Public unions on trial in the Big Apple
New York's transit workers, even though their strike hit the city hard before a holiday, are at least doing the nation a favor. They've revealed the desperation of powerful public-sector unions to hang on to unsustainable benefits and workplace rules.
The Transport Workers Union, which represents 33,700 workers on the subway and bus systems, decided to disobey a state law against public-worker strikes and started a city-wide shutdown Tuesday - even though the union will suffer steep fines. This drastic action, coming just five days before Christmas and possibly costing billions in losses to the city, only highlights other moves by government- dependent unions to resist recent attempts by state and local leaders to rein in the costs of public services and keep taxes and fees from skyrocketing.
The city's Metropolitan Transportation Authority opposes a union demand to reduce the retirement age from 55 to 50 and to give a 24 percent pay raise over the next three years. (MTA workers now earn between $47,000 and $55,000.) Meanwhile, the MTA seeks greater efficiency for a 100-year-old system by reducing the number of drivers per train and putting automated ticket machines in little-used stations.
But the heart of the dispute is over health benefits. The MTA, like many public-sector bodies these days, wants to reduce the burden of healthcare costs. It's asking that new MTA workers pay 2 percent of wages toward their healthcare and retire at 62. Such changes would help avoid a $1 billion deficit in 2009.
Such two-tier contract offers, while they do pit current workers against future ones, help governments start to deal with the crunch on healthcare and other compensation costs of public workers. The transit workers union is striking for both current and future workers.
Unlike private business, governments can't go out of business if costs are too steep. Only the political will of elected leaders can resist the well-monied clout of unions and serve society as a whole in negotiating contracts or in taking worthwhile actions that may hurt the private interests of public-sector workers.
Today, healthcare costs for state and local government workers are almost double that of private workers, as a percentage of compensation. That's partly because unionization of government workers far exceeds those of private companies.
Under new accounting rules for local and state governments, the real costs of healthcare for teachers, police, and other employees when they retire is due to be fully calculated and made public within the next couple years. Such benefits have been promised for decades, often in good economic times, without accurate budgeting for the future. The resulting costs (and tax bill) could be more than $1 trillion, by some estimates.
Resisting public unions to achieve government reform isn't easy. "It's the union bosses that run the state of California," Gov. Arnold Schwarzenegger says. His ballot initiatives, and his popularity, were shot down recently by wealthy ad campaigns by public-worker unions.
New York's transit strike must be settled soon, and in a way that doesn't once again put the public interest at the mercy of the private interests of public employees.