The New York City transit strike has me puzzled. The right to unionize and strike, and the requirement that an employer negotiate with a union, is an artificial right created by the government, along with copyright and patent. The government does not allow certain workers, such as police and firemen and, in this case, transit workers, to strike. The transit workers strike was illegal. A typical analysis of transit worker pay shows that they get at least 30 percent more than they would in a competitive market. The pensions are particularly expensive for New York City taxpayers, providing for retirement at age 55 with 50 percent of the final year’s compensation (typically this works out to 100 percent of a normal 40-hour-per-week salary because a worker will get a lot of overtime shifts in his or her last year and the pension is based on whatever was earned in those final 12 months before retirement, including overtime).
Consider an employer with a 54-year-old worker. The guy is getting paid $70,000 per year to do a job that a young immigrant would be happy to do for $25,000 per year. In one more year, assuming he is still on the payroll, you’re going to incur an obligation to pay this 54-year-old guy $70,000 per year for the rest of his life (30+ more years times $70,000 is more than $2 million). He does something illegal, thereby giving you a pretext for firing him. There are 140 qualified young applicants for his job, folks who won’t want or need a pension for at least 25 years from now. What do you do?
Ronald Reagan faced a similar question during his first year in office, when the nation’s air traffic controllers went out on strike. He fired them all (cnn story), and replaced them with younger, cheaper workers (there was no disruption in service, as supervisors picked up the load and worked overtime). One would naively imagine that it is easier to replace a bus driver or a subway car cleaner than an air traffic controller. New York City is more strapped for cash than the Federal government. Regardless of the merits of the transit workers’ demands, it seems unfathomable that Mayor Bloomberg resisted the opportunity to fire all of the workers who stayed out. What is different about this strike than the ATC strike of 1981?
Full post, including comments