MTA TWU Wage Negotiations: A “Fair Increase” Will Not ...

MTA-TWU Wage Negotiations:

A "Fair Increase" Will Not Increase Fares

January 2012

The contract of the Transport Workers Union (TWU), the union representing about 38,000 employees of the New York City Transit and MTA Bus divisions of the Metropolitan Transportation Authority (MTA), expired on January 15, 2012. The MTA, facing out-year budget gaps, is depending on a three-year wage freeze to balance its budget; the TWU has rejected this offer and demands a "fair wage increase." Negotiations are continuing, but if they reach an impasse, the parties may file for arbitration with the Public Employment Relations Board (PERB). The TWU and MTA have gone before PERB in the last 2 rounds of collective bargaining, for the contracts covering 2009 to 2012 and 2005 to 2009.

The case would be heard by a tripartite panel whose decisions are binding upon both parties. The panel would be composed of one representative appointed by the MTA, one appointed by the TWU, and one member, who chairs the panel, jointly appointed by both parties. The statute1 that provides for the arbitration process makes explicit the factors that the panel must weigh in coming to its decision, but does not specify how much weight should be given to each factor.

The stakes of the settlement are significant. The MTA's dedicated sources of revenues are volatile and were hard hit by the recession,2 and recent State agreements and the uncertain economic climate place revenues further at risk. Riders have already experienced fare increases in tandem with service cuts, and are fearful that a downward turn in negotiations will lead to a transit strike similar to the one that crippled New York City in 2005. Workers would like improved benefits and safety precautions, while the MTA would like to loosen work rules so as to improve efficiency and prevent further deterioration of its finances.

To determine what a fair wage increase for transit employees would be in the current fiscal climate, this report applies the criteria specified by PERB for determining arbitration awards. It finds that the public interest will be served by an agreement that maintains a good standard of living for workers, is within the MTA's ability to pay, and does not force further harm upon riders; in short, a fair increase will not increase fares or reduce service.

CITIZENS BUDGET COMMISSION

Two Penn Plaza, Fifth Floor New York, NY 10121 540 Broadway, Fifth Floor Albany, NY 12207 T: 212-279-2605 F: 212-868-4745 cbcny

Kenneth Gibbs Chairman

Carol Kellermann President

The Citizens Budget Commission is a nonprofit, nonpartisan civic organization devoted to influencing constructive change in the finances and services of New York State and City governments.

This policy brief was researched and written by Maria Doulis, Director of New York City Studies. Rahul Jain, Research Associate, provided significant research contributions. Charles Brecher, Consulting Director of Research, offered editorial suggestions.

January 2012

A FAIR SETTLEMENT: ARBITRATION CRITERIA

There are five factors that an arbitration panel must consider to make a determination:

(1) Overall level of compensation, including salaries and wages, paid leave, and fringe benefits;

(2) Comparison of compensation and work conditions to employees performing similar work and to other employees in New York City;

(3) Changes in the cost of living, as indicated by average consumer prices;

(4) Financial ability of the MTA to pay award and the impact on fares and services;

(5) Public interest and other factors.

Each of these is analyzed in turn.

Overall level of compensation

TWU employees receive a salary, overtime pay, longevity increases and other pay; in addition, they are also entitled to benefits that do not provide direct cash payment. Vacation, holiday and excused time, health insurance, pensions and other fringe benefits add significantly to the value of compensation, and any improvements or reductions to wages and these benefits (except for pensions) must be collectively bargained. As a result, compensation decisions assess the overall level of compensation, not merely salaries and wages.

Salaries and Wages. The most recent salary schedule shows current hourly wage rates for 45 titles represented by the TWU. Wages range from a low of $16.11 for traffic checkers to a high of $35.51 for electronic specialists working at Woodside.3 Bus and train operators, the positions with the greatest number of employees, earn a minimum of $29.95 and $31.87 an hour,

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respectively. Most positions (26 out of the 45) make at least $30 an hour, amounting to $62,400 a year as a base salary.4

The hourly wage rate is supplemented in several ways. Employees earn "differentials" for working on nights, weekends and on some holidays. Employees are also eligible to earn overtime pay at a rate of time and half; typically this adds about 15 to 20 percent to base salary, as shown in Table 1. In addition, senior employees earn annual longevity differentials of $200 a year after 15 years, $300 after 20 years, $400 after 25 years and $500 after 30 years on the job. An employee with a $30 an hour wage can earn over $72,000 with these additional payments.

Table 1: Average Wages of New York City Transit Full-Time Employees in Selected Titles, 2010

Bus Operator Revenue Train Operator Cleaner Station Agent Conductor Car Inspector Track Worker Signal Maintainer/Helper Bus Maintainer B Bus Maintainer Chassis Light Maintainer Collecting Agent Bus Maintainer A Electronic Specialist Car Maintainer Bus Maintainer Body

Full-Time Employees

9,390 3,108 2,966 2,669 2,663 1,948 1,687 834 827 492 491 300 238 201 173 124

Average Wage

$73,166 $78,218 $52,826 $63,789 $67,621 $74,757 $69,292 $81,359 $79,783 $83,530 $75,197 $63,082 $71,989 $77,163 $68,986 $78,563

Average Average Overtime Pay as Overtime Pay a Share of Average Wage

$16,539

23%

$14,813

19%

$4,579

9%

$10,295

16%

$12,588

19%

$2,833

4%

$12,113

17%

$17,944

22%

$17,933

22%

$20,870

25%

$11,108

15%

$7,001

11%

$9,800

14%

$6,455

8%

$2,501

4%

$17,631

22%

Notes: Average wage calculated by CBC using the number of full-time employees and total compensation in each title. Full-time employees were determined by comparing reported year-to-date earnings in 2010 to yearly wage that would have been earned at the hourly rate of pay for a 40-hour work week for 52 weeks; if yearly wage was less than 75 percent of year to date earnings, employees were deemed to be part-time employees working less than 30 hours and were excluded from the analysis.

Source: Empire Center for New York State Policy, SeeThroughNY: Payrolls: Public Authorities: Metropolitan Transportation Authority: 2010, 2011, .

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CBC used 2010 payroll data obtained from SeeThroughNY to determine the average wages of full-time employees in major titles. Bus and train operators, the most staffed titles, earned $73,100 and $78,200, on average. Cleaners had the lowest average wage, $52,800, and earned little in overtime; on the other hand, bus and signal maintainers worked significant amounts of overtime, and increased their compensation by over 20 percent to about $80,0000, on average. CBC estimated the average wage, including salary, overtime and differentials, for the full-time employees in the transit titles listed on the preceding page to be just over $70,000.

Holidays and Leave. Employees receive 11 paid holidays a year ? including their birthdays ? and one personal day after a year of service. Employees earn additional vacation time according to their length of service. After 1 year, employees receive 10 vacation days, growing to 20 days after 3 years and 25 days after 15 years.

TWU employees are also entitled to paid sick leave that is accrued according to length of service. All employees have 12 standard sick days a year, and after four years of service, can take additional sick leave ? ranging from 15 to 90 days and increasing with seniority ? at 60 percent of their pay. Employees who do not use sick leave for an entire year are entitled to receive a cash equivalent worth two days of leave, to be paid right before Christmas.

Health Insurance. TWU employees are offered comprehensive health insurance coverage. They can choose from plans, which include the cost of prescription drugs, offered by Empire BlueCross Blue Shield and United Health Care.5 Retirees also receive health insurance coverage for themselves and their dependents. Current employees pay 1.5 percent of their gross bi-weekly wages toward health premiums,6 but retirees do not contribute to the cost of their premium. Retirees over 65 receive partial reimbursement of federally-determined premiums for Medicare Part B.

Pension. TWU employees are provided a defined-benefit pension when they retire. The most common retirement plan7 allows employees with 25 years of service to retire at age 55 with 50 percent of their final average salary, which is calculated as the average of all cash earnings, including overtime pay, in the last three years. TWU members contribute 3 percent of their salaries a year toward the cost of their pensions.

Other Benefits. Employees also receive the benefit of contributions to a childcare fund that subsidizes daycare and afterschool programs for children of employees;8 free uniforms or allowances for uniform cleaning; and $100,000 benefit for surviving spouses of workers killed on the job.

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Comparison of compensation and work conditions

The level of compensation is difficult to evaluate in isolation; therefore, the arbitration statute calls for assessing compensation and work conditions relative to (1) employees performing similar work and (2) other employees, both public and private, in New York City or comparable communities. Because the MTA is a public authority of the State, comparison to State employees is also relevant.

Employees performing similar work in other transit systems

Other large cities have extensive bus and transit operations, but none of them are of the scale of New York City; nevertheless, a comparison to these other large cities can reveal any glaring differences in the level and nature of compensation. For example, if TWU employees receive less than employees in other cities, increasing compensation would be appropriate.

The Federal Transit Administration collects data on the operation of mass transit systems across the country. This source, the National Transit Database (NTD), contains data on over 660 systems and is considered to be the most reliable dataset available for comparing urban transit systems. The most recent data available on employee compensation from the NTD provides total salaries and fringe benefits, including overtime pay, sick leave, holidays, health insurance and pensions, for 2010. CBC calculated the average hourly rate of compensation per employee and the average yearly compensation for vehicle operations and vehicle maintenance employees using data provided by the NTD on the number of positions and hours worked.

The data indicate that the value of overtime and other benefits add substantially to the value of compensation received by TWU employees. While the most recent salary schedule shows hourly wage rates of approximately $30 an hour for bus and train operators, the NTD data indicate that, when benefits are properly accounted for, hourly compensation is closer to $60 and $70 an hour for bus and train operators.

The results also indicate that TWU employees are well compensated relative to their counterparts in other large transit systems. TWU heavy rail and bus vehicle operators average over $140,000 and $120,000 in compensation, respectively. Both earn at least $20,000 more than their counterparts in the second highest-paying systems, a difference of 20 percent for train operators and 25 percent for bus operators.

Compensation for vehicle maintenance employees is similarly high relative to other systems. TWU heavy rail vehicle maintenance employees average the highest hourly rate of compensation at close to $60 an hour, 10 percent greater than the second-place transit system in Philadelphia (SEPTA). TWU heavy rail vehicle maintainers earn over $95,000 in annual compensation on average, almost twice what's earned by their counterparts in Atlanta. On average, bus vehicle maintainers earn $117,660 in MTA Bus and $125,260 in New York City Transit, the highest of all bus systems, although counterparts in other systems also make over $100,000. Only San Francisco bus maintainers average a slightly greater

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hourly rate, though their average annual compensation does not surpass New York City Transit or MTA Bus workers.

Table 1: Hourly Rate and Annual Compensation of Urban Transit Employees, 2010

Agency Name

New York City Transit Chicago Transit Authority Los Angeles Metro. Transportation Authority Massachusetts Bay Transportation Authority Metropolitan Atlanta Rapid Transit Authority Miami-Dade Transit Southeastern Pennsylvania Trans. Authority Washington Metro. Area Transit Authority

HEAVY RAIL

Vehicle Operators

Vehicle Maintenance

Hourly

Annual

Rate Compensation

Hourly

Annual

Rate Compensation

$68.55 $51.40 $50.51 $50.32 $30.13 $57.56 $51.72 $54.58

$140,176 $87,159 $106,841 $90,092 $71,154 $117,394 $100,765 $101,906

$59.58 $49.38 $49.95 $50.42 $42.25 $24.37 $53.95 $52.27

$95,295 $82,924 $98,077 $94,587 $85,551 $47,758 $112,140 $90,320

Agency Name

New York City Transit MTA Bus Company Chicago Transit Authority King County Dept. of Trans.- Metro Transit Los Angeles Metro. Transportation Authority Massachusetts Bay Transportation Authority Metropolitan Atlanta Rapid Transit Authority Miami-Dade Transit New Jersey Transit San Francisco Municipal Railway Southeastern Pennsylvania Trans. Authority Washington Metro. Area Transit Authority

BUS

Vehicle Operators

Vehicle Maintenance

Hourly

Annual

Rate Compensation

Hourly

Annual

Rate Compensation

$58.61 $56.86 $49.03 $48.11 $42.09 $52.16 $33.94 $39.94 $44.35 $49.87 $48.95 $46.55

$120,908 $123,962 $87,126 $78,930 $99,029 $90,135 $60,816 $79,359 $78,055 $99,272 $92,695 $87,327

$63.68 $56.20 $53.58 $57.31 $47.33 $50.92 $37.76 $45.03 $43.95 $65.74 $48.53 $58.13

$125,259 $117,657 $95,738 $101,133 $95,290 $91,688 $74,512 $87,958 $86,003 $116,662 $92,932 $106,274

Notes: Compensation includes total salaries, wages and fringe benefits, including overtime pay, health insurance and pensions. Average hourly rate of compensation per employee and annual compensation calculated by CBC data on number of positions and hours worked available from National Transit Database.

Source: Federal Transit Authority, National Transit Database, Operating Expenses & Transit Agency Employees, 2010.

TWU employees operate the transit system of a city that never sleeps, and their increased pay may reflect the added complexities of their job; however, the large discrepancy between the average

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compensation level of TWU employees and employees of all other systems indicates that a large wage increase is not necessary to compensate TWU employees fairly for the type of work they perform.

New York State and City Public Employees

TWU employees receive the same types of benefits as other public employees: they earn overtime pay, have comprehensive health insurance coverage, and enjoy the retirement security of a defined benefit pension. Arbitrators consider wage increase or benefit changes negotiated by other public employee unions, as well as the special circumstances of each union and the relative generosity or paucity of contractual benefits.

The "Pattern"

Collective bargaining agreements for State and City public employees typically follow a "pattern" that includes a series of similar wage increases, benefit changes and/or productivity measures.

Governor Andrew Cuomo recently settled contracts with the two largest civilian unions in the State. The contracts provided for a wage freeze in the first three years and a 2 percent increase in the fourth year.9 The agreements also increased required employee contributions toward health insurance premiums, with higher earning employees making a higher level of contribution.

In New York City, almost all union contracts have expired. The City's financial plan assumes a three-year wage freeze for all employees and a five-year wage freeze for teachers and principals. The City's contributions to the welfare funds, which provide prescription drugs and other supplemental benefits not provided under the City's health insurance plans, have been frozen since 2006.10 Mayor Michael Bloomberg is pursuing broad health insurance changes, including increasing vesting periods for health insurance benefits, implementing premium sharing for all plans, and eliminating Medicare Part B reimbursements, in negotiations with the Municipal Labor Committee.11

In sum, the pattern set by the State and advocated by the City establishes a three-year wage freeze with added employee responsibility for health insurance costs. MTA has already taken a step in this direction by freezing the wages of managerial and administrative personnel.12 Applying this pattern appears reasonable given the superior salaries of TWU employees relative to transit workers in other systems and the low contribution that TWU employees now make toward the cost of their health insurance coverage.

Special Circumstances

Recent attacks on transit workers highlight the dangers faced by many transit workers, particularly bus operators. Bus operators can fall victim to attack, with 76 assaults reported in 2010.13 The MTA and the TWU reached an agreement in 2009 to equip buses with cameras and clear partitions.14 Partitions are already in use on Greyhound buses and on city buses in Milwaukee and Chicago.15 Cameras have been installed in 195 buses and installations will continue into the spring;16 however, installation of partitions

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has stalled as the MTA has piloted several prototypes in search of a product that works well for all models of city buses and seeks additional funding to furnish them.17 More than 500 new buses have been equipped with a clear partition, but the progress of retrofitting the existing fleet remains unclear.

The MTA's new chairman, Joseph Lhota, has recognized the importance of safety for transit workers, signing a letter with TWU President John Samuelsen to New York City's district attorneys requesting strong prosecution for those who assault bus drivers. A greater priority should be placed on the safety of TWU employees and on accelerating the installation of the clear bus partitions.

Relative Comparison

There is one area ? maternity benefits ? in which TWU members receive relatively poor benefits and two others ? health insurance and pension benefits ? in which TWU members fare better than other public employees.

Maternity Leave. The TWU contract does not provide for any additional maternity leave beyond that required by the U.S. Family and Medical Leave Act, which allows for up to 12 weeks of unpaid leave. Public employees are typically allowed to deplete their available paid leave and may elect to take unpaid leave for extended periods of time. New York State employees represented by the Civil Service Employees Association may request a seven-month, unpaid leave of absence that may be extended for up to two years. New York City employees represented by District Council 37 are eligible for up to 48 months of unpaid child care leave for children up to the age of four.18

Health insurance. TWU employees make only a modest contribution to the cost of their lifetime health insurance coverage. Like New York City public employees, TWU members do not pay directly any share of the cost of their health insurance premiums; however, they do contribute 1.5 percent of their base pay toward the cost of health coverage. While this contribution was originally negotiated as a share of gross wages (including overtime) that was to rise with the growth in health care costs, it was reduced to 1.5 percent of base pay for a 40-hour work week in the last MTA-TWU arbitration. A hypothetical $30 an hour worker pays $936 a year, or $78 a month, for the cost of coverage for himself and his family. Retirees make no contribution.

In contrast, New York State employees and retirees pay at least 10 percent of their premium costs for individual health coverage and 25 percent for dependent coverage. Most civilian employees now pay 12 or 16 percent for individual coverage and 27 or 31 percent for dependent coverage, depending on the employee's pay grade.19 A State employee with the same salary as our hypothetical TWU employee contributes $4,800 a year, or $400 a month, for family coverage and will continue to make a payment when she is a retiree.20

Pensions. TWU employees are in a defined benefit pension plan that is more generous than the plans for new State employees and some new City employees. In response to financial difficulties, the State adopted a "fifth tier" for new employees in December 2009. The plan included State uniformed and civilian employees and State and City teachers, but did not include MTA employees. New MTA

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