Micah Blaichman

his is ridiculous,” a nominally liberal friend of mine complained to me at the end of last semester. “I realize that transit workers must be able to protect their rights and should get a share of the MTA's surplus, but this strike is affecting so many other people.” After pointing out that all strikes affect other people and that is why they are effective, I asked him whether he was siding with the MTA. “No, of course not,” he replied; “I just wish that they would call off the strike.”

This was the sentiment I heard constantly from fellow Columbia students during the transit strike, one decidedly different from the strong support many of them gave to teaching assistants who walked off the job in years past. Students who were already exhausted from final exams were understandably angered by the extra hurdle it took them to get home. When pressed for why they believed the transit workers were striking, most students with whom I spoke chalked it up to greed over wages and hours, not the kind of issues that inspire commitments or sacrifices.

Wages and hours, however, were not the causes of the strike. In fact, the deal the Transit Workers Union (TWU) rejected would have raised their pay in each of the next three years (three percent in the first year, four percent in the second year, and 3.5 percent in the third year), added Martin Luther King, Jr. Day as a holiday, held the retirement age at 55, and dropped a demand that future workers pay one percent of their wages for health premiums. What led the TWU to walk away from the negotiating table was really one issue: pensions, specifically the MTA's insistence that future workers pay 6 percent (up from 2 percent) of their wages toward their pensions.

The MTA's demand was arguably illegal. The Taylor Law, officially known as the Public Employees Fair Employment Act, states that pension rules for municipal union members cannot be specifically modified during collective bargaining proceedings, although they can be discussed as a “permissive” subject. Essentially, the MTA wanted the TWU to agree to petition the New York State Legislature for the changes, which is known as “joint-support legislation,” thus getting around Taylor's restrictions.

The primary impetus for the strike was the union's belief that it was being unfairly treated by the MTA in the negotiating process. Although the Taylor Law criminalizes strikes by municipal employees, the TWU argued that the MTA was violating Taylor by refusing to sign a contract on the basis of a permissive subject. If the MTA violates Taylor, the union's representatives argued, why can't we? Furthermore, many union officials felt that the TWU was being unfairly singled out and that the MTA was attempting to remove the pension issue from the legislative process and to insert it into contract negotiations, a change that might affect other municipal unions in future negotiations. The MTA responded that its insistence on including a “permissive subject” in the contract violates Taylor only if either side concludes that negotiations are at an impasse and requests an impartial arbitration that fails to bring the two sides to an agreement. Because neither side has requested an impartial arbitration, the MTA insists that it has done nothing wrong. The aim of Taylor was to restrict modifications of pension plans for municipal employees to the purview of the state legislature, which has been the status quo since the law came into effect in 1967. It was unreasonable to ask TWU President Roger Toussaint to accept an inferior pension proposal when he had no obligation to do so.

The battle between the TWU and the MTA over pension reform is part of a larger struggle that American employees have faced over the past few decades. Corporations have begun to replace their traditional pension programs with 401(k) plans, which were made possible by a reform of the Internal Revenue Code in 1978. Whereas traditional pension plans, or “defined benefit” plans, provide employees with income for life, usually paid for by the employer, 401(k) plans provide a single account payment usually taken from contributions from the employees' paychecks, which are sometimes matched by the employer. A study done by The New York Times found that “nearly anytime a traditional pension plan was frozen and replaced with a typical 401(k) plan, some group of workers would lose part of the benefits they were expecting — and sometimes a big part.” 1

The MTA's proposal was not a 401(k) plan, but by requiring transit workers to contribute more of their money to their own retirement, it echoed many of the changes that private corporations have been making around the country. Pension reform has become an important national issue after many large corporations have declared bankruptcy and been forced to default on their pension plans, which have been insured by the federal Pension Benefit Guaranty Corporation (PBGC) since 1974. Various reform proposals have been suggested both in Congress and by the Bush Administration, including calls for employers to pay higher premiums to the PBGC and to strengthen funding of their defined-benefit pension plans. For example, Rep. Peter Viclosky (D-Ind.) recently introduced a measure to strengthen the pension system by forcing companies to include employee representatives in the management of pensions, to disclose the financial status of pension plans, to identify and disclose other possible options besides dumping the pension plans, and to make up the gap between the promised pension and the actual pension from government insurance if the company dumps the plan. Viclosky's proposals were rejected and the House and Senate passed competing reform bills that are not expected to come out of Conference Committee until much later this year.

Whatever happens in Congress, it is clear that pension systems are going through a substantial transformation. Companies have had an increasingly harder time keeping up with increasing costs (a $354 billion shortfall through April 2005) and have begun to replace defined-benefit pension plans with 401(k)s, which are now the dominant form of pension plan in the country. Defined-benefit plans are promises made to employees as compensation for a lifetime of work. The individual is valued not just as a part of the firm's ability to produce profit, but also as a member of a larger organization, a team. He or she is working today with the knowledge that his or her employer will provide for him or her in the future. 401(k) plans, in contrast, stress the individualism and freedom that is characteristic of the new American consumer-based economy. The status of an individual's retirement fund is based on his or her own contribution and management and on the performance of the market. This is not to say that traditional pension plans do not have problems that need to be addressed or that 401(k) plans are not beneficial to workers, but simply that 401(k)s offer a different understanding of the relationship between employer and employee.

Once the transit strike ended after three days, reporters and pundits argued over which side had “won.” Some argued that the TWU had triumphed by forcing the MTA to take pension reform off the table, while others pointed to the fact that the union agreed to pay 1.5 percent more of its wages to employee health coverage while the legislature could still alter the pension plan if it wanted to. Unfortunately, both sides may turn out to be losers: the TWU voted against the new contract by a margin of seven votes out of more than 20,000 cast, offering a major blow to President Toussaint's prestige and raising the threat of another strike. After filing a petition for impartial arbitration, the MTA offered the union another contract, this one calling for a four percent employee contribution to pension programs.

The biggest losers, however, were the citizens of New York; the strike was estimated to have cost the city as much as $400 million a day, and those hardest hit were working class New Yorkers who struggled to get to their jobs. Although strikes always cause hardship to society, a municipal union like the TWU has the added difficulty of performing a function that is integral to the New York economy. It is clear that the negotiation process must be looked at in order to avoid another similar situation: unions must be able to take steps to protect their members, but protection must also be secured for the rest of New York. Before this happens, it would behoove the union to try other tactics less harsh than a general strike; for example, they could try work slowdowns or partial strikes. The more important issue is to begin a national conversation on the future of pension programs. This cannot simply be a contrast of defined benefit plans and 401(k)s, but must also be a discussion of the value of labor in our society and the relationship between the employer and employee. It may be that President Bush's ideal of an “ownership society” is the only viable option for the 21st century economy; however, it is crucial that we arrive at this conclusion on the basis of an open dialogue rather than furtive legal evasions.

1. Walsh, Mary Williams. “When Your Pension is Frozen...” The New York Times. January 22, 2006. WK 3.