, the Long Island Rail Road has issued a request for a second Presidential Emergency Board. The new PEB request and subsequent arbitration proceedings will delay any potential work action the UTU make consider until July 19 at the earliest.
The MTA has tacitly recognized of a favorable outcome in this fight. Currently, 59 of the agency’s 60 unions are working without a contract, and the UTU could set the stage for subsequent negotiations. If the MTA cannot achieve a net-zero labor increase, either through work rule reform, layoffs or a combination of both, the agency’s precarious financial picture will be thrown into doubt. That seems to be the X Factor New York politicians are so willing to ignore, but it was the MTA’s focus in their statement announcing the request for a second PEB.
Said the MTA:
The MTA wants to resolve these contract issues at the bargaining table, where they belong. But the recommendations of the first Presidential Emergency Board ignored the enormous burden that a 17% wage increase over six years – without a single change in work rules or other cost offset – would place on the MTA’s budget. If those terms were applied across the entire MTA workforce, they would be equivalent to raising fares 12% – or cutting $6 billion from the capital budget for keeping our system safe and reliable.
In response to this procedural move, the TWU — a very interested bystander — issued a stridently worded statement speaking out against the measure. One union official noted that “the MTA’s repeated insistence that it has no ability to pay the raises recommended by the panel is ‘a phony smokescreen rejected by four consecutive panels of arbitrators’ who have handled recent MTA labor disputes.” The TWU is the MTA’s largest union, and their top brass have vowed to support the UTU were it to engage in a strike.
Meanwhile, as this labor fight takes shape, Dana Rubinstein explored how Gov. Andrew Cuomo is using the MTA as a piggybank. Between the $40 million diversion for debt purposes and the $7 million Verrazano Bridge toll giveaway, Cuomo is not standing behind the MTA as a variety of interests jockey for money. Brooklyn now wants its own toll relief, and the union issues will loom throughout the spring and summer.
When the dust settles, the riders will wind up paying more and getting nothing in return. After all, it was Tom Roth, the UTU’s expert witness, who said at the last PEB that “he passenger has had a good run here at the MTA, and it is about time the fares went up.”
While news from the transit world has trickled to a crawl during the cold, snowy days of winter, all eyes have shifted to the east where a labor dispute is playing out that could have ramifications that echo from Montauk to Manhattan to Manitou. With the Long Island Rail Road’s largest union creeping toward a strike and MTA CEO Tom Prendergast’s warning of a huge fare hike if the MTA can’t fulfill its net-zero labor dreams, the next few months could be more important for the MTA’s future than most straphangers realize.
When we last saw this tale, Prendergast had just issued his warning. If the MTA has to grant wage increases to all of its unions without any hope of work rule reform, the fares will go up. It’s the only way the MTA can cover these increased costs, the MTA Chairman has stressed. It’s not a new line from the man who sits in that role, but it’s one inching ever closer to reality. Meanwhile, the MTA and the UTU are living in an era in which the first Presidential Emergency Board determined that the MTA could pay for raises with endless Pay-As-You-Go payments and the MTA’s never-ending ability to borrow more money. Welcome to fantasyland.
So this week, the politicking and maneuvering picked up a bit with a bunch of members of Congress urging the MTA to avoid a strike. Their argument relied on the same one put forward by the PEB without a nod to the MTA’s financial reality. Here’s the Daily News’ take:
Twelve members of New York’s Congressional delegation urged the MTA to soften its hard-line wage freeze stance as a March 21 strike date loomed for Long Island Rail Road workers. In a two-page letter Wednesday to Metropolitan Transportation Authority chairman Tom Prendergast, the lawmakers called for MTA officials to rethink their position despite what they called the agency’s “past financial stresses.” “We urge the MTA to reconsider its insistence on a wage freeze or concessions to fully pay for wage increases,” read the letter from the office of Rep. Steve Israel (D-L.I.)…
In the letter, Israel and his fellow lawmakers argued for the MTA to return to the bargaining table by pointing out that the presidential panel found the authority could afford to pay for a rise for LIRR workers. The letter, which was signed by all four Long Island Congress members and most of those from New York City, quoted the panel’s argument that “it simply cannot be concluded that the MTA’s current financial position is one in which it is unable to pay for wage adjustments.”
But in speaking at an Albany hearing last month, Prendergast raised the possibility of a 12% fare hike for 2015 if all contract-less MTA workers received raises like those recommended for LIRR employees. Prendergast predicted “dire consequences” — including the possibility of a $2.75 subway ride, up 25 cents, and a $125 unlimited monthly MetroCard, up from the current $112.
To avoid a strike, the MTA will request a second PEB meditation, and the UTU will not be able to walk off the job until late June. There’s no indication that the MTA will accept anything other than a finding favorable to the agency, and it’s possible that they’ll push the issue until the end. The public wouldn’t be happy with a strike, but the LIRR is one railroad that should be pushing for labor reforms. Meanwhile, I’d dispute the stance that the MTA has a “hard-line wage freeze stance.” They’ll willing to grant a wage increase as long as work-rule reform comes with it.
Still, the larger issue here is the fact that of the MTA’s 60 unions, 59 of them are working without a contract. The TWU is agitating for raises too, and if the UTU earns its contract, the other labor unions will push for a similar resolution. At that point, the increased costs of labor — which do not factor into the MTA’s rather optimistic budgets — will fall on the shoulders of the riders. Should the MTA grant wages if everyone else has to pay more? Should work rule reform follow a bump in salary? The answers to these questions will set the tone for the MTA’s economic structure for the foreseeable future.
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.
It’s been a few weeks since Presidential Emergency Board recommended a series of wage increases for the Long Island Rail Road’s United Transportation Union workers, and the MTA has come back with a resounding response to the non-binding suggestions. Setting the stage for a summer of labor unrest, the MTA will not grant the raises to UTU Local 645.
For the MTA, this is a risky, if necessary, move to keep the budget and the dream of net-zeroes in tact. It should lead to a permissible strike, and the MTA is gambling that Long Islanders will allow their support of getting to work quickly and easily trump their support of labor unions. It could also foreshadow how the MTA plans to address the TWU’s ongoing contractual situation.
Pete Donohue offers up this take in today’s Daily News:
MTA Labor Relations Director Anita Miller notified the National Mediation Board that the authority would not enact a contract settlement for the commuter railroad that was crafted by an independent panel. The move prompted an angry response from a top union leader representing LIRR workers, who have labored without a contract since 2010. “If a strike occurs, it’s the sole responsibility of the MTA for being unwilling to accept the results,” said Anthony Simon, general chairman of the United Transportation Union. “It’s not a matter of them being unable to pay. It’s a matter of them not wanting to pay.”
Simon’s union is one of eight representing LIRR workers that are involved in the labor showdown with MTA brass. The MTA, meanwhile, all but accused the unions of being indifferent to the possibility that the raises sought would necessarily result in fares being increased to levels higher than that which the authority has already planned.
Federal law says commuter railroad workers can legally walk off the job if a contract deal is not reached after a lengthy process involving negotiations, mediation and mandatory “cooling off” periods. That process is expected to be played out by this summer.
As Donohue details, the MTA’s beef with the PEB decision is as much over what it doesn’t contain as it is over what it does contain. While it required higher union contributions to benefits, it did not include work rule reform which the MTA has repeatedly said is key to its net-zero plans and is also key to future improvements in its operating model.
Meanwhile, in rejecting the raises, the MTA also played to the fears of its riders. Miller told the feds that union officials have no issues with the LIRR passengers paying significantly more for service. One union rep reportedly told the PEB, “The passengers have had a good run at the MTA, and it is about time the fares went up.” Fares have not always tracked inflation.
The path to a strike is a slow one with mandatory cooling periods and enforced negotiations on tap first, but the MTA seems to recognize that a strike may be the only way for it to get what it wants. You can be sure, too, that the TWU is watching as well. They don’t have the right to strike under New York State law, but they’ll push for whatever favorable outcome the UTU can draw out from the MTA. That contract is worth far more in current dollars and future savings, and right now, the UTU fight is a proxy for the larger war with riders and fares serving as the battlegrounds.
The MTA’s budget is a curious thing. It’s a multi-billion-dollar behemoth with nearly no room for maneuvering. While a recent uptick in the economy has resulted in a slight surplus and a rosier outlook, recent developments from Long Island have cast a shadow over a key fundamental assumption. That assumption is the net-zero labor increase, and that development is a substantial award from a Presidential Emergency Board to the United Transportation Union.
The story is a familiar one: The UTU and MTA had been at odds over wage increases and a long-term contract. The MTA wanted to hold the line at a net-zero wage increase with raises in out-years and benefits contributions from retirees. The UTU didn’t want to embrace any of that. So under the Railway Labor Act, President Obama ordered a PEB to convene, and the award issue arrived last Saturday. It was bad news for the MTA though the award is non-binding.
The three board members recommended that the LIRR pay wage increase totaling 18.4 percent over six years (2.9 percent per year) and employees begin contributing to health insurance premium costs. After factoring in the recommended employee health insurance contributions, the board’s recommendations would still produce net wage increases of 2.5 percent per year…
The board’s wage recommendations are retroactive to the first year of the contract dispute, which has been ongoing for more than three years. The board rejected MTA’s demand that workers accept three years of net zero wage increases, followed by two, two-percent increases over five years. The board also rejected MTA’s demand for major concessions in pensions, including a permanent five percent employee contribution. The PEB also rejected MTA’s demand that retirees begin paying for health insurance and that railroad retirement disability pensions be offset by LIRR’s pension payments.
PEB recommendations include that employees begin contributing to health insurance premium costs, beginning at one percent of 40 hours straight-time pay, at the contract’s opening date of June 16, 2010, and increasing by .25 percent increments each year thereafter. MTA had proposed larger employee contributions, while the affected unions had proposed no contributions from current employees.
Procedurally, the MTA and UTU now have 30 days — or until January 20 — to work out a deal, and then either party can request a second PEB hearing. Following that hearing, absent an agreement, the unions could legally strike. This clearly differs from the situation with the TWU, as the Taylor Law prevents such a strike, but Local 100 leaders are supporting the UTU in any action it may take.
From a substantive point, the key line in the PEB report it this: “It simply cannot be concluded that the MTA’s current financial position is one in which it is unable to pay for wage adjustments that are otherwise warranted.” In deciding as much, the Board pointed to Pay-As-You-Go resources and the MTA’s ability to borrow more money for wage increases. This is analysis that seems to exist in a short-term vacuum with no nod to context, but it’s also an argument we’ve heard before in the labor context.
For the MTA, this is a tough one. The Board has already announced that planned fare hikes in 2015 and 2017 will be lower than expected, but again, that decision rested on an net-zero wage increase. As the LIRR and UTU head toward a compromise, the MTA’s options will narrow, and staffing reductions may become necessary. Worker morale across the board is low, and strife between the unionized workers and management would be tremendously costly to riders.
We’ve seen this movie end before. The MTA’s budget outlook improves; labor demands increase; riders pay more. Until there is a fundamental change in work rules, pension contributions or labor practices, it always ends the same.
Allow me to dip for just a minute into a quote from 2012’s The Dark Knight Rises. As Anne Hathaway’s Selina Kyle shares a dance with Bruce Wayne at a masquerade ball, she warns him of impending troubles. “There’s a storm coming, Mr. Wayne,” she warns Wayne. “You and your friends better batten down the hatches, because when it hits, you’re all going to wonder how you ever thought you could live so large and leave so little for the rest of us.”
It’s a bit of an overly dramatic line, but when Bane takes over, Kyle’s words aren’t wrong. Today, when I read WNYC’s coverage of the MTA’s latest budget machinations and the current state of management’s relationship with labor, I had a flashback to the film. “Underground where I work,” Christine Williams, a station agent based in Brooklyn, said. “There’s a storm brewing — and it’s not good. It’s not a merry Christmas when you can’t afford to get to work and when you get to work you’re working at a $7 an hour job. It’s like you can’t win in New York.”
This too a bit overly dramatic. A search through the SeeThroughNY database revealed that Ms. Williams earned $25 an hour back in 2008 — which is hardly a challenging amount — and it’s a far cry from minimum wage. Still, the point remains: As the MTA passed a $13.5 billion budget that rests largely on the shaky assumption of a net-zero labor spending increase, the workers are not happy. “We’re certainly not looking for the stars,” TWU president John Samuelson said during a protest outside this week’s MTA Board meeting. “We’re looking for raises that keep up with the cost of living.”
The debate and the battle aren’t necessarily either/or propositions. The MTA’s stated goal — and one that will help avert massive fare hikes or service increases — is a net-zero scenario. That doesn’t mean wages can’t go up. Rather, it means if wages go up, something else moves along with it. Wages go up; worker count and staffing levels go down. Wages go up; pension contributions go down or retirement age goes up or benefits contributions go down. The options are out there, but the TWU isn’t readily embracing anything at a time of good economic feelings for the MTA.
The real question right now as the TWU Local 100 heads to work each day nearly two years removed from the expiration of their last contract concerns a strike. We all still remember those few days in 2005 when the TWU walked out of the job. For New Yorkers, it was disruptive; for the TWU, it was destructive. Would they do it again? The Taylor Law makes a strike seem doubtful, but union officials are threatening “job actions” which could be slowdowns of any shape or form. They grow tiresome after a while.
Meanwhile, within the MTA’s leadership, the net-zero concept is a controversial one. Perennial Board gadfly Charles Moerdler challenged the assumption this week. Moerdler called such an approach “indefensible and fictional.” As Prendergast pointed out that each percentage point increase in wage increases would add $50 million to the MTA budget, the idea of net-zero seems both perfectly defensible and nearly entirely necessary. A five-percent raise, for instance, would be devastating to the MTA’s budget.
So this gap between the rock and the hard place seems to be narrowing. Rank-and-file are growing dismayed over the fact that it’s been years since their last raise (though non-unionized labor have felt that sting for even longer). At MTA HQ, the lack of labor spending could lead to an even faster brain drain while disgruntled union workers could make service worse. Of course, there’s plenty of room for reform across the board. Will we get there or will this awkward detente be steady enough to support slow movement on a new contract for the TWU? It’s a key issue for the MTA heading into 2014.
For years, the MTA has engaged in an aggressive move to shutter former token booths and reduce the number of full-time staff who sit in these glass cubes occasionally dispensing a MetroCard, a map or a scowl at some straphanger. Even as I’ve supported the effort, it’s still jarring to see the outline of a former booth and no personnel at the entrance to, say, the Bay Ridge-bound Union St. station on 4th Ave., and now the MTA wants to take staffing reassignments to the next logical level.
According to a report in the Daily News, in discussions with the TWU over the union’s next contract, the MTA has proposed doing away with agents in booths entirely at 25 stations and essentially reassigning these employees to serve instead as roving station assistants. It’s a workrule change that has long faced strident union opposition but would do much to make helpers in the subway far more visible while eliminating a position that serves little use these days.
Pete Donohue has the story:
Subway riders will have no choice but buy MetroCards at vending machines under a proposed pilot program that would eliminate all booth positions at 25 stations, The Daily News has learned. Instead of a clerk behind the glass, each station would have a transit worker carrying out a wider-range of duties that might include such tasks as crowd control on platforms, emptying garbage cans and waiting with an ill rider for an ambulance to arrive, according to union and management sources.
Workers in this new role would not handle cash or sell fares but they would still provide riders with travel directions and information, sources said. “The idea is an employee can do a lot more for customers outside of the booth than inside,” an MTA official said.
Metropolitan Transportation Authority brass outlined the proposal in broad terms recently during contract negotiations with Transport Workers Union Local 100, which represents bus and subway workers. An MTA spokesman declined to comment because the proposal was part of closed-door contract talks.
As Donohue notes, such a move would represent a major sea change in employee operations as currently “the MTA can’t assign a worker in one job title to duties now proscribed to another title.” The union publicly isn’t interested in this measure because it would obviously reduce staffing levels considerably. It would though lead to a cleaner subway system and a more productive workforce as the vast majority of station agent workhours are spent idle.
Where this idea goes from here is anyone’s guess. For the MTA to realize its net-zero labor projections, the TWU can either accept a shift in workrules, reductions in benefits or a smaller workforce. The union is unlikely to fight against its members’ best interests, and this proposal certainly isn’t something the rank-and-file will embrace even if it has the potential to be a big gain for riders and the MTA.
It’s a positive sign though that the MTA is even talking about this move. Since the end of the token era, station agents have had fewer and fewer responsibilities as station environments receive less and less attention. Shifting workrules to create a more productive and passenger-friendly labor force should be embraced.