The NY Transit Strike: At What Price?

December 21, 2005 ( - New York City says that every day of the transit workers' strike will cost its businesses hundreds of millions of dollars in lost revenues, while it seems the pension proposal that started it would have saved the transit authority less than $20 million over the next three years.

The New York Times reports that on the final day of intense negotiations, the Metropolitan Transportation Authority (MTA) had greatly altered what it had called its final offer, to address many of the objections of the transit workers’ union. The MTA improved its earlier wage proposals, dropped its demand for concessions on health benefits and stopped calling for an increase in the retirement age to 62 from 55.

Just hours before the strike deadline, according to the Times, the authority’s chairman, Peter Kalikow, put forward a surprise demand seeking to control the MTA’s pension costs. He asked that all new transit workers contribute 6% of their wages toward their pensions, up from the 2% that current workers pay, and the union decided to strike (See NYC Transit Strike Fueled by Pension Disagreement).

The authority contends that it must act now to prevent a “tidal wave” of pension outlays if costs are not brought under control. In the days immediately before the strike deadline, the union kept pointing out that the authority’s pension demands would save little over the life of a three-year contract.

John Murphy, a pension expert and former executive director of the New York City Employees’ Retirement System, told the Times that he computed that the authority’s pension proposal would save $2.25 million in the first year, $4.8 million in the second year and $7.8 million in the third year. He pointed out, though, that the plan would achieve significant savings in the long-term, more than $160 million in the first 10 years, and by some officials estimates, more than $80 million a year after 20 years.

Other New Yorkers are also questioning whether it was worthwhile for the authority to go to war over the issue when the pension demands would apparently save less over the next three years than what the New York City Police Department will spend on extra overtime during the first two days of the strike. Robert Linn, a former New York City labor commissioner, questioned the transportation authority’s decision – with the backing of the mayor and governor – to fight over pensions with a union that can impose large problems on the city in a year when the authority was enjoying a $1 billion surplus.

Gary Dellaverson, the authority’s director of labor relations, said “If you know a tidal wave is coming and you can still play around in the surf because it’s not here yet, anyone would think that’s foolishness.”

The MTA forecasts a $1 billion deficit in 2009.