LIRR

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.

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.

As the UTU outlined in a release, the PEB decision went something like this. (You can read the full here in PDF form.)

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.