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Lessons of the Strike: Pension Pickle


Lessons of the Strike: Pension Pickle

December 23, 2005
Public SectorOther

Among many other things, this transit strike has been a learning experience for a whole new generation of Yorkers too young to remember issues raised by municipal labor unrest of the 1960s and the fiscal crisis of the 1970s.

Roger Toussaint of the Transport Workers Union has overreached in a way that should have other public labor bosses grinding their teeth. It's been at least 30 years since so many New Yorkers have been forcefully reminded of the cushy retirement deal available not just to transit workers, but to public employees in general.

Unlike the strike of 1980, which came at a time of double digit interest rates and raging inflation, this illegal stoppage wasn't mainly about wages. Millions of people had their lives disrupted this week not because the TWU was demanding a bigger pall raise than the final offer from the Metropolitan Transportation Authority, but because the union insisted that its future members in perpetuity should be entitled to retire in their mid 50s with guaranteed pensions equal to one half of (overtime swollen) final average salaries.

The exchanges of the past week have highlighted at least a couple of important points:

First, despite its temporary cash flow surplus, the MTA has an urgent need to rein in its exploding future operating costs. Having employees contribute more to funding their benefits is by no means the sole solution, but represents an essential first step.

Second and notwithstanding the authority's effort to negotiate the issue with the union government employee pensions ultimately are a matter of state law, not labor agreements.

The second point has especially broad implications for the whole state. It means that even if the MTA "loses" by failing to win pension concessions in the pending contract, the issue of pension reform remains very much alive.

The MTA isn't the only government employer faced with huge retirement legacy costs. Every level of government in the state, including New York City, has been increasingly strapped by rising pension obligations and growing retiree health benefit costs will exacerbate the problem over the next decade.

Far fetched as it may seem, given the state Legislature's shameless pandering to unions in recent years, there is a historic precedent for reform in this area. During the 70s fiscal crisis, the Legislature created a series of new pension "tiers" to scale back the benefits of public employees.

The transit strike was nothing if not a crisis and others will almost surely follow if something isn't done about the pension problem.

The key actor now is Gov. Pataki. Having spent the second half of his gubernatorial tenure making a variety of costly concessions to unions, Pataki turned a corner when he allowed the MTA (which he controls) to make an issue out of public pension costs. Better late than never.

In the year he has left in the governor's office, Pataki has a chance to build on the heightened public awareness and anger generated by the 'TWU's self destructive militancy. Mayor Bloomberg has already made it clear he wants the state to enact pension reform for city employees. The governor should lose no time in proposing a comprehensive restructuring of pension benefits for every level of government in New York which, at the very least, will finally put the issue on the table in Albany.

In the meantime, as the negotiations continue, Pataki's priorities should be obvious: Insist that MTA Chairman Peter Kalikow drives the hardest possible bargain with the TWU, and avoid setting any precedents or making any deals that tie the hands of the next governor.