Monday, June 29, 2009

What to do about labor costs

Back in February, I wrote about some ways of helping transit operations to become independent of government budget battles. In the comments, Christopher Parker wrote:
A lot really does come down to labor costs, which are a very significant amount of the expense of transit.

Christopher is quite right here, and this is a major issue. Transit systems in countries with low labor costs are able to operate more lines with less subsidy. Some have argued that transit will never be competitive with such high labor costs, blamed the transit workers' unions, and recommended finding a way to break the unions.

This is, of course, only one manifestation of the wider labor cost issue. Yes, with enough force we could break the unions, dismantle restrictive labor laws and bring labor costs down to the levels of Brazil or Thailand. But what would we really accomplish? A big part of what makes America (or France, or Japan) a nice place to live is that many people can make a decent living, with health care and a pension, without working seventy hours a week. We do not want to race to the bottom on this.

Our goal should be to accomplish what we want without compromising on labor standards. Like all workers, transit staff deserve enough money to pay the rent and support a family, plus decent health care and retirement benefits. They deserve to work reasonable hours under healthy, comfortable conditions. We should stand in solidarity with the bus drivers and train operators. We are all transit workers.

Actually, we are all transit workers, and that's part of the problem, as Christopher continues:
When you think about it, that's a serious competitive disadvantage because the perceived labor cost of driving is free.

What has happened over the past hundred years is that the government has effectively outsourced the bulk of passenger transportation to individuals and families. They pay much of the capital costs (roads and bridges, roads and bridges), and subsidize some of the rest (Detroit bailout, oil wars), and even pay some of the capital maintenance, which is essentially an operating cost.

The remaining costs (vehicles and their operation) is mostly provided directly by the consumer. This has always been true to some extent, but during the golden age of rail transport it was provided by corporations, usually private, but unionized with strict labor rules. Many of these have been taken over by the government, but unable to compete with the cheap labor of individual drivers, they have shrunken considerably.

Of course, there is no such thing as a free lunch, and we have paid dearly for the de-professionalization of driving. Car crashes are the ninth leading cause of death worldwide and climbing, and the leading cause of death among young people. Buses and trains do kill people, but at nowhere near that rate.

It's time to recognize that we can't get away from paying for well-trained, well-treated professional transit operators. Of course we should work to reduce scams like the golfing "disabled" Long Island Rail Road workers, and other wastefraudandabuse. But there's a limit to how much cost savings can be wrung from labor. If we try to save money by farming transportation out to unprofessional, poorly-trained individuals, or by ruining working conditions - or even by importing desperate immigrants - it will backfire, and we'll wind up dead or wishing we were dead.

As Christopher points out, this outsourcing of passenger transportation provides unfair competition to organizations that do treat their drivers right. If the "externalities" were not hidden - for example, if the cost of medical care for road casualties came out of the DOT's budgets, or if the states had to pay every driver a living wage for every hour behind the wheel - we'd see these costs brought under control quickly, and transit wouldn't look so expensive.


CityLights said...

You may be able to compare us to France, but not to Japan. Japanese transit workers may be well compensated but they work much harder on a per-dollar basis than US workers. I think it wouldn't surprise anyone if I say that Americans are simply not very good workers unless they are driven by the possibility of merit-based promotion or a ton of money. Americans want to make it big. Union jobs don't provide these things.

Some American corporations like McDonald's claim to have a good work ethic. It's pretty obvious how they set strict standards on how to greet the customer, how many seconds to spend on making a hamburger, etc. But a public transit company in America can never even dream of such a thing.

Bottom line, it's not about the pay, it's about the amount and quality of work done for that pay- which is where union jobs fail due to a lack of competition.

tony said...

Oh please. Stop with the phony populism like "they deserve to be able to pay the rent, etc". People are enriching themselves and fleecing the city off of an outdated, broken system.

NYC transit workers are grossly underworked and over compensated. 20 years of mediocre work (with no incentives to actually do well) followed by a lifetime of bloated pension, diabiliity and helthcase benefits? All underfunded due to poor, poltics-driven money management.

Hardly anyone in the real world gets a deal like this, why are they somehow "entitled"?

Thats what's crippling the system, and until these benefits are "on the table" we won't really get anywhere. Stop treating tranist compensation (and in particular pension reform) as some sort of
3rd rail (pun intended).

meshugah said...

No, it's not labor costs. It's health care costs, as at GM, a symptom of the massively bureaucratized, overexpensive, inefficient, rationed health care in this country.

lyqwyd said...

I think the biggest problem is that there doesn't seem to be any accountability amongst the employees, I keep hearing stories about transit employees who claim disability or sick days that are completely fraudulent, or don't even bother to show up to work and they still get their full days pay and are not even reprimanded, much less punished for such behavior. I'm not sure if this is a failure of management, or something the union has demanded.

If anybody in the public sector were to pull a stunt like that once, much less repeatedly they would most likely be instantly fired.

BruceMcF said...

This is, of course, in part a question of how to attract effective management to transit agencies, since bad unions are normally a symptom of bad management.

However, we also do have to be careful about being penny wise and dollar foolish. Much of the incomes earned by people working in transit gets spent again in the local area, where far more of the money spent on the mixed public/private motor car transport system goes straight overseas. The fact that a substantial portion of the cost of transit goes to labor is part and parcel of the fact that cities that have strong transit systems tend to be wealthier than cities with weaker transit systems.

Cap'n Transit said...

Sigh. I thought I made it clear that I'm all for eliminating actual wastefraudandabuse. If it happens in the MTA, it should be dealt with properly.

My point with regard to transit workers is that we shouldn't go beyond that and expect them to work long hours under stressful conditions for low pay.

And no one seemed to like my other point, about outsourcing to individuals. Maybe I should have made that a separate post.

Citylights, I'm not surprised that you (and others) think Americans are lousy workers. I'm just not convinced. I think most native-born Americans aren't desperate, that's all. And that's a good thing. It's possible to motivate workers who aren't desperate, but it takes empathy, skill and creativity, not just brutality.

Cap'n Transit said...

Also, Meshugah, thanks for the link to the DMI post, and for reminding me that Gelinas had written about labor costs. I agree that many of the costs are for services that are provided by the government in more civilized countries, but I don't think that Petro makes a convincing case that actual wages aren't a factor as well.

Jarrett at said...

My own view is that we should pay drivers more and hold them to a much higher standard. Like other jobs, driving is a job that should get harder, not easier, as you advance through the ranks. The seniority systems used by most transit workforces ensure that senior drivers can pick the senior jobs, while the most junior ones have to drive the crush-loaded articulated bus on congested streets at the peak of the peak.

Of course, I have the same basic attitude about schoolteachers. Which is to say, we're up against a powerful force here.