Transit Labor

We spent much of last week concerned about the most recent round of Second Ave. Subway delays, and in doing so, a potentially explosive story concerning New York City Transit slipped through the tracks. According to a report in the Daily News last week, Transit took a $1 million hit and jeopardized a strong position vis-a-vis its labor relations when it allowed potential worker health care contributions to lapse.

Pete Donohue broke the story last week:

The transit workers contract reached after the December 2005 bus and subway strike allowed management for the first time to make paycheck deductions to help defray soaring expenses. The rate – 1.5% of earnings – went into effect retroactively for 2006. It could be increased annually and was bumped up to 1.53% for 2007.

While health care expenses continued to escalate for the agency, NYC Transit managers opted not to hike the contribution rate for 2008. Instead, transit brass agreed with Transport Workers Union Local 100’s interpretation of the contract on how to determine if contributions should be increased or kept flat.

The decision has raised eyebrows inside and outside the Metropolitan Transportation Authority. Interim MTA Chief Executive Officer Helena Williams was concerned last month after learning NYC Transit, the main subway and bus division, didn’t increase the contribution rate, a statement released by MTA spokesman Jeremy Soffin said. Williams asked the MTA auditor to do a “full review.”

“Ballooning health care costs are putting enormous pressure on the MTA’s budget, and escalating employee contributions are critical to defraying these costs,” Williams said.

According to union leaders, Transit officials were concerned that they would lose on the issue in arbitration. With relations between the union and the MTA so tenuous as late, Transit reportedly did not want to risk pushing the issue.

The next day, former MTA Chair Peter Kalikow expressed his outrage over the news. “What did we go through a strike for?” he said to Donohue. “So we could give it back to them? It’s outrageous.”

On Friday, the Daily News editorial board called Transit President Howard Roberts a subway sellout. “He must be held accountable,” they wrote while Kalikow chimed in with his own op-ed. He called it a “shady deal” and claimed that the union “has wormed its way out of paying anything for health care.”

I’m not so sure I can get that worked up about this announcement. Roberts’ decision will probably cost the MTA around $1 million and may cost them up to $4 million, if everything goes wrong. Meanwhile, any improvement in labor relations could save the MTA far more than that.

As I’ve written about this year, the MTA has some serious labor problems. They are beholden to a very generous pension plan with escalating costs threatening to get out of hand. This health care story is hardly worth the trouble. Maybe another contractual interpretation would have bolstered the MTA’s position, but maybe it wouldn’t have. Perhaps I don’t see why ex-MTA officials are so up in arms, and as interim MTA head Helena Williams looks into this issue, I doubt she’ll find much.

As the MTA’s economic comes to a head this week with Senate and Assembly votes due on a funding plan, the agency is searching for money every way it can. One of those options — eschewing pay raises for its workers — may just start some labor unrest at at time when the MTA can least afford it.

Pete Donohue reported on Friday that the MTA has informed union leaders it does not have the money raises this year. This is sure to go over poorly with a generally defensive union. Writes Donohue:

Metropolitan Transportation Authority CEO Elliot Sander has invited union officials to meetings next Tuesday to discuss the fiscal crisis that has the authority preparing to raise fares up to 30% and enact deep service cuts. Sources said Sander will announce the MTA can’t afford to pay even the meager 1.5% raises, totaling about $50 million, included in its austere budget approved in December.

The contract with the largest union – Transport Workers Union Local 100, representing bus and subway workers – expired in January. An arbitration panel is charged with dictating the new terms of a contract. Citing the opinions of labor experts, The News reported exclusively on Tuesday that a wage freeze was possible because arbitration centers on an employer’s ability to pay raises and provide improved benefits.

The MTA wouldn’t reveal if it intends to ask the arbitration panel to maintain the existing pay rates for approximately 36,000 bus and subway workers.

This is the unmentioned underbelly of the MTA funding crisis. Many union jobs will be lost either through attrition or flat-out firings; others won’t see raises; and the agency is under increasing political pressure to rein in the bureaucracy.

Right now, the MTA could really use the support of its union, but that may require union leaders to compromise publicly. A political move like that could be a dangerous one for a fiercely protective union.

Over the next few weeks, I’m going to roll out some employment- and benefits-related stories concerning the MTA’s financial position and its workers. This effort by the MTA to limit pay raises may just be the tip of labor ice berg.

Late last week, MTA CEO and Executive Director Elliot Sander predicted that the transit authority and the Transport Workers Union would be able to avoid another strike as the TWU contract is set to expire later this month. While the two sides have been negotiating for the last few weeks, they are not going to come to a negotiated resolution and will instead head to arbitration.

A few minutes ago, the MTA released the following statement:

Over the past several months, the MTA and TWU Local 100 have discussed a possible agreement on a contract effective January 16, 2009. However, due to complications associated with today’s current economic climate, we have reached an impasse and have jointly decided to arbitrate contract terms.

The Union, on the other hand, does not seem as optimistic:

After months of discussions with the M.T.A., a settlement could not be reached. As the contract moves to arbitration, we wait to see whether transit workers will be treated fairly or in a manner disparate to the other workers who serve this city.

While arbitration is not as ideal as a negotiated contract and can lead to animosity further down the road, both sides have so far seemed willing to do what it takes to avoid a strike. That is, of course, good news for straphangers, but today’s development throws a wrench into those plans. The TWU is obviously not too happy about the arbitration development, and another strike would probably throw MTA bailout efforts into turmoil.

I’ll have more on this development as the story develops.