Public Transit’s Costly Compensation Bonanza

As the confrontation over a new contract for New York-area commuter-rail employees reminds us, it's hard to beat the pay and benefits that transit workers enjoy.
July 17, 2014 AT 9:00 AM
By Charles Chieppo  |  Contributor
Principal of Chieppo Strategies and former policy director for Massachusetts’s Executive Office for Administration and Finance

It appears that a strike has been averted at the Long Island Rail Road (LIRR), but the confrontation is just the latest reminder of what a sweet deal most unionized public-transit workers have.

Between base salary and overtime, the average LIRR employee makes nearly $84,000 annually, over 17 percent more than New York's subway and bus workers. LIRR workers' total compensation is 30 percent higher than for employees of Metro-North, which provides comparable commuter-rail service to Connecticut and upstate New York.

Then there are the pensions. A private-sector worker would have to accumulate upwards of $1.2 million in retirement savings to enjoy a pension as generous as the average LIRR benefit. All of this comes in addition to federal labor-law protections that provide displaced transit workers with up to six years of full pay and benefits.

The LIRR is part of New York's Metropolitan Transit Authority (MTA), and the MTA largely caved on salary. It originally offered an 11 percent hike, which it increased to 17 percent over seven years. The unions wanted the 17 percent increase over six years, and the two compromised on a six-and-a-half-year term.

As in so many public-sector labor conflicts, the real battle was over benefits. The MTA wanted LIRR workers, who currently pay nothing toward their health-insurance costs, to pay 4 percent . The unions offered to contribute 1 to 2 percent and once again prevailed when the sides settled at 2 percent.

Current employees will continue to pay a paltry 4 percent of salary to fund their pensions for just 10 years; new employees will pay for 15 years. It's yet another reminder of why benefit contributions should never be subject to collective bargaining.

One reason for the nation's transit labor mess is the mediation process. In this case, two federal panels had sided with the unions, although both were before the MTA sweetened its offer.

One might hope that taxpayers will at some point put their collective foot down, but with the LIRR's unions getting most of what they wanted just six years after a major disability scandal, there is little evidence of meaningful public outrage. The scandal grew from the discovery that during an eight-year period 95 percent of LIRR employees over 50 who retired with 20 years of service got federal disability payments thanks to a regulatory quirk that allowed the employees to apply for and receive disability payments for jobs they no longer held. This exercise in gaming the system cost federal taxpayers $250 million and resulted in 33 convictions for faking injuries, but hardly any workers lost their disability benefits.

LIRR employees and other transit workers deserve reasonable pay and benefits. But it's wrong for transit workers' to get compensation packages that are the envy of teachers, nurses and countless other professionals. Findings like those of federal mediators in this case are the result of decades of bad precedents. Rolling back those precedents and achieving transit-labor sanity will likely take several more decades.

This column has been updated to reflect a tentative settlement in the LIRR contract talks.