Wall Street Journal: New York's Subway Woes Could Have Been Avoided

[MTR Admiralty]

New York's Subway Woes Could Have Been Avoided

Get ready for a return to 1970s-style chaos.

By NICOLE GELINAS

 

New York

Unless the state intervenes, in five weeks New Yorkers will face steep fare hikes on buses, subways and commuter rail lines. They'll also face deep cuts in train and bus service. Those who work late will suffer long waits in stations with no employee on duty, inviting unease, disorder and crime.

 

The state's Metropolitan Transportation Authority is facing a $2 billion shortfall this year, with bigger deficits looming in the future. Its officials are planning a huge 30% fare hike while they await action from the political class. How city and state leaders respond will have far-reaching consequences. But the forecast does not look good: With shrinking tax revenues going toward outdated public-sector benefits and social spending rather than to core public services, New York appears to be on a path to ruin frighteningly similar to the 1970s.

 

....

 

The MTA has borrowed partly because labor has consumed cash. Politicians and MTA officials say that the authority's deficit is a direct result of unanticipated economic forces. But that's not the whole story.

 

True enough, the depression in New York's main industry, finance, is doing its damage. But it was an unanticipated bubble in that industry over the past five years that hid the MTA's problems. Thus, in 2007 alone, the authority raked in $1.6 billion in real-estate related taxes that, along with other levies, subsidize its fares. That was nearly double what the authority expected.

 

But the governor and the state legislature (which are responsible for the MTA's leadership) did not use this windfall for capital improvements. Instead, this money papered over labor and debt costs that were growing out of control. Now that bubble-related tax revenue has fallen off, we can see what was covered up. In 2004, for example, servicing the MTA's debt cost $848 million. Three years from now, it will hit $2.3 billion a year, even without much new construction.

 

That is just the tip of the iceberg. Five years ago, the MTA's labor costs were $5 billion. Now they are nearly $7 billion. The big drivers have been pension and health-care costs, up 42%.

 

MTA employees, even those who perform what might be called retail jobs, like station clerks, can retire as early as 55 with generous pension and health benefits. This is not compensation for a lifetime of low wages. Average pay for the MTA's union workers is more than $60,000.

 

The blunt truth is that New York City and state spent the good years giving its public employees generous raises, without asking for benefits concessions in return. City benefits costs, too, have piled up to an unsustainable $13 billion annually. That's a third of the city's tax revenue. Political leaders did nothing about it. When the transit union went on strike nearly four years ago to protect its pension benefits, Gov. George Pataki caved in and kept the status quo.

 

Gov. David Paterson and Gov. Pataki before him (let's just leave out the farce of Eliot Spitzer) didn't even need the unions' cooperation to reduce pensions costs for new workers. Lawmakers could have passed legislation that would have cut benefits and increased contributions without union input. They didn't.

 

Instead the state expanded its Medicaid program, which now costs the city $5.6 billion a year, up 44% over the past seven years. The city, under Mayor Michael Bloomberg, similarly ramped up education spending by 70% to nearly $21 billion. Education spending has shot up 42% faster than spending on the MTA, even though public-school enrollment shrank while MTA ridership soared.

 

So now we're stuck with the same subway system that we had when the financial bubble era started -- even though faster commutes to the outer boroughs are feasible and would improve people's lives.

 

[C]utting service will not stem out-of-control costs. If the MTA ceased all service, it would still have to pay all of its employees' pension obligations and service its massive debt.

 

City and state officials have tried to come up with a bailout plan. But what the governor wants is to impose $2 billion in new taxes and fees -- including a new payroll tax on all employers in the city's five boroughs, Long Island, and five upstate counties served by the MTA. It's hard to see how that will help create jobs in New York. Meanwhile, if the public infrastructure that supports the private sector decays, it will only be harder for private businesses to revive themselves and the metro area's economy.

 

A rate hike in some form is certain (and inflation-linked hikes are appropriate). But the real fix will only come if the state prioritizes the MTA in its budget by cutting spending elsewhere to free up transportation funding. City and state officials should stand together to demand labor reforms, including raising the retirement age and increasing pension contributions for new workers, and requiring all city and state employees to pay more for their health benefits.

 

 

Ms. Gelinas is a senior fellow at the Manhattan Institute, a CFA charterholder, and a contributing editor to the institute's City Journal.

 

http://online.wsj.com/article/SB124061278398254359.html

[metsfan]

Oops. :tdown:

 

- A

[R32 3348]

This woman needs to stop blaming everything on workers. Just my opinion.

[Y2Julio]

They need to stop blaming the rank and file about high employee salary cost. They need to trim the fat from managerial positions, I don't think they need as many line managers, supervisors and superintendents.

[SubwayGuy]

Typical corporate capitalism Wall Street Journal yuppie white collar a-hole serving trash. Yup, blame the blue collar guy actually providing service to the public...screw him for expecting a paycheck for actually serving the customer. He should have gotten a rich mommy and daddy to buy him a college education and a lifetime of political favors so he can sit an office for 12+ hours a day not knowing what the phrase "time and a half" means, with his thumb up his a** providing no actual service to anyone, mired in a stack of papers that means nothing to anyone, doing a bunch of busy work that no one cares about, and sitting around on conference calls with other corporate types all thumbing their a***es... and collecting more money per year than the "stupid" MTA workers who have no real responsibilities, I mean it's not like anyone gets hurt being around trains, right? Yup blame the blue collar guy, he's a dumb guy who's bringing this whole city down. Let's ignore the hundreds of thousands of white collar workers who do NOTHING, collect pay, and don't even provide service who are bringing down the whole system. Let's also ignore the ones who were "providing" service and robbing this country blind the whole time they were doing it. Yup, let's put this all on the TA workers.

 

F**ing stupid, this is why the wall street journal is trash. It's the most expensive toilet paper money can buy, but I guess that's to be expected. These people have learned absolutely NOTHING about WHY we are in a recession and WHAT will prevent us from dropping right back into one in another few years. They're too busy texting their BFFL's while listening to their iPod as they snap at their waiter for putting too much whipped cream in their overpriced double shot mocha frappa wappa latte...

[Joe]

Typical corporate capitalism Wall Street Journal yuppie white collar a-hole serving trash. Yup, blame the blue collar guy actually providing service to the public...screw him for expecting a paycheck for actually serving the customer. He should have gotten a rich mommy and daddy to buy him a college education and a lifetime of political favors so he can sit an office for 12+ hours a day not knowing what the phrase "time and a half" means, with his thumb up his a** providing no actual service to anyone, mired in a stack of papers that means nothing to anyone, doing a bunch of busy work that no one cares about, and sitting around on conference calls with other corporate types all thumbing their a***es... and collecting more money per year than the "stupid" MTA workers who have no real responsibilities, I mean it's not like anyone gets hurt being around trains, right? Yup blame the blue collar guy, he's a dumb guy who's bringing this whole city down. Let's ignore the hundreds of thousands of white collar workers who do NOTHING, collect pay, and don't even provide service who are bringing down the whole system. Let's also ignore the ones who were "providing" service and robbing this country blind the whole time they were doing it. Yup, let's put this all on the TA workers.

 

F**ing stupid, this is why the wall street journal is trash. It's the most expensive toilet paper money can buy, but I guess that's to be expected. These people have learned absolutely NOTHING about WHY we are in a recession and WHAT will prevent us from dropping right back into one in another few years. They're too busy texting their BFFL's while listening to their iPod as they snap at their waiter for putting too much whipped cream in their overpriced double shot mocha frappa wappa latte...

 

This, my friends, is what we call truth.

[RokuSix]

The MTA just needs to prioritize its workers. There are a lot of unnecessary white collar positions in the business that can be trimmed down to size. It isn't fair to take the burden out on the blue-collar workers who really drive the system.

I mean, line managers? Were those really necessary?

[R32 3348]

I mean, line managers? Were those really necessary?

The line manager program is a very good program, IMO, except it was supposed to replace the line superintendent which it still hasn't. That's spending extra money paying workers.

[digitalyuki]

Hi, I've always had a love of the NYC transit system, however I am worried about its future, as a rider that came to NYC in 2003 I came when it was 'good', I am worried it will go 'back' to when there was less service, less people riding (thus more dangerous at night), more trash lying around the stations, more breakdowns b/c of less $$ spent on maintenance. I joined these forums to try to understand better what's going on. So far all I'm seeing is blame going around - MTA workers blaming 'management' or the government, I guess the WallStreetJournal blaming the unions... can we start a serious debate about what the fundamental problems are and possible solutions?

[KTrainExp]

I don't see how less people can ride . More people will ride , but there will probably be less trains. This cannot be classified as an 1970s style case because the ridership is getting higher and higher.

______

 

I agree. What's the point of having a line manager? There's really no point since all the train equipment comes out of the yard. is just paying sitting ducks...

[metsfan]

I don't see how less people can ride . More people will ride , but there will probably be less trains. This cannot be classified as an 1970s style case because the ridership is getting higher and higher.

______

 

I agree. What's the point of having a line manager? There's really no point since all the train equipment comes out of the yard. is just paying sitting ducks...

 

This is gearing up to be a total disaster.

 

- A

[MTR Admiralty]

I don't see how less people can ride . More people will ride , but there will probably be less trains. This cannot be classified as an 1970s style case because the ridership is getting higher and higher.

______

 

I agree. What's the point of having a line manager? There's really no point since all the train equipment comes out of the yard. is just paying sitting ducks...

Agreed, people are actually looking into riding mass transit. Especially during these times, people are either environmentally conscious or find car owning to be a cumbersome part of their life (parking, fuel, etc...) In either case, the subway in the city is a better option for them.

Even with a fare hike and a wave of service cuts, the subway will still be the cheapest and most reliable mode of transport around the city, that's almost indisputable. While there are dollar vans, the subway takes people to a gutload of places throughout the 4 boroughs it serves for 2 dollars (and 50 cents, with the hike).

[Eric B]

Typical corporate capitalism Wall Street Journal yuppie white collar a-hole serving trash. Yup, blame the blue collar guy actually providing service to the public...screw him for expecting a paycheck for actually serving the customer. He should have gotten a rich mommy and daddy to buy him a college education and a lifetime of political favors so he can sit an office for 12+ hours a day not knowing what the phrase "time and a half" means, with his thumb up his a** providing no actual service to anyone, mired in a stack of papers that means nothing to anyone, doing a bunch of busy work that no one cares about, and sitting around on conference calls with other corporate types all thumbing their a***es... and collecting more money per year than the "stupid" MTA workers who have no real responsibilities, I mean it's not like anyone gets hurt being around trains, right? Yup blame the blue collar guy, he's a dumb guy who's bringing this whole city down. Let's ignore the hundreds of thousands of white collar workers who do NOTHING, collect pay, and don't even provide service who are bringing down the whole system. Let's also ignore the ones who were "providing" service and robbing this country blind the whole time they were doing it. Yup, let's put this all on the TA workers.

 

F**ing stupid, this is why the wall street journal is trash. It's the most expensive toilet paper money can buy, but I guess that's to be expected. These people have learned absolutely NOTHING about WHY we are in a recession and WHAT will prevent us from dropping right back into one in another few years. They're too busy texting their BFFL's while listening to their iPod as they snap at their waiter for putting too much whipped cream in their overpriced double shot mocha frappa wappa latte...

The whole ideology is that the blue collar and everyone else struggling are lazy and have not aspired and pushed themselves like those in upper management (or entertainers and sports talent) have. So everyone is getting what they deserve, and any attempt to "redistribute" the wealth (through taxes, salary caps, or us demanding more), is seen as the real "unfairness".

 

One person layed the whole philosophy out:

 

The divide people talk about--between haves and have-nots, the educated and the uneducated--is very often voluntary. Many more people could get rich if they'd simply make an effort to get rich; but few people are willing to make the effort. Anybody could get an education if he wanted to--even if he had to do it the way Abe Lincoln did, borrowing books and learning in his spare time after work. But many people just won't make the effort.

 

If people aren't willing to help themselves, what good does it do to channel a bunch of tax money into welfare programs and such? Do you know how many social parasites are currently leeching off the system?

 

People are still complaining about tax money spent on welfare, even though welfare was reformed almost 13 years ago already! This is amazing! What else do they want? For the poor to give every penny back?

 

All too many people want something for nothing. And IMO they should never get it. Not unless they're really helpless and need to be cared for, temporarily or permanently. No one has a right to anything he hasn't earned. No one (except a child or invalid) has a right to live off other people's money.

 

So we (the ones complaining now, not the nonworking) do not work hard. Only Madoff, the AIG people and MTA management do, I guess.

 

The only thing keeping me from getting rich is the fact that I don't put any effort into it. I've chosen a lifestyle that requires only a modest salary and allows me to enjoy a routine I like; and I'm unwilling to disrupt my routine and start buying and selling real estate or whatever. I don't have much material ambition, and as long as I continue to be this way, I'll always be middle class at best. (But I'd be a lot better off if I weren't enslaved for a largepercentage of the year via taxation.)

 

But I firmly believe almost *anybody* can become rich if he sets his mind to it and puts in the effort. It's an abundant world, full of opportunities. And the only barriers I see are imposed by the government: e.g., all the red tape, regulations, etc.

Most people are where they are because they choose to be--because they aren't willing to put forth the effort to make a big change. And that's just fine with me, as long as they don't whine about it and try to convince me they've been victimized. In most cases, they haven't.

 

Here he even accepts his own lot. But then isn't he complaining about taxes in the same breath?

 

This basically is what the entire country has been lulled to sleep by for nearly 30 years, through the rhetoric of Reagan and other Republican campaigns, the Christian Right to a certain extent, and finally Rush and others. This is why the AIG people figured they could use the bailout money for $89,000 pheasant hunts. They earned it! If others are hurt by the crunch; too bad; they weren't diligent enough to make more money; by their own admission! They themselves even support this. Like Joe the Plumber who gets "scared" of Obama, even though he assures him his tax plan would not affect him. No, if you tax the rich; you tax me, and I'm going to stand with them and oppose you! (Hoping to be one of them one day, but then why don't you just climb the ladder and become one of them now, then? Not as easy as you make it out, is it?) If only that meddling govt. would stop persecuting Madoff, AIG, etc and focus on the real enemies coming across the borders (one of the new scapegoats after welfare) many may even feel.

 

MTA is govt. and not as crass as private industry with the executive earnings, but still we see that as much as the conservative media complains about "government", class mentality still takes precedence, and they will point the blame away from government leaders (like during the 90's, when Gingrich & co were shutting down the govt. because of all it's "waste" including "social programs", yet they were building fancy new office/court buildings and other such waste the conservatives never even mention).

[SubwayGuy]

Great post Eric you obviously get it. I work with these types every day and you really hit the nail right on the head. Their attitudes SICKEN me and I see it every day.

 

Heck one of them even had the nerve to ask "geez which job is worse? To drive the subway or a bus?" and when I responded saying the subway was the better job (better pay, plus considered a "promotion" from B/O) that person responded with something along the lines of "well yeah but they both suck" - NEWS FLASH - a subway operator who puts in minimal overtime makes more in a year than the person who said this

 

They side with the rich but they are not one of them. The rich just laugh at the support they get from people "not in the club" and just keep more for themselves.

 

Working harder has become synonymous with working LONGER and that's just not true. Working hard is a combination of putting in your time, but most importantly being efficient, improving things (including yourself), and being good at what you do. If a subway operator has a put in, and he has to get to the yard 3 hours early because that is how long it takes him to pre-trip his train, he's going to get laughed at by his co workers for taking 3 hours to pre-trip his train. But on the other hand if an office worker can't figure out a spreadsheet that should take them 8 hours, and they work 15 hours, including well into the night and get it done, they still get paid the same but are seen as a real go getter. Meanwhile the guy who gets it done in 8 hours and goes home is seen as lazy and a slacker, or he is seen as efficient and given other people's work so that the inefficient person works 11 and the efficient person also works 11. Both are seen as equally valuable by the company despite the fact the efficient guy is probably doing twice the work of the inefficient one.

 

The double standards in corporate America are ridiculous. It's unbelievable. These people say "work hard and you can do anything" but in reality it's "you can do anything within a set range of possibilities and that's it, so work a lot and show people that and maybe you will make it to the top of that, but no further". No one will say it but it's true. It's a big club and the average American isn't in it, which is why it's so shocking that they all spout this crap. The reality is the not-rich like to view themselves as rich, so they side with the rich. Most think they are more hard working than they really are, and most think they are more ambitious than they really are. So they side with those who they want to be like, rather than what they are. And all they end up doing is hurting themselves because the policies they promote are policies that actually hurt them. And they're too busy working late and brown nosing those above them to realize it!

[MTR Admiralty]

Great post Eric you obviously get it. I work with these types every day and you really hit the nail right on the head. Their attitudes SICKEN me and I see it every day.

 

Heck one of them even had the nerve to ask "geez which job is worse? To drive the subway or a bus?" and when I responded saying the subway was the better job (better pay, plus considered a "promotion" from B/O) that person responded with something along the lines of "well yeah but they both suck" - NEWS FLASH - a subway operator who puts in minimal overtime makes more in a year than the person who said this

 

They side with the rich but they are not one of them. The rich just laugh at the support they get from people "not in the club" and just keep more for themselves.

 

Working harder has become synonymous with working LONGER and that's just not true. Working hard is a combination of putting in your time, but most importantly being efficient, improving things (including yourself), and being good at what you do. If a subway operator has a put in, and he has to get to the yard 3 hours early because that is how long it takes him to pre-trip his train, he's going to get laughed at by his co workers for taking 3 hours to pre-trip his train. But on the other hand if an office worker can't figure out a spreadsheet that should take them 8 hours, and they work 15 hours, including well into the night and get it done, they still get paid the same but are seen as a real go getter. Meanwhile the guy who gets it done in 8 hours and goes home is seen as lazy and a slacker, or he is seen as efficient and given other people's work so that the inefficient person works 11 and the efficient person also works 11. Both are seen as equally valuable by the company despite the fact the efficient guy is probably doing twice the work of the inefficient one.

 

The double standards in corporate America are ridiculous. It's unbelievable. These people say "work hard and you can do anything" but in reality it's "you can do anything within a set range of possibilities and that's it, so work a lot and show people that and maybe you will make it to the top of that, but no further". No one will say it but it's true. It's a big club and the average American isn't in it, which is why it's so shocking that they all spout this crap. The reality is the not-rich like to view themselves as rich, so they side with the rich. Most think they are more hard working than they really are, and most think they are more ambitious than they really are. So they side with those who they want to be like, rather than what they are. And all they end up doing is hurting themselves because the policies they promote are policies that actually hurt them. And they're too busy working late and brown nosing those above them to realize it!

Good post

[digitalyuki]

So I guess this thread is more about the classic fight between 'blue-collar' and 'white-collar'? I'm a total newbie, but do you guys know where I can find a good post on the general problems the has had up to this point and what possible options are available as a fix? I mean, long-term, not just a 'bailout' - that seems a temporary solution.

 

Also it seems that semi-private, semi-public_service organizations like the MTA are caught constantly between not hemmoragging money and making sure the large majority of their users' needs are met. Are there models in any other state or country of a well-balanced public transportation system, that is both run well and isn't a large financial burden on the supporting government? Or perhaps the examples of well-run systems (Japan, etc) also cost a lot, but more is allocated to it due to the more socialist governments?

 

I know I'm throwing several thoughts but bear with the newbie B)

[Jah]

I mean, long-term, not just a 'bailout' - that seems a temporary solution.

 

 

This so called "bail out" if done properly would be a long term fix. They need to give the MTA a few DEDICATED funding sources.

[SubwayGuy]

This so called "bail out" if done properly would be a long term fix. They need to give the MTA a few DEDICATED funding sources.

 

Exactly and property tax revenue tied to a housing bubble in an economy dominated by the finance industry and the wild swings it can go through because of the stock market is not it. MTA might as well just play the slots at AC if they're going to continue to get a lot of their funding that way.

[Y2Julio]

 

This so called "bail out" if done properly would be a long term fix. They need to give the MTA a few DEDICATED funding sources.

The funny thing is that, the .375% in the 8.375% NY sales tax goes to the MTA.

[Jah]

The funny thing is that, the .375% in the 8.375% NY sales tax goes to the MTA.

 

And I have a charge on my cell phone bills for the MTA also and everyone has a cell phone these days.

[Rapid Transit TO]

Sure the problems could have been avoided, quite simply really... Had the state kept out of meddling in the transportation business, and let the free markets control the service, as it ORIGINALLY was, there would be no costs incurred to the state for health care or pensions, ect..

Granted, private operation of the subways was always a thorn in the 'elected' representatives side, but they had no financial obligations to keep it running soundly.. (read '722 Miles' by Hood for pre- history of the subway) Its the same old song, everybody wants something for nothing.. It wouldn't be in the sad state as it is if the state & city PAID what they USED/should pay, rather than the pittance they do now.. If the city & state make money off the transit system functioning, then they should equitably contribute to keep it functioning. Bloomberg's campaign propaganda last election cycle said the city has always posted a surplus. Of course it has, when you don't pay your share of transit costs! Let me pose, what other state agency is expected to be totally self sufficient? DOT, DEC, DEP, State Legislature? State Police? Could you imagine the tickets if the state police budget was 100% funded by revenue generated by the dept? If is supposed to operate as a private entity, then so be it, and just as any private firm in its financial position, go bankrupt & go under. OR treat it as a division of government, with the understanding it costs money to operate & will not be self sufficient, and needs funding from people & business' served by the service. One way or the other, but not both..