Monday, October 21, 2013

Course On How Great Nations Decline

Bay Area Shutdown 
Unions are striking so they can maintain work inefficiency.

WSJ Editorial, October 21, 2013

President Obama keeps saying that government needs to spend more to improve the country's aging roads and mass transit. But as the San Francisco Bay Area transit strike is showing, the real problem isn't too little spending but a lack of productive investment.

About 2,300 Bay Area Rapid Transit (BART) workers walked out on Oct. 18 after negotiations stalled over a new contract. The strike has snarled traffic throughout the region, causing more than one-hour delays on some highways and stranding low- and middle-income commuters.

The two big unions involved, the SEIU and Amalgamated Transit Union, say they've already retreated from their initial demand for a 21.5% raise over three years and to pay no more than 3% of wages to pensions. They contribute nothing now and can retire at age 55 with annuities equalling 60% of their salary plus nearly free medical benefits. The agency also contributes 6.65% of wages to a defined-contribution retirement account.

The latest union offer is to pay 4% of wages to pensions (phased in over four years) and 9.5% of medical premiums, up from about 6% today. In return, they want a 15.9% raise over four years. BART President Tom Radulovich says the agency can't afford more than a 12% raise over four years—the average worker already grosses $78,000 and about $130,000 with benefits—and that a pay increase must be coupled with a more flexible contract.
The union's 470-page work-rule book ought to be required reading in a course on how great nations decline. Workers receive overtime if they call in sick one day and report for duty on a later day that week that they're scheduled to have off. They also get overtime if they skip any of their two 15-minute breaks and 30-minute lunch break. Birthdays are paid holidays.

Meantime, the transit system relies on faxes and manual records because the contract gives unions a veto over any changes in labor practices including technological upgrades. So BART employees hand-deliver pay stubs to workers.

Mr. Radulovich says the agency needs labor efficiencies to maintain and improve its system. Its 30-year-old train fleet is the oldest among the major mass transit networks. He also calls the work rules pure "waste," but an employer's waste is a union's gravy train. The unions oppose productivity improvements because inefficiencies increase the demand for labor (including overtime) and yield more dues.

BART's union work rules aren't unique. New York City's MTA bus drivers can't be assigned shifts in two different boroughs in one day. An Inspector General report last year found that MTA Long Island Rail Road workers took more than twice the estimated required time to replace a staircase in Great Neck because they were using inefficient tools.

The problem is that unions and their political allies, President Obama included, view mass transit as a public jobs program and government stimulus rather than a means to enhance productivity in the private economy. Hence, Davis-Bacon rules that require union wages for all construction and the Federal Transit Act, which prohibits public-transit agencies that receive federal cash (almost all of them) from unilaterally changing work rules and benefits.

The upshot is that taxpayers must spend more on public works but get less in return for their investment. Maybe taxpayers should go on strike.

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