Gov. Andrew Cuomo couldn’t wait until Christmas to give away his presents. As Transport Workers Union members delayed buses — as if anyone can tell that the bus runs more slowly! — and threatened a strike to disrupt the holidays, the state-subsidized Metropolitan Transportation Authority came through with a contract for the TWU’s nearly 37,000 members Wednesday night. The cost of this deal will sit on the taxpayers’ credit card long after the New Year.
At first glance, the agreement doesn’t appear so bad. For the first year (this year), TWU workers will get a 2 percent raise. That’s higher than the going 1.8 percent inflation rate, sure, and it will cost the MTA about $72 million.
But the MTA says it will offset that with $44 million in savings. The MTA will save a little money — $27 million annually — by discouraging workers from using expensive emergency rooms and encouraging them to use generic drugs. (Most people in the private sector have been similarly “incentivized” for years, with high out-of-pocket emergency-room and drug costs.)
The MTA will save a little more money — $17 million — by using the radical technique of getting people to show up for work. Last year, transit employees worked just 210 days on average, the equivalent of 10 weeks’ vacation.
High sick leave and the like push up overtime, but the union has agreed to get people to work an extra day and a half a year. Both the union and the MTA will share in any savings above one day.
So, altogether, the first year of this agreement will cost riders and taxpayers about $28 million: the $72 million in raises minus the $44 million in savings. Not great, considering the MTA is broke, but against a $17 billion annual budget, hardly breaking the bank. There’s even some other good stuff in there, like an agreement that the union and the MTA will work together to find other savings, sharing in the proceeds.
But you have to read the fine print. Though the “average” raise, over four years, is 2.3 percent, the raises escalate every year. This year’s raise is 2 percent, but the raise for 2022 — the final year — is 2.75 percent.
This may seem minor — but against the MTA’s huge payroll, it’s a lot. Though raises will cost $72 million extra this year, they’ll cost $310 million extra by 2022, relative to what the MTA had planned to spend on subway and bus payroll that year.
But don’t the savings go up every year, to match the higher costs? Well, that isn’t at all clear — and it makes a big difference. Raises are guaranteed, but savings aren’t.
The new MTA labor agreement, then, increases the authority’s annual costs, starting in 2022, anywhere from $100 million a year to $265 million a year — depending on whether the MTA can turn its first year of $44 million savings into $175 million in annual savings or so by then.
Does this break the bank? Well, yes. The MTA faces a $212 million deficit in 2022, the last year of this new contract. This contract could easily double that deficit — and the MTA already faces a $426 million deficit by 2023.
That’s without a recession — and assuming the MTA can achieve nearly $2 billion in mostly white-collar, non-union savings before then.
The MTA board and the union must approve this contract early in the new year. The MTA board should be queasy about signing off on such unknown deficits so late in an economic expansion.
As for the union: Since its labor agreement has been expired since April, it has proved that good things come to those who wait. More than a decade ago, the MTA scored what it thought was a coup, getting the union to agree to a contract that expires in the spring, not the winter, because it’s harder for riders to walk or bicycle to work in a cold-weather strike. But it doesn’t really matter when the union’s contract expires; the union can wait until the weather changes.
Cuomo — or rather, subway and bus riders and the other taxpayers who subsidize them — is paying dearly for labor peace. The question is how dearly.
This piece originally appeared at the New York Post
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Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. Follow her on Twitter here.
This piece originally appeared in New York Post