Adjusting for inflation, the 11.3 percent pay hike awarded by an arbitration panel to Local 100 of the Transport Workers’ Union (TWU) this week appears to be the transit workers’ biggest score since the disastrously generous contract settlement that ended their 1966 strike.  Indeed, by some measures, this year’s increase will be even larger.

mquill-14-3091116
Somewhere, he’s smiling: the TWU’s Mike Quill

The 1966 deal cost $60 million–about $400 million in today’s dollars.   This week’s arbitration award will cost $600 $465 million over three years.  And that largely unbudgeted expense, when fully effective, will eat up nearly one-third one-fifth of the new payroll tax imposed under the MTA bailout.*

Of course, a lot has changed over the past 43 years.  For example:

  • In 1966, while the city’s economic strength was eroding, it was also benefiting from a strong national economy.  Wages, personal income and employment were still growing, and Wall Street was booming.  Today, New York is struggling to emerge from its deepest and sharpest economic downturn since the Great Depression.  Much of Wall Street is in financial ruins, its largest survivors propped up by the federal government.
  • In 1966, the subway system was run by the city, and Mayor John Lindsay–or “Linsley,” as then-TWU boss Mike Quill called him– could be personally held accountable for the bungled contract negotiations.  Today, the transit system is part of a state-controlled authority. The MTA’s decision last fall to punt its largest and costliest labor agreement to arbitration conveniently leaves no one to hold accountable, other than the unelected “public” appointee to the arbitration panel–real estate lawyer and former deputy mayor  John Zuccotti.

Revising from our post earlier this week, here’s a chart comparing the TWU arbitration award to current economic indicators and projections (from the city Office of Management and Budget):

CORRECTION: The base year for these three-year trend comparisons is 2008; thus the chart title should read “2008-11”

mta-wage-chart1-7320612

* This line originally was incorrect, because it conflated cumulative with annual costs.   The annual cost of the pay raise will reach $272 million in 2011, according to the arbitrators’ opinion.   This is 18 percent of the amount that the payroll tax is likely to be raising by then, assuming no significant next increase in total wages in region during the meantime.

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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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