The MTA's bad faith

The New York Times is reporting that the MTA and the New York City transit union had nearly reached a deal to avert a transit strike when an MTA negotiator derailed the talks with a last minute demand: tripling the pension contributions for new employees.

All this to save a measly $20 million over 3 years?

But then, just hours before the strike deadline, the authority's chairman, Peter S. Kalikow, put forward a surprise demand that stunned the union. Seeking to rein in the authority's soaring pension costs, he asked that all new transit workers contribute 6 percent of their wages toward their pensions, up from the 2 percent that current workers pay. The union balked, and then shut down the nation's largest transit system for the first time in a quarter-century.

Yet for all the rage and bluster that followed, this war was declared over a pension proposal that would have saved the transit authority less than $20 million over the next three years.

It seemed a small figure, considering that the city says that every day of the strike will cost its businesses hundreds of millions of dollars in lost revenues. But the authority contends that it must act now to prevent a "tidal wave" of pension outlays if costs are not brought under control.

Roger Toussaint, the president of the union, Local 100 of the Transport Workers Union, said the pension proposal, made Monday night just before the 12:01 a.m. strike deadline, would effectively cut the wages of new workers by 4 percent.

"They're trying to beat down wages for our new workers," Mr. Toussaint said yesterday.

The MTA is trying to cripple the union one way or another. At the last minute, they asked the union to choose between a self-undermining contract that pitted new workers against their senior colleagues and a financially devastating illegal strike.

Comments

[The Continental Op]

The MTA should be roundly condemned for forcing this strike by insisting on a two-tier pension system. Under NY state law, public employee pensions are not subject to collective bargaining; they are controlled by the legislature. So, it is illegal for the MTA to insist on negotiating over its proposed changes. Perhaps the court should impose a $1 million/day fine on the MTA until they withdraw their demand? (In my dreams!)

[Rob Bate]

So who knows why binding arbitration isn't a sane resolution to this conflict and why did the TWU strike rather than submit to it? Is arbitration a function of the administration or is it truely neutral?

One complaint I heard from a TWU worker was dangerous conditions involving metal dust, asbestos and other unhealthy conditions, but these were used as a justification for retirement with pension at 55 rather than a demand that the work enviornment be made healthy.

How specifically does the TWU contract compare with their peers in other cities and other service unions in NYC like the police, fireman and teachers? I haven't heard any word from those unions in support of the TWU, are they legally prevented from commenting? Also why is the national TWU not supporting the local?

[Uncle Kvetch]

Rob, my understanding is that the NYPD and NYFD are fairly similar to the MTA in terms of pensions and early retirement.

As for the question of inter-union support, this is from today's NY Daily News:

At a rally last night outside Pataki's office only hours before the new midnight deadline, Patrick Lynch, head of the Patrolmen's Benevolent Association, reminded every union member what was at stake.

In a fiery speech, Lynch talked about his own father, a former transit worker who had walked the picket lines in both the 1966 and 1980 strikes and who raised a large family into the middle class on his MTA salary.

"My father was not a criminal in 1966. He was not a criminal in 1980," Lynch said. Then he pointed to the uniformed cops on the other side of the barricade.

"Their hearts are on this side with you," he bellowed as the crowd erupted in cheers.

[The Continental Op]

Rob poses some good questions, to which I offer these responses:

1) My understanding (from a source close to the union) is that the union is opposed to arbitration on democratic grounds--it would mean that the rank & file would not have the opportunity to vote on their own contract, which would instead be imposed by an arbitration panel. The union has good reason to be suspicious of the arbitration process in general, since the grievance arbitration process for TWU has long been a joke, until, under Toussaint's leadership, the union started to insist on following the rules (much to the chagrin of the MTA). That said, an arbitration panel would almost certainly side with the union on the key sticking point--the MTA's proposed pension changes, since (as I noted in my prior comment), this is not a lawful subject of bargaining.

2) There is no love lost between the TWU International and Local 100/Toussaint. It is a matter of internal union politics. Personally, I find the International's failure to show solidarity to be absolutely shameful, but not all that surprising given the history there.

[AB]

Well, I don't think it's entirely fair to say that raising pension contribution rates is somehow an outrageous demand b/c it will "only" save $20 million over the next three years. I mean, if you've read up on or studied the nature of pensions and retirement funds, you know that the amount saved over the next three years is a pretty inappropriate measure for whether 2% or 6% or 10% or whatever is a sustainable level.

I mean, thinking about it for a few seconds, you realize that the percentage of workers contributing 6% at the end of the next three years is likely to be a pretty small fraction of their total workforce. The real question is whether in 20 or 30 years, when the majority of workers are putting in 6%, is that a sustainable level to continue funding pension obligations? The only way that the billion-dollar current surplus should be relevant is by figuring out, if they put the entire thing in the pension fund, how much of the pension obligations would be funded by that in 20 years.

I think the risk is that since it's politically hard to make unpopular reforms that don't make anyone happy now, the question of the long-term viability of this pension plan will get pushed off and pushed off and pushed off. Then, when the billion dollar surplus is but a faded memory in everyone's mind, the city is running such huge deficits over this that (a) it goes the GM route and simply terminates the pension, screwing over the workers *way more* than a 4-point bump in their contribution rate; or (b) it continues to fund the pension but is forced to "find" the money in other, less popular programs (ie, Medicaid or food stamps or immunization programs or childhood development programs). Not good.

I sympathize with the argument that having some workers pay 2% and some 6% is not good for union solidarity. But to me, the answer seems to lean towards slowly bumping up current worker's contributions towards the 6% over a number of years.

[Rob Bate]

Besides the issue of union autonomy and a defense of a union's right to strike, the main issue seems to be the tiered pension system where new members would be required to pay 6% (an additional 4%) of their wages into their pension funds, thus effectively transferring the liability from the state to the workers. I take it the pension itself is not the issue, only who funds it.

The $20 million figure touted in headlines is over the next 3 years when there would be relatively few workers being so burdened, however the costs to the workers would become increasingly heavy (collectively though not individually) and the savings to the state increasingly great as time passed. Therefore to characterize the $20 million number as petty is a red herring.

Are pension costs rising now and are they projected to rise to unsustainable levels in the years ahead or is the state trying to roll back existing benefits as part of a partisan conservative agenda to reduce the size of government? Is AB's vision where the pension would have to be funded by the state at the expense of entitlement programs like Medicaid the likely alternative to an increase in employee contributions, or is Bloomberg and the MTA being disingenuous when talking about budgetary restraints?

As for arbitration, it seems like a just solution if it works like this description from the NYT

"The union and the Metropolitan Transportation Authority would each choose one member of the panel, known as an "impasse panel." The union and the M.T.A. would each have the right to strike names from a list of candidates for the third member of the panel."

unless there is a larger issue where there is an agenda to further erode labor strength to the benefit of the capital class.

I really don't know what reform and progress are in this strike. Is Bloomberg a plutocrat bent on stripping worker's rights and freedoms or is Toussaint a Marxist demagogue bent on crippling the system, or both, or neither?

Thanks for the feedback.

[JC]

AB, you can't ask union officials to agree to a measure that would destroy their union. They're there to represent their members. That's why it's an outrageous demand. The TWU willingly made concessions after 9/11, but there's no way they can go along with this. Asking new workers to pay more into the pension system would pit them against their fellow workers, they'd feel like they'd been sold out, and eventually there wouldn't be a union anymore, and then the city would really ram through some nice concessions. The MTA knows this, that's why they did it, way to say thank you for all the cooperation the TWU has given over the past few years, and they knew that there's no way in hell that the union could agree to it. A two tiered system would finish the union.

Rob, I don't know the exact procedure for arbitration in New York, but I do know the political system there is similar to my state. My sister works for a union, and because we've had Republican governors for years, they've appointed anti-union people to every governoring body, including the state labor relations board. As a result, the union is very reluctant to take cases to the board, even in situation where the law is ambiguously 100% in their favor, because with these types of political appointees who are actively hostile to public sector unions, the chances of an adverse ruling that defies the law and sets a very bad prescendent, and which there may be no opportuinty to appeal, is very high. Since both the powerful state actors in this case, the mayor and the governor, are taking a very high profile position against the TWU, I don't blame them for doubting the process. Also, NY has some really draconian labor laws that would not even be constitutional in other states.