Asymmetrical Information

From the desk of Jane Galt:

Strike!

So it looks like the transit union may walk.

It's not immediately obvious why. The state's Taylor Law is pretty draconian; striking workers not only lose two days pay for every day they strike, but also (I'm told), the union loses the right to automatic deduction of their dues.

Nor is it likely that they will get what they want, for several reasons. First of all, Toussaint has challenged Bloomberg publicly; if Bloomberg caves, his administration is done. Second, as I've said, the MTA does not cover its expenses out of its own revenues; the "surplus" the union keeps agitating about was a one-time gift from Pataki last year to keep the agency from raising fares before the election. There can be no repeat this year because the city and state budgets are both deep in deficit.

Most interesting is the inter-union warfare. After last year's record raises to 1199 (the healthcare union), the other public unions are looking to get theirs. The city cannot afford to let a raise go through for the TWU, because if it does, the police and firefighters will demand even more lavish payouts. The size of those departments, and those payrolls, dwarfs the city's contribution to the MTA. Bloomberg needs to draw the line here.

If Toussaint strikes, he'll certainly cost his unions something. But a one or two day strike, while a mild inconvenience, will not force the City to concessions, and will be a public relations disaster for the union. A longer strike would be a public relations catastrophe -- and a financial catastrophe for the workers, who we keep hearing from the union are practically on the edge of starvation.

So, why would he strike against the interests of his workers? Well, just as boards and managers do not always act in the interests of their shareholders, unions do not always act in the interest of their membership. For example, it's very common for unions to resist plans to reduce the workforce through attrition when productivity improvements reduce the number of workers needed in a given job. Even in cases where the workforce reduction won't hurt any of the current membership, the union will often make pay and benefit concessions in order to implement featherbedding rules that increase future membership at the expense of current members. This does not benefit the current members -- to whom, remember, the union leadership has a fiduciary relationship as binding as that of boards to shareholders -- but it does benefit the union leadership, by giving them a larger, more powerful organization.

Toussaint is a new president. If he takes down Bloomberg, he will be a hero to his members, and his union will grow in power. Even if his membership ends up little better off -- and remember, strikers who only work 40 hours a week will lose a full days pay every day the union is out, a net loss of 5 weeks pay in two weeks -- he could end up better off. But given the unlikelihood of a favorable settlement, it's hard to see how his members will be.

As of this writing, they're still talking. That's a very good sign, as these things usually go pretty close to the wire. If not -- well, I'll be walking the three miles to work in the rain tomorrow. I try to look at it as an opportunity to get a little closer to our pioneer ancestors.

Update Reader emails to say that there will be livery cars picking up at the bus stops. Actually, I don't mind walking unless the weather's really vicious, and I can certainly use the excercise after the holiday festivities. I may take a livery car if there isn't a lot of demand, but for any youngish, fit-ish New Yorkers out there -- try to remember that there are probably a lot of people who need to get around who can't walk as far as they need to go. If there's a long line at the bus stops, why not stretch your legs a little?

Update II The union just blinked.

Posted by Jane Galt at December 15, 2002 11:23 PM | TrackBack | Technorati inbound links"); ?>