Behind the NJ Transit Strike Threat: Bills Jersey Can't Afford
Some 150,000 Jersey rail riders may still avoid a massive disruption in their commutes next week if NJ Transit’s management and the rail line’s labor leaders agree on a new contract that union members approve.
“NJ Transit has nearly $900 million in net pension and retiree health-care liabilities. Over the last five years, it has consistently put aside less than half of what it needs to meet its health-care obligations.”
But even if workers decide not to strike, there’s plenty of long-term pain in store for riders of the financially troubled rail system and state taxpayers.
NJ Transit unions have been working without a contract since 2011 and, unlike other government employees in the state, have the right to strike under federal laws governing railroads. The unions are demanding 18 percent wage increases over six years and want to limit their contribution to health insurance to 2.5 percent of pay.
NJ Transit management, instead, wants workers to pick up a greater share of health costs — at least 10 percent of salary — and take smaller pay increases. The agency points out that granting workers their demands would cost NJ Transit $183 million annually.
The agency has been struggling for years in large part because of generous salaries and benefits. It collected $933 million in passenger fares in 2015 but spent nearly $2 billion on operations. Labor costs alone account for 55.4 percent of the agency’s budget, including a whopping $439 million in fringe benefits.
To pay that bill, the agency relies on more than $1 billion in subsidies and grants, largely from state and federal sources.
Union leaders say they’ve gone long enough without new contracts. They’re buoyed by the opinion of a federal mediator who has largely sided with the unions in their attempt to retain their expensive health benefits because other rail workers in the region, notably those at Metro North and the Long Island Rail Road, receive similar packages.
NJ Transit officials, by contrast, argue that the proper comparison should be the health-care premiums private workers in Jersey pay. A 2015 bipartisan state report found workers employed by large Jersey companies pay as much as one-quarter of their health insurance themselves.
Many NJ Transit union employees have also continued to receive annual pay hikes — so-called automatic “progression” or step increases — even without new contracts. According to state payroll records, conductors who earned $57,345 in base pay in 2011 received $60,840 last year, a 6.1 percent increase. Locomotive engineers earning a base salary of $57,012 in 2011 earned an average salary of $67,184 in 2015.
Plus, there’s generous overtime. The actual average compensation of the nearly 300 conductors in the top salary category last year was $97,618, thanks largely to about $35,000 in overtime pay per worker.
One reason for the huge extra costs is that the price of employee benefits has gotten so high at NJ Transit that the agency finds it cheaper to pay current workers time-and-a-half for extra work than to hire additional workers and absorb the cost of their benefits. Taxpayers and fare-payers are the losers in such an expensive system.
Regardless of what happens in the negotiations, the agency faces a difficult financial future. It has nearly $900 million in net pension and retiree health-care liabilities. Over the last five years, it has consistently put aside less than half of what it needs to meet its health-care obligations.
Commuters have already felt the pain. They’ve absorbed two big fare hikes in five years, including a whopping 25 percent increase in 2010. A study last year by the New Jersey Association of Railroad Passengers found that riders already pay the highest fares of any commuter-rail system in the nation.
The state budget, meanwhile, is unlikely to offer much relief. Trenton’s own finances are groaning under other, even greater obligations, including one of the worst pension bills in the country.
The bleak picture in a state that already is among the nation’s highest taxed makes it essential for NJ Transit to find significant cost savings. Even without a strike, however, taxpayers and riders will be paying heavily for the messy NJ Transit balance sheet for years to come.
This piece originally appeared in the New York Post
This piece originally appeared in New York Post