As New York State and New York City prepare for a crucial round of collective bargaining talks with their public employee unions in the year ahead, the strike-averting contract agreement between the Metropolitan Transportation Authority (MTA) and the Transport Workers Union (TWU) could represent a costly precedent.

Each of the 34,000 members of TWU Local 100 will reportedly receive a flat $1,000 per-member bonus in 2003, plus wage hikes of 3 percent per year in each of the final two years of the three-year pact.

New York City’s contract with its largest cluster of unions—District Council 37 of the American Federation of State, County and Municipal Employees (AFSCME)—has already expired, and other municipal labor pacts will come up for renewal in the next several months. The major state employee contracts all expire at the end of the current state fiscal year on March 31, 2003.

In the past, the transit workers’ contract has sometimes been viewed as creating a “pattern” for other labor agreements, particularly on the city level. If this becomes the case during the next round of collective bargaining, resulting in contracts duplicating the MTA-TWU agreement, the added city budget expense would range from $300 million in fiscal 2004 to $1.2 billion in 2006. So far, however, Mayor Michael Bloomberg’s plan for closing a $6.4 billion budget gap over the next 18 months includes no money at all for pay raises over the next three years.

If the TWU agreement was applied to the entire state government workforce, the same deal would cost $725 million a year when fully implemented. But, like Bloomberg, Governor George Pataki is grappling with massive budget gaps that leave little room for pay hikes. Indeed, the city and state will need to find ways to reduce their payrolls, although both the Governor and Mayor have stressed they would rather avoid layoffs.[1]

The previous “pattern”

The 1999 contract between the MTA and the transit workers, which expired Dec. 15, had awarded TWU members pay increases worth 12.5 percent over three years—almost double the rise in inflation during the same period. New York City’s subsequent labor negotiations produced a series of contracts calling for wage increases of 12 percent to 16 percent over periods ranging from 27 months to just under three years.  Meanwhile, New York State’s unionized workers received pay increases totaling nearly 14 percent in their most recent four-year contracts.[2]

In addition, many city, state and MTA workers effectively received pay increases of up to 3 percent when the Governor and Legislature agreed in 2000 to eliminate pension fund contributions for those with 10 years’ experience.

The true cost of the transit workers’ deal—and, by extension, any agreements patterned after it—will depend on the true nature of the “productivity” concessions that TWU members reportedly agreed to in exchange for the wage increases in the final year of the deal.

Mayor Bloomberg has identified increased productivity as a prerequisite for wage increases in the city’s future contracts, while Governor Pataki has not revealed his bargaining strategy for state contracts. Given the immense size of the budget gaps facing both levels of government, and the unions’ traditional resistance to meaningful productivity reform, the most affordable result for the city and the state in the short term would be the kind of pay freeze the MTA management sought—but, in the end, failed to get.

Originally Published: FISCALWATCH MEMO

Notes

  1. The state estimate is based on quarterly payroll reports from the Office of the State Comptroller. The city estimate is based on figures used by the city Office of Management and Budget as the basis for the 1999 of collective bargaining, inflated slightly to adjust for subsequent wage increases and changes in the size of the workforce. In both cases, wages and pension contributions are inflated by 6.09 percent; as in the case of the reported MTA-TWU deal, the initial $1,000-per-worker bonus is not counted as part of the permanent wage base.
  2. The current state contracts were retroactive to 1999 but were not settled until the spring of 2000, several months after ratification of the last TWU contract.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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