Home MTA Economics On the net-zero approach to labor and a tense TWU

On the net-zero approach to labor and a tense TWU

by Benjamin Kabak

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.

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Akiva December 20, 2013 - 6:48 am

Great quote from a great scene from a great movie! Very apropo to content of the article!

Larry Littlefield December 20, 2013 - 7:44 am

“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.”

Here is what they don’t get. According to the American Community Survey, median household income in New York City, and median work earnings per household, fell far behind inflation from 2008 to 2012. The increase in nominal dollars was less than zero, and inflation was 6.6%. Meanwhile, the TWU got two 4.0% raises. (2013 data out next September).

So they have already gotten much richer than the people who have to pay for them, not even including the soaring cost of their tax-free pension benefits.

OK, so how about those in the TWU get richer and richer relative to the rest of us, but make the 1 percent pay for it so we don’t get even worse off? Well, believe it or not the total amount grabbed by the 1 percent in NYC has gone down. And it is still WAY too high, so if people wise up it is going to go down more.

This is the reality of a bankrupt country that has had a false economy for some time. The reason fares are going up more than inflation, and service is constrained, and there is no money for the capital plan, is twofold. Costs from the past deferred to the future. And the fact that those who work for transit (TWU, contractors, commuter rail employees) keep getting richer relative to those who ride, who have been getting poorer. And no one would care how much TWU members got if it didn’t make them worse off still.

aestrivex December 20, 2013 - 9:10 am

How many people does the MTA employ that make anything close to minimum wage (for the sake of defining “close,” say, anything below $13/hr which is somewhat generous by itself given the job market). Are there even non-unionized employees that make that little?

Eric F December 20, 2013 - 9:14 am

Ben seems appalled that a station agent is “only making” $25 per hour. But that’s $1,000 a week, assuming no overtime (which is an heroic assumption), plus gold-plated benefits, to take tickets. What does a comparable private sector job pay? There’s a reason that these jobs are disappearing from the MTA.

Benjamin Kabak December 20, 2013 - 9:17 am

Me appalled by how much a station agent is making? I know you’ve been reading a long time, Eric. I think you’re missing the sarcasm. That’s about $25 too much.

Eric F December 20, 2013 - 10:40 am

Apologies, I did miss it. I’m usually better about that.

Eric F December 20, 2013 - 9:11 am

Do you really think the private sector workers who ultimately pay the TWU’s wages and benefits have been getting raises the past 5 years?

Larry Littlefield December 20, 2013 - 9:35 am

Moreover, public employee union members have been getting HUGE raises. But the unions have arranged for those raises to be hidden from and unappreciated by the workers, AND tax free! How?

They are getting a huge raise in their pensions. But that raise was in 2000. It’s just that as part of the deal, we didn’t pay for it at the time. (In fact, at the time we weren’t even paying for the pensions TWU members were promised to begin with).

We’re paying for it now.

I’ve downloaded all the data the U.S. Census Bureau has collected on currently active NY and NJ public employee pensions over the decades, put it in a spreadsheet, and posted it.

The database is at the end of this post.


This one is on teacher pensions in NY and NJ.


This is on the three big pension plans that cover most workers in NY and NJ, including transit workers.


And this one is on police and fire.


At the end of it is a link to two articles everyone should read.

Spendmor Wastemor December 22, 2013 - 6:31 pm

Those were reckless expenditures.
But it fits with the public character of this region: Government is a source of free money, shovel it out. Votes are to be bought by selling the future. In sum, take everything you can get from anywhere you can get it.
51% of New Yorkers see nothing wrong with this approach to life.

John-2 December 20, 2013 - 9:53 am

Here’s the 2012 Congressional Budget Office report on private vs. federal sector wage and benefit rates. It shows that for jobs requiring above a bachelor’s degree, private sector salaries are better, but with benefits thrown in, even those with Master’s degrees fare better in the public sector. And for jobs requiring less than a bachelor’s degree for employment, public sector wages and benefits combined are way better than what the private sector is putting out. The CBO report doesn’t include state and municipal worker jobs vs. private sector wages and benefits, but the numbers are similar.

Since public sector salaries are derived from taxes, fees and other sources of income — like subway fares or bridge tolls — having the vast majority of job levels in the public sector surpass the pay levels in the private sector just isn’t sustainable, because you use up your outside sources of income and have to dip into other areas to come up with the benefits. So far the MTA hasn’t made the same mistake it and the TA made back in the late 1960s and early 70s, when the cost of the higher TWU contracts was offset by a decision to basically not take care of the rolling stock or the physical plant until something went wrong, but that’s the concern the agency has to look at if wages and benefits there are going up faster than the ability of outside wage-earners and companies to cover the higher costs (and non-transit public sector workers also pay into the costs here, but then you’re simply transferring one facet of public section funding to another, as a taxpayer-supported worker is forced to pay higher transit costs to finance another taxpayer-supported worker).

Larry Littlefield December 20, 2013 - 10:47 am

That’s what it comes down to. You don’t want the public employees earning less that those who pay for the, but you can’t afford to have them earning more.

The worst case? They earn more on average, but only because of pension enrichments for those cashing in and moving out, while the public workers you hire to replace them get screwed — and have qualifications and attitudes that reflect that. Which is where we always end up.

Bolwerk December 20, 2013 - 11:49 am

They can earn more and it can *work* fine. It’s a little offensive that they get more and the rest of us don’t, but what is more offensive is how they get a pension and free health coverage and we don’t.

Phillip Roncoroni December 20, 2013 - 8:58 pm

Is it offensive because you don’t like that they get pensions and free health care, or that you don’t also get a pension and free health care? We have an upcoming retirement crisis in this country, and nothing controlling healthcare costs, so just asking union members to throw money at the black hole that is American health care doesn’t fix it.

Bolwerk December 21, 2013 - 12:40 pm

Personally, I favor universal single-payer care. I could live with any sane system. France and Germany aren’t really universal single-payer.Just why the hell should the MTA be responsible for healthcare? It should be a concern for the state or superstate.

Pensions are more complicated. Defined benefit pensions, including universal defined benefit pensions, work if employers actually put enough money into the system to pay out. Beyond that, it’s mainly an actuarial challenge. Our major problem now, as Larry said, is that we offered the benefit, but put off paying for it for a generation.

I do think if government workers get a defined benefit pension, everyone should. If everyone does not get that right, it’s still reasonable to give government workers defined contribution plans.

Tsuyoshi December 20, 2013 - 4:23 pm

The cost of government-provided services generally goes up faster than inflation. This is because these services are generally less amenable to productivity improvements than other sectors of the economy. The agricultural and manufactoring sectors, for example, are so mechanized that hardly anyone works in them any more, even while absolute production in both sectors has grown. In the long run, employing people is only going to get more expensive.

Comparing the wages of public sector workers to those of private sector workers is not really an effective way to approach this. MTA workers should be paid whatever is necessary to keep them working productively, and no more. You can say, well, we have leverage because they can’t quit and go into the private sector and make more money, but that kind of approach invites some serious morale problems. They can’t (legally) strike, but there are many ways for MTA workers to perform poorly, and reduce their effectiveness. For that reason, on per-employee level, we absolutely should pay cost-of-living increases.

But there are lots of productivity improvements that can be made, which necessarily means employing fewer people. One-person (or even zero-person) train operation is something that we should implement. Buses should have more level boarding and we should switch to proof-of-payment on all buses. More elevators should be installed at subway stations so that people unable to climb stairs can switch away from buses to trains. And we should (although this is unfortunately entirely outside the control of the MTA) discourage development away from existing (and future) subway stations and encourage it near them.

But deciding to do these things to save money isn’t really going to happen in the context of the governor simply declaring that there will be a net-zero labor budget increase. I guess maybe you can get an agreement to start implementing OPTO, but I don’t think you’ll see any immediate efficiency gains from such an agreement.

I hope there are some ways you can reconfigure work rules to make up the gap, but it seems likely that either service will get worse or fares will go up, or both.

Larry Littlefield December 20, 2013 - 6:44 pm

There have been productivity improvements on the subway over the years. Thanks to improvements in equipment and organization, it takes fewer workers to maintain the tracks and cars than it used to. You don’t see big declines in the workforce because some of the productivity is swallowed up by quality gains.

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