Manhattan Institute for Policy Research.
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      

Wall Street Journal


What Would Reagan Do?

December 21, 2005

By Steven Malanga

A radicalized union that twice before has tried and partially succeeded in shutting down America's largest city is once again holding New York hostage. Using such aggressive tactics, or the threat of them, over the last 40 years, the Transport Workers Union (TWU) has won for its members a wage and benefits package that far outshines what most blue-collar workers in the private sector can earn, including retirement at age 55 with half salary and cost-of-living adjustments.

If New York state and city officials are ever to stop the TWU's recurring blackmail, which has burdened taxpayers and riders with enormous costs, they should use this illegal strike to impose the Reagan solution. Faced with a militant public-sector union that violated the law with a walk-out, President Reagan dismissed thousands of air traffic controllers in 1981 and rebuilt the nation's air traffic system with a new work force. New York's Metropolitan Transportation Authority (MTA) could do the same by terminating striking workers and hiring new ones, because its relatively unskilled unionized jobs are highly sought-after, with over 30 applicants for each position.

Founded in 1934 originally to represent workers in the private sector, the TWU was one of the radical unions that formed the Congress of Industrial Organizations. An early president, Mike Quill, was a member of the Communist Party who reveled in his nickname, "Red Mike." Though Quill quit the party when it refused to back an early transit fare increase (on the grounds that it would hurt the working class), he remained a militant power for decades, especially after New York Mayor Robert Wagner misguidedly signed an executive order giving public employees the right to organize and bargain collectively in 1958. Quill began a predictable cycle: Every few years, during the critical Christmas shopping and tourist season, the TWU threatens to shut down New York if officials don't acquiesce to its demands.

The union first struck on New Year's Day, 1966, John Lindsay's first day as mayor, demanding a 30% wage hike, a four-day, 32-hour work week and retirement after 25 years service. Workers stayed out for 13 contentious days, and though public opinion mostly opposed the strike, in the end the union won a rich settlement, estimated at some $70 million (about $400 million in today's dollars), or twice what city negotiators had originally offered. In 1980, with the city still recovering from the fiscal crisis of the late 1970s, the union struck again, this time for 11 days, and when a judge imposed fines on workers, they simply upped their demands to cover the costs, winning 18% wage increases over two years.

Today TWU bus drivers earn, on average, $63,000 annually, while subway motormen make $54,000 and subway cleaners $40,000. Workers get full health benefits, make no contributions to insurance premiums and can retire after 25 years of service or at age 55. The MTA has an unfunded pension liability of $1 billion. Given the strike, one might think the MTA is asking for significant givebacks of these perks. Hardly. It asked to push the retirement age back to 62 for new workers but dropped that demand and is now merely asking that they contribute 6% of their pre-tax salaries toward their pension for their first 10 years on the job, as well as pay 1% of salary for health insurance. By contrast, the TWU demanded that the MTA lower retirement age to 50 for its current workers and grant 8% wage increases over the next three years.

In heavily pro-union New York, these kinds of demands are not only taken seriously but often prevail. Nearly three-quarters of all government workers in the Greater New York area are unionized, the highest level of public-sector unionization of any major metropolitan region. With so much muscle, they typically earn 15% more on average in wages than private sector workers, according to a recent study by New York's Citizens Budget Commission. When porcine benefits packages are added into the mix, total compensation is often 50% greater. The cost of all this has become a huge burden. New York City's pension and benefits costs have soared 60%, or about $4 billion, in just four years. The transit system's pension costs alone have tripled since 2002, while the bill for health benefits is up 40%.

Public unions rarely have to strike to win such benefits. The vast and growing political power they wield in state legislatures and city halls is usually enough to swing contract negotiations in their favor. But the TWU has always been a militant organization, whose leaders, egged on by the membership, seem engaged in a game of one-upmanship even with other unions.

But now New York officials should take a page from President Reagan's playbook: The MTA should start sending out termination letters to striking workers for breaking the law, and hiring a new work force—including offering jobs to current workers, but on terms set down by the MTA.

While rebuilding the work force, transit officials could unleash the privately owned van services and bus lines, which they currently prohibit from operating along public bus lines, to protect the MTA's and the TWU's monopoly. The MTA should begin handing out long-term contracts for these operators to provide alternate, competitive services on a permanent basis.

New York officials should also privatize big chunks of the transit system, as many other cities in the U.S. and abroad are doing. For the past 50 years New York has unfortunately moved in the opposite direction, preferring to take over private lines and to house transit operations in a gigantic state agency, the MTA, or to offer no-bid franchises to a few politically connected and heavily subsidized private lines -- all in the mistaken belief that having workers on the public payrolls would prohibit strikes and make the system more reliable.

Elsewhere, transit authorities are more like outsourcing contractors than operators, bidding out lines and overseeing routes. Denver and San Diego have contracted 35% of their bus routes. But perhaps the best model is London, where, spurred by Margaret Thatcher, officials began an aggressive transit privatization program nearly 20 years ago. London's bus lines, though designed by the city, are now operated by some 40 private companies. Only on such a model can New York begin to rein in its high costs and stop repeated union blackmail.

Mr. Malanga, contributing editor to the City Journal, is the author of "The New New Left" (Ivan R. Dee, 2005).

Original Source:



America's Legal Order Begins to Fray
Heather Mac Donald, 09-14-15

Ray Kelly, Gotham's Guardian
Stephen Eide, 09-14-15

Time to Trade in the 'Cadillac Tax' on Health Insurance
Paul Howard, 09-14-15

Hillary Charts the Wrong Path on Wage Inequality
Scott Winship, 09-11-15

Women Would Be Helped the Most By an End to the 'Marriage Penalty'
Diana Furchtgott-Roth, 09-11-15

A Smarter Way to Raise Paychecks
Oren Cass, 09-10-15

Gambling with New York's Pension Funds
E. J. McMahon, 09-10-15

Vets Who Still Serve: After Disasters, Team Rubicon Picks Up the Pieces
Howard Husock, 09-10-15


The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2015 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494