1-07-06, 9:53 am

December’s three-day strike by the 33,700 members of New York City’s Transport Workers Union Local 100 was a victory for the workers as they turned back significant pension cuts for future employees. And that victory comes at a time when corporations and state governments are freezing and eliminating pension plans for tens of thousands of workers.

While the strike was a victory, it was stark evidence of a new and far more brutal reality that workers now face across the United States: declining real wages and a broadside attack on health care and pension benefits.

While this scenario has been all too common during periods of recession and fiscal crisis, the current assault on workers is occurring in the middle of an economic expansion and regardless of the employer’s ability to pay.

Like private and public sector workers across the United States, the transit workers in New York should be able to achieve real improvements in their standard of living. New York City is in solid financial condition, the Metropolitan Transportation Authority (MTA) is sitting on a $1 billion surplus, and the transit workers provide an essential service that cannot be outsourced abroad. The transit workers have a strong union and enjoy broad public support.

Up until this point in the post-war history of the U.S., these conditions would provide the framework for workers to secure real wage improvements, enhance their benefits package, build better lives for their families and contribute to flourishing communities.

Instead, the MTA demanded real wage cuts and a two-tier benefits package that would erase the gains the union has made over decades of hard bargaining.

The tentative 37-month contract now up for ratification provides New York’s subway and bus workers with increases of three percent in the first year, four percent in the second and 3.5 percent in the third.

The contract represents a victory over the MTA’s harsh offers. But with inflation in the New York metro area running 3.9 percent for the first 11 months of 2005 and expected to hold near that level in 2006, the three percent increase will not even cover increases in the cost of living. Instead, it will result in a one percent decrease in real wages in the first year of the contract.
Even if inflation in the metropolitan area returns to its 2004 pre-gas hike level of 3.5 percent, the transit workers will be looking at a real wage cut.

In addition, the new contract calls for workers to contribute 1.5 percent of pay to health benefit costs. Combined with the below-inflation wage increases, the total decline in real wages will be substantial.

Average base pay for New York City transit workers is about $46,800 a year – below the average wage for the metropolitan area. This is not an adequate pay level for what are some of the most dangerous and difficult jobs in the city.

Although some media reports have claimed that the strike represented a struggle to maintain middle-class living standards for the transit workers, their current pay levels do not qualify as a middle-class income. New York City is the most expensive city in the United States. Basic living costs are more than double the cost of living in the average U.S. town.

Even if the high cost of housing is removed from the cost equation, the cost of living in the metropolitan area is more than 30 percent higher than in the rest of the country.

The union was still trying to negotiate adequate wage increases when the MTA dropped the benefits bomb, demanding a two-tier package that would force new hires to contribute six percent of their wages to the pension plan instead of the current two percent – the equivalent of a four percent pay cut for new hires.

The MTA also sought to raise the retirement age from 55 to 62, even though the health risks and physical demands of the transit jobs are extraordinarily high.

The MTA agreed to withdraw its demand for pension concessions in return for the 1.5 percent contribution to health benefits. Either way, the new contract will signal a massive change from gradual improvements in the standard of living for transit workers to a gradual decline. The decline would have been far more dramatic if the union had caved into the MTA’s pension demand.

2005 data from the Bureau of Labor Statistics shows that 57 percent of union members are required to contribute to health costs for single coverage, compared with 79 percent of nonunion workers. For union members, the required annual contribution averages $669, compared with $850 for nonunion workers.

For family coverage, 65 percent of union workers are required to contribute, compared with 92 percent of nonunion workers. The average annual union worker contribution for family coverage is $2,378, compared with $3,396 for nonunion workers.

If the contribution of 1.5 percent of pay for the transit workers remains limited to base pay, the average annual payment will be about $700. The proposed contract also calls for many of the transit workers to receive pension refunds from the overfunded plan, which will help offset the new health care costs.

The struggle over basic benefits is now distorting bargaining and making it impossible to negotiate fundamental provisions for wage improvements. The only way to ensure basic health care and retirement income and reverse the decline in real wages is to move basic benefits out of the existing employer-based system.

A national health care system and a federal pension plan provided through a vastly expanded Social Security system are the only way to guarantee benefits for U.S. workers and put wages back at the center of bargaining where they belong.

From Labor Research Association