Friday, December 23, 2005

Winners and Losers

Subways and buses are running on or close to schedule this morning, which is a tremendous relief to millions of commuters and the thousands of businesses that were adversely affected over the past week.

Normally you would think that there would be winners and losers in the fallout from the transit strike. I would disagree. There were only losers (except that the mediator should be considered a big winner - he'll have new clout in future negotiations). But before I proceed with a dissection of the strike fallout, I think we should keep in mind that most New Yorkers (and this New Jersey resident) do not blame the rank and file for the strike and its fallout, but the union leadership and their enforcers who forced the workers off the job.

Over the last three days, there's been numerous reports that the rank and file are pissed at Toussaint and the leadership for sending them on strike with a certain list of demands, and that yesterday's caving in to the MTA to return to work was a stab in the back despite the fact that none of the demands were apparently met.

The union lost bigtime in the strike. They lost $3 million due to fines, and that doesn't count the individual worker penalties. Will those fines and penalties be wrapped into the new contract? That's a possibility, but they should be paid in some fashion. The fines can't simply be disregarded due to the fact that the union was in criminal violation of a restraining order.

Roger Toussaint is a huge loser. He gambled that the threat of the strike would be sufficient to ram through his outlandish demands. He was wrong. And then he was wrong to think that people would rally behind his union once they went on strike. People increasingly saw that the union was too greedy by half and therefore gave them the Bronx cheer. The union's bargaining position is actually worse off than before the strike was called.

The rank and file are losers. They're both going to be lighter in the pocket, and some New Yorkers may take their anger and frustration out on them. Additionally, the union bosses may go after those union members who crossed the picket lines to work despite the call for the strike. They may not recoup the losses from the strike despite whatever new contract is reached. And the long term effect on the union may be negative because their strike fund was depleated, the union leaders are split on strategy, and rank and file may be disillusioned over the direction the union took.

The MTA is a big loser. With the union, they brought this strike on themselves. Accounting has never been a strong suit with the MTA - often accused of have two sets of books - and fanciful accounting practices result in wide swings in revenue projections that only feed union thoughts of big raises. Fact is that the MTA has little money to deal with operating budgets, let alone capital budgets. The $1 billion 'surplus' was a fiction and the money was badly needed to prop up the existing pension fund.

Mayor Bloomberg is a loser in this because he's got to deal with the fallout of the strike. He's got to figure out how to fill the hole in the budget punched by the strike. Personally, he may have broken even in terms of popular support on how he handled the strike, but the long term fallout of the strike will make his job more difficult. Calling the union bosses thugs doesn't really help, even if it was true. And his tough talk was late in coming to prevent the strike.

Gov. Pataki was a loser because he didn't deal with the striking harshly enough soon enough. One can argue that if the Governor had called for strikers to return to their jobs within 24 hours of first calling the strike or else they'd be looking for new jobs before the strike was called, this situation may have been averted. And his oversight of the MTA has been sorely lacking - demanding better accountability and transparancy on the books.

As I noted above, small businesses were a huge loser in this strike because they lost three days of prime retail shopping leading up to Christmas and Hannukah. At least one business is seeking to sue the MTA and the union, but their chances of winning their case are slim to none. Prior suits against the union and MTA have not been successful. That's not going to stop prospective class action suits being filed.

Taxpayers are going to be big losers - they're going to have to incur whatever new agreements are reached between the union and MTA in the form of increased fares or tax increases. As an editorial by H. Dale Hemmerdinger notes:
Two key points to keep in mind about the financing of mass transit are that (1) labor costs represent more than 60 percent of all operating expenditures and (2) fares cover just under half of those costs, with taxes making up the rest.

Any contract that increases the cost of labor, therefore, inevitably means some combination of higher fares and more taxes.

The changes sought by the MTA, on behalf of the riding public, recognize this reality. They link raises to productivity enhancements that would permit higher pay without raising costs. They also want to control the exploding cost of future retirement benefits by changing the pension system for workers hired in the future. Without such changes, the MTA's contributions to the pension fund will increase from $480 million in 2004 to $770 million in 2008 — and continue to rise thereafter.

One curious potential winner - online shopping outlets. With people unable to do shopping at their usual bricks and mortar stores, did people go online to do their holiday shopping? It will take time to determine just where and how people did their last minute holiday shopping.

The inevitable question of who's to blame is going to make the rounds in the punditocracy: there's more than enough to go around as I've been reporting for the last week. Others seem to concur.

The hopefuls weigh in. A number of candidates for governor of New York have weighed in on what they'd do if facing a strike. William Weld, Patrick Manning and John Faso all said that they'd fire the striking workers, though Faso said that he'd make an exception for those workers who crossed the picket lines. Eliot Spitzer, the current Attorney General hasn't taken a position, but he was involved in the lawsuits against the union to seek the injunction and enforcement of the Taylor Law.

Prior Coverage: Strike Over?
Seeing The Humor in Striking
Three Strikes and You're Out?
Rogering New York
A Pox On Both Their Houses
The Pension Gap
The TWU to NYC: We're Gonna Strike
Taking Sides in the Transit Strike

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