NYC Transit Strike
I’m sure everyone in New York is relieved that the transit strike has been settled. The buses and trains should be running by tomorrow morning.
The blogs that I read have generally been supportive of the striking transit workers, strongly so in the case of landismom and Lindsay Beyerstein, moderately so for Laura at 11d. By contrast, my family in NYC had very little sympathy for the strike, even though they’re generally liberal and pro-union. They argued (and I agree) that it was the working class — who don’t have the option of telecommuting, who don’t get paid if they can’t make it to work, and for whom the cost of a taxi is a significant portion of a day’s wages — who bore the brunt of the shutdown.
In weighing whether the TWU demands are reasonable, a key issue is whether you’re comparing them to an abstract ideal of what workers should received or to the wages and benefits that other workers actually receive. Because I don’t think anyone is disputing that their retirement and health package is more generous than most workers receive today, especially when compared to other jobs that don’t require college degrees. And, just as low-income workers often get hostile when welfare recipients get benefits they don’t, lots of people are angry at the transit workers for asking to be able to retire at 50.
Retirement benefits are a particularly tricky issue, because it’s becoming increasingly clear that both the private and public sector vastly underestimated the real costs of the pension promises that they made during the last 30 or so years. Negotiators saw pensions as a cheap concession to make, because they didn’t have immediate cost impacts. Now that the law requires companies — and is about to require governments as well — to calculate the real costs of their future obligations, they’re in trouble. A lot of companies are dealing with it by ducking out of their promises — either converting to defined payment plans instead of defined benefit plans, or just dumping the whole mess in the government’s lap.
Governments — and quasi-governmental entities like the MTA — tend not to weasel out completely, but they’re in a fix too. While I’m not a fan of two-tier benefit systems that treat workers differently depending on when they’re hired, I’m not sure what the alternative is if we don’t want to change the rules on current workers in midstream, but also don’t want to be tied forever to unwise decisions that we made 30 years ago.
December 23rd, 2005 at 6:15 pm
I’m generally somewhat hostile to unions, or at least to public sector unions. I think it’s perfectly fine for Giant or Safeway to have a union: if grocery (or auto or steel) workers go on strike, they and their employers can be scorpions in a bottle for a good long time before they grossly inconvenience the rest of us. When you’ve got people who’ve gotten a stranglehold on an essential public service, and strike making it generally impossible for the society to function, then I think the Coolidge strategy (he fired the entire Boston police force in 1919) and its modern reincarnation (Reagan fired all the air controllers) is appropriate.
The incentives are all wrong for politicians negotiating with public sector unions: the union asks for something where the costs are heavily loaded into the out years, beyond the term of the politician who is negotiating, the politician says ‘yes’, peace is restored, and the taxpayers of 2015 are left holding the bag. Duluth is an example of a system where they have to get some give-backs because they absolutely cannot meet the commitments irresponsibly made by prior government negotiators. It’s hell on wheels there – workers have been counting on something which just cannot be paid for. So yes, I am absolutely in favor of anything which makes this kind of thing transparent, and better yet, make the public entity pay the predicted cost of pensions every year so the pain comes at the same time as the gain.
I myself work in a system (Federal) where there is an older, too-generous pension system and a newer system into which all the people hired after I think 1985 have been placed. The post-85 people have a fairly generous match for a 401k type scheme and a smaller defined-benefit plan than the pre-85 people. I don’t see much bitterness from the new hires – they accepted the terms of employment they were offered.
December 24th, 2005 at 12:51 am
Thanks for your kind comment on Jon’s Friend Dennis on my blog. Jon is doing OK. Being a paramedic he’s only too aware that anything can happen, so he’s dealing.
Are you the Elizabeth I know from several email lists? Runner?
December 24th, 2005 at 3:55 pm
elizabeth, i don’t think the private sector underestimated the pension costs, except possibly the healthcare portion for those who promised it. And even then, the writing was on the wall 15-20 years ago. I’ve been factoring in a 13% inflation rate for our own healthcare spending for years, and to my disappointment it’s generally been a good ballpark figure.
I think the real culprit there was pension law that allowed corporations to deliberately underfund. My guess is their own lawyers and top management were talking about PGBC long ago, and expecting that either the feds would bail them out or simply change the rules again for them, recognizing the impossibility of the financial task.
The real rubbernecking for us younger people, I think, is going to start when the states begin defaulting on pension promises. It’s going to be a disaster for people who never made enough to put anything away, but personally, I’ve got limited sympathy for older state employees who made reasonable money and were capable of reading a newspaper, but didn’t put anything away or vote out the crooks who’ve been building a new plutocracy. Like my PhD in-laws, who heard about Iowa’s underfunding some time ago but still aren’t saving or planning to work longer, as far as I know. Boy, are they gonna be surprised when I pick the kid’s summer camp fees over their mortgage.
The dissonance between older/younger got more audible for me when I went to a synagogue-sponsored retirement-planning talk. I was the only under-40 there; most were 60 or older. The air of assurance & entitlement about the existence of retirement really struck me. That it’s some real, tangible thing — you know, they really will quit work in two or three years, and just hang out, paint, take cruises, go to the doctor, etc. for 20-30 years. It’s astonishing to me. I expect I’ll be working till I’m too sick or slow to work, and then hope the money lasts through the vicissitudes of the next decade or so. One of the women at this talk asked the advisor if things really had changed in the global economy. Astonishing.
(gah. thinking of the years when I spent more on FICA than on groceries, without health insurance, and listening to my grandparents’ wealthy friends rail about $5 Medicare copays.)
December 24th, 2005 at 4:10 pm
Well done post. Here in Texas where nothing is unionized and benefits are minimal I have trouble even comtemplating a job with such generous benefits as General Motors and the transit workers get. I can understand why they don’t want to let go what is THEIRS but wish they would realize it can’t continue forever and make concessions for those just entering the workforce and align their benefits more toward what the rest of us have (or don’t have)
December 26th, 2005 at 8:17 am
For the next two weeks you can go to read a NY Times article about new accounting standards for planning the costs of health care for public-entity retirees:
http://www.nytimes.com/2005/12/26/nyregion/26benefits.html?hp&ex=1135573200&en=89be9d4811384896&ei=5094&partner=homepage
This is likely to make it at least somewhat harder for worker and city government negotiators to hide from the long term costs of their agreements.
December 27th, 2005 at 2:24 pm
dave, I suspect all it will do is make the public “can’t carry de burden, massa” theatre happen sooner. Because it’s true. The states and cities can’t. The tax base won’t. At which point the rules will change, and the promises will turn into good intentions.
The thing is, this is not a new game. This is what happened 25 years ago in the steel mills, when the reality was that it was not possible anymore to sell steel while paying the steelworkers good money. We could’ve subsidized Beth Steel up the wazoo and it’d still have gone bust in the end; it couldn’t compete. Even if the managers had pulled their heads out of the 18th hole and modernized, it still wouldn’t have been competitive. So the retirees will yell, AARP will yell, the old people will come out and demonstrate, and the whole structure will still crumble. Not because the plutes are greedy, but because we can’t afford to give 70 million old people 30-year vacations with four-star medical coverage.
You can try raising the money through taxes, but I guarantee that fairly quickly, the 18-40 contingent will make that a dangerous thing to do politically. It may take them a few years to figure out what’s happening, but they will.
It’s why it’s always nicer to get paid up front….One of the things those financial planners told me was that it was useless to try to really plan, at this point, for my retirement 30-40 years from now, because God knows what’ll be in 30-40 years. All I can really do is make what I can and sock away as much as I can, and try to stay healthy. I think they’re right. Look, I save in my own name, but in the end I don’t make the rules, and I don’t keep the peace.