The contract of the Transport Workers Union (TWU), the union representing about 38,000 employees of the New York City Transit and MTA Bus divisions of the Metropolitan Transportation Authority (MTA), expired on January 15, 2012.  The MTA, facing out‐year budget gaps, is depending on a three‐year wage freeze to balance its budget; the TWU has rejected this offer and demands a “fair wage increase.”   Negotiations are continuing, but if they reach an impasse, the parties may file for arbitration with the Public Employment Relations Board (PERB).  The TWU and MTA have gone before PERB in the last 2 rounds of collective bargaining, for the contracts covering 2009 to 2012 and 2005 to 2009.

The case would be heard by a tripartite panel whose decisions are binding upon both parties.  The panel would be composed of one representative appointed by the MTA, one appointed by the TWU, and one member, who chairs the panel, jointly appointed by both parties.  The statute that provides for the arbitration process makes explicit the factors that the panel must weigh in coming to its decision, but does not specify how much weight should be given to each factor.

The stakes of the settlement are significant.  The MTA’s dedicated sources of revenues are volatile and were hard hit by the recession, and recent State agreements and the uncertain economic climate place revenues further at risk.  Riders have already experienced fare increases in tandem with service cuts, and are fearful that a downward turn in negotiations will lead to a transit strike similar to the one that crippled New York City in 2005.  Workers would like improved benefits and safety precautions, while the MTA would like to loosen work rules so as to improve efficiency and prevent further deterioration of its finances.

To determine what a fair wage increase for transit employees would be in the current fiscal climate, this report applies the criteria specified by PERB for determining arbitration awards.  It finds that the public interest will be served by an agreement that maintains a good standard of living for workers, is within the MTA’s ability to pay, and does not force further harm upon riders; in short, a fair increase will not increase fares or reduce service.