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The Pension Play
December 21st, 2005

Although the union is getting most of the flak for the transit strike, some observers question the Metropolitan Transportation Authority’s Monday night offer to the Transport Workers. It would have increased wages and no longer called for raising the retirement age. But, Steven Greenhouse reports in the Times, the MTA introduced a “surprise demand” that new transit workers contribute 6 percent of their wages toward their pensions, up from the current 2 percent. This would save the authority less than $20 million over the next three years — far less the city will lose in a single day of the strike. But for new workers it would, the union says, amount to a 4 percent pay cut – a problem for someone making around $30,000 a year.

Blaming Governor George Pataki for the plan put forth by MTA Chair Peter Kalikow, Wayne Barrett writes in Power Plays,
“The same governor who could find unimaginable billions in pension goodies when he was still running in this state was ready, once he knew he’d never run again, to provoke a devastating strike over a few million in pension savings.”

Robert Linn, a former New York City labor commissioner, also questions the MTA’s decision. “They might have picked a union that was more willing to consider the subject,” Linn told the Times. Even E. J. McMahon, of the Manhattan Institute, no fan of unions, expesses doubts: “On one hand, the transit workers are the hardest union to bring this up with. On the other hand, this has really put a spotlight on the pension issue.”

Juan Gonzalez in the Daily News writes that Mayor Michael Bloomberg “apparently wants … the TWU to accept a two-tier pension system. Then he can get all the municipal unions to follow suit and accept a weak new pension tier in their next contracts…. There was no need for this strike.”

And why, asks Reality Based Educator, is the press, except for Gonzalez, Greenhouse and a few others, playing along with the MTA. Self interest perhaps? The blogger writes that Daily News owner Morton Zuckerman ” is an infamous union-buster,” that the News itself has a “history of ugly contract negotiations and strikes” and that “most newspaper publishers or TV conglomerates have an interest in union-busting and tailoring a line that the workers are ‘selfish’ and ‘greedy.'”

By on December 21, 2005, 9:42 am
In category: Gotham City,Public Finance,Transportation | 3 Comments »

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3 Responses to “The Pension Play”

  1. IB Says:
    December 21st, 2005 at 1:37 pm

    Not to suggest that this latest post is misleading, (and in fact I have enjoyed this blog and the Gazette as a pleasant alternative to the major media sources) but did that NY Times article not also indicate that that $20 million savings over 3 years, could also turn into much larger savings over the course of a longer period of time:

    John J. Murphy, a pension expert and former executive director of the New York City Employees’ Retirement System, said he computed that the authority’s pension proposal would have a modest saving at first: $2.25 million in the first year, $4.8 million in the second year and $7.8 million in the third year.

    G. Paul Burnett/The New York Times
    Roger Toussaint, president of Local 100 of the Transport Workers Union, announced the strike at union headquarters around 3 a.m. More Photos >
    But he said the plan would achieve significant savings, more than $160 million in the first 10 years, with some officials estimating that it would save more than $80 million a year after 20 years.

    Mr. Dellaverson said it was important for the authority to try to control its pension outlays even in a year when it had a surplus. The authority’s pension outlays for the transit workers have soared to $453 million this year, triple the amount in 2002.

    “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,” Mr. Dellaverson said.

    That wave, he suggested, is a continued rise in pension costs and the authority’s forecast of a $1 billion deficit in 2009.

    Mr. Dellaverson said the week of negotiations at the Grand Hyatt hotel in Midtown were unusual because the union made hardly any firm counteroffers. “The longer you wait to start to address the problem,” he said, “the more dramatic the changes must be to address them.”

    I wonder if there is any information, or analyst who suggests otherwise, or has a different proposal to this situation?

  2. anonymous Says:
    December 21st, 2005 at 4:29 pm

    I think you, and Steven Greenhouse, have misrepresented the facts here. Steven, by burying the real financial details on his second page, and you, by not even citing it.

    This math problem is not linear, it’s exponetial, as an economist cited in Greenhouse’s article pointed out, and as one of your readers cited.

    As more new workers are added, more money is saved. There is no way that NYC can sustain the current pension plan for more than another decade. I for one, don’t want to have to pay $10 for a subway ride*, but that’s where we are headed without a TWU contract that has some grounding in the financial realities of the next few decades.

    We’ll probably be paying this price by the end of the decade, perhaps not directly, but certainly through municipal taxes taxen from other programs and used instead to fund MTA liabilities.

  3. Del Davis Says:
    December 21st, 2005 at 7:06 pm

    Why did the mayor not mention this two tier retirement plan with the teacher’s when the negotiated their contract?

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