Big Risk for Little Return

If this is accurate, I'd say the City of New York made a huuuuggeee mistake:

On the final day of intense negotiations, the Metropolitan Transportation Authority, it turns out, greatly altered what it had called its final offer, to address many of the objections of the transit workers' union. The authority improved its earlier wage proposals, dropped its demand for concessions on health benefits and stopped calling for an increase in the retirement age, to 62 from 55.

But then, just hours before the strike deadline, the authority's chairman, Peter S. Kalikow, put forward a surprise demand that stunned the union. Seeking to rein in the authority's soaring pension costs, he asked that all new transit workers contribute 6 percent of their wages toward their pensions, up from the 2 percent that current workers pay. The union balked, and then shut down the nation's largest transit system for the first time in a quarter-century.

Yet for all the rage and bluster that followed, this war was declared over a pension proposal that would have saved the transit authority less than $20 million over the next three years.
It seemed a small figure, considering that the city says that every day of the strike will cost its businesses hundreds of millions of dollars in lost revenues. But the authority contends that it must act now to prevent a ''tidal wave'' of pension outlays if costs are not brought under control.

Roger Toussaint, the president of the union, Local 100 of the Transport Workers Union, said the pension proposal, made Monday night just before the 12:01 a.m. strike deadline, would effectively cut the wages of new workers by 4 percent.

''They're trying to beat down wages for our new workers,'' Mr. Toussaint said yesterday.

In the days immediately before the strike deadline, the union kept hammering the point that the authority's pension demands would save little over the life of a three-year contract.

Indeed, not just Mr. Toussaint but some other New Yorkers are questioning whether it was worthwhile for the authority to go to war over the issue when the authority's pension demands would apparently save less over the next three years than what the New York City Police Department will spend on extra overtime during the first two days of the strike.

''What they'd be saving on pensions is a pittance,'' Mr. Toussaint said.
Robert Linn, a former New York City labor commissioner, questioned the transportation authority's decision -- with the backing of the mayor and governor -- to go to the mat over pensions with a union that can exact huge pain on the city in a year when the authority was enjoying a $1 billion surplus.

''They might have picked a union that was more willing to consider the subject,'' Mr. Linn said. ''It not just the considerable economic power of this union, it's also the timing,'' just before Christmas. ''It's tremendously problematic.''