Public Transit's Labor Madness

Despite some positive steps, the industry's outdated pension and disability policies continue to be a sweet deal for workers and a costly one for taxpayers.
by | November 6, 2013

There is at least one sign of progress in an agreement hammered out last month that will give Bay Area Rapid Transit (BART) employees raises of 15.4 percent over four years. But the bulk of the contract is a reminder that mass transit is in a class by itself when it comes to costly and outdated labor policies.

The good news is a provision that gives workers for the San Francisco Bay area rail transit system an incentive to focus on customer service by offering bonuses of up to $1,000 a year if ridership exceeds projections. But the rest of the contract reflects the labor relations of another time -- a time that nevertheless lives on in the transit industry.

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It might seem to be a positive step, for example, that the new contract marks the first time BART employees will contribute toward their own pensions. They will pay 1 percent of their salary in the first year, with their contribution increasing by a percentage point each subsequent year until it reaches 4 percent in the final year of the contract. But the contract also includes a "pension swap" that adds 72 cents to workers' base pay for every dollar they contribute toward their pensions.

While contracts like BART's might seem surreal to most people, they are routine in the transit industry. A 2011 agreement with employees of the Boston area's Massachusetts Bay Commuter Rail Co., which operates the Massachusetts Bay Transportation Authority's commuter-rail service under contract, marked the first time the workers contributed toward their health insurance. The deal required employees to pay $40 a month going back to 2009, $50 a month starting in 2010 and $60 in 2011. These retroactive payments were simply deducted from the workers' retroactive raises.

Perhaps the most amazing transit labor story of all comes from the Long Island Railroad (LIRR). Under a provision of the federal Railroad Retirement system that covers many commuter rail workers, retirees can claim disability for jobs they no longer hold. The Railroad Retirement Board approves about 98 percent of disability requests. As a result, each year from 2003 to 2007 between 93 and 97 percent of LIRR employees over 50 who retired with 20 years of service also received disability benefits. The 2,000 employees who retired during that period collected $250 million in disability payments.

There's more. I recently wrote about how California transit workers will be exempted from the state's recently enacted pension reforms until at least the end of 2014 while the courts determine whether the reforms violate Section 13(c) of the Federal Transit Law because the benefit reductions were not arrived at through collective bargaining.

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Part of the transit labor madness is because of federal provisions like 13(c) and Railroad Retirement. Another is due to the simple reality that public-sector managers bargain using taxpayers' money, not their own.

By itself, fixing the mass-transit labor mess would not free up enough money to fund governments' future pension obligations or meet our myriad transportation infrastructure needs. But bringing some sanity to transit industry collective bargaining agreements will have to be part of any serious effort to meet those larger challenges.

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