Saturday, December 17, 2005

The Perils of Relying on Public Transit

Will a public transit strike in NYC cripple this town? Perhaps Newman from Seinfeld will offer commuters rides on his rikshaw? How would this City adjust to this surprise?

Relative to their next best employment opportunities, public transit workers seem to have a pretty good deal; namely elatively high pay, early retirement (age 55!) and health insurance.

Alberto Alesina has done some interesting work examining how public employment varies by city. It would interest me what city level characteristics predict whether a city has a "lean and mean" public sector versus a bloated payroll. I would predict that in pro-union states that do not have Right to Work Laws that we are more likely to see the bloated urban public sector. So What? Cities have to run balanced budgets so somebody's taxes have to be raised to pay for these large expenditures. What is the deadweight loss in this case? Clearly urban land owners implicitly pay for inefficient local government.

December 17, 2005
New Yorkers Wait for Word on How They'll Get to Work
The day after the strike deadline came and went, the day after the city went to bed not knowing what to expect, it seemed yesterday that New Yorkers had finally started to take the threat of a transit strike seriously. And they were not happy.
After serenely assuring themselves earlier this week that brinkmanship would not give way to an actual strike that would shut down subways and buses, people around the city sounded decidedly more pessimistic yesterday.
"Businesses are going to suffer like mad if there's a strike," said Keith West, 38, who makes deliveries for a linen supply company. "There's going to be a lot of hostile drivers because of the car pooling. It's going to be impossible to drive on the roads. Yesterday our company had to do a double shift just in case there was a strike today.
"Personally, I think they're both being stubborn," he added. "It makes me angry. At Christmas, it's not fair to us."
The union announced yesterday that if no agreement was reached, it would strike on Monday at two bus companies in Queens that have been taken over by the Metropolitan Transportation Authority. And it set a new strike deadline for the entire transit system: 12:01 a.m. Tuesday.
Paul Shatraw, 50, a stay-at-home father from Carroll Gardens, Brooklyn, said the union should work for a time without a contract, if that is what it takes to make a deal. And he warned that whatever good will the public has for the workers could evaporate quickly.
Yet most of the dozens of people interviewed yesterday still sounded more sympathetic to Transport Workers Union Local 100 than to a transportation authority whose actions and officials it has long been civic sport to mistrust.
"I think the T.W.U. has legitimate grievances," said Chris Gordon, 52, a manager with Verizon who lives on Staten Island and works in Manhattan. "I think the M.T.A. was ham-handed in their negotiations strategy. How in the name of God with a billion-dollar surplus they could cry poverty, I'll never know."
Dan Kinckiner, 42, who lives on Long Island, said he did not look forward to getting around the city to visit the clients of his security company without public transport.
"I think both parties are wrong," and the union is asking for too much, he said. But moments later, he added, "I'm not opposed to the strike if they need to in order to get people to listen." As for the transportation authority, he said, "If you have a big surplus, give some back."
Several riders mentioned the holiday fare discounts that the authority is giving, and said they show how well the authority is doing - or show, at least, an insensitivity to the workers during contract negotiations.
What was perhaps most striking was how little the authority's arguments have gotten through to its customers - about deficits looming in future years, enormous debts, mounting pension and benefit costs, and the notion of some rough parity with the great mass of American workers who have had to make concessions on health care, wages and productivity.
Ben Carver, a financial consultant who lives in Bay Ridge, Brooklyn, was one of the few people interviewed who focused his ire squarely on labor. Then again, he is a newcomer to the city, not yet steeped in the culture of bashing transit-system management.
Mr. Carver, 23, says he thinks unions are outdated. "Cutting off everyone's transportation as leverage is ridiculous," he said. "I don't think it's an ethical thing to do."
He would get no argument from Greg Wirth, an actor who lives in Battery Park City and commutes daily by subway. "I almost feel like the threat of a strike is a shakedown."
Far more common was the view of Oscar Lopez, 30, a driver who works with Mr. West for the linen supply company. A strike, he said, "is going to hurt everything," including his ability to navigate the city's streets. But when he argued against a strike, it seemed as much out of concern for the transit workers as anything else.
"I hope they get what they expect to get, but if they go on strike, I don't think that's the way to do it," he said. "Their job is on the line. They'll have to pay fines. It's something they have to think about."
Tamara Powell, 40, who works as a security guard in Astoria, Queens, ordinarily rides the Triboro bus line, one of those the union has threatened to strike on Monday. Yesterday, she was thinking less about the right and wrong of the contract dispute than about the $7 to $9 she would have to pay for a cab to work, and again to get home, if there is a strike.
"It's going to tap into the money I have for Christmas," she said. "I have no benefits, so if I lose a day I don't get paid."
Ann Farmer, Janon Fisher and Colin Moynihan contributed reporting for this article.


Tom Slee said...

I may be unfairly conflating your opinions with those of some other economists, but it has often seemed to me that the only form of response to incentives that economists deem somehow wrong is the response of forming a group.

Surely the formation of a union and the collective pursuit of higher wages is a perfectly reasonable (rational even) response to incentives. You are suggesting that in NYC there is a "deadweight loss" in public welfare, but relative to what? Relative to a world in which employees leave aside the option of working together, and instead participate independently in the labour market -- a market which is, after all, plagued with all kinds of other failures. There is presumably also a "deadweight loss" relative to other worlds in which the options of individuals are even further restricted, but I'm not sure I see this as relevant. And would you see a company who gives its CEO a large pay increase as "inefficient" or would you suggest that their pay is driven in some sense by the market?

I guess what I am driving at is that I've always thought there is an arbitrariness as to what activities are considered market activities (and so part of efficiency) and which are considered extra-market (and so inefficient).

Anonymous said...

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