As the NYC transit workers continue to strike into day three, they continue to push for demands including reform of a pension plan, which labor movement activists view as important to the nation-wide movement. We speak with Frank Emspak, director of Workers Independent News, and Juan Gonzalez. [includes rush transcript]
- Frank Emspak, Director of Workers Independent News, a national labor news service, and a professor at the School for Workers at the University of Wisconsin-Madison
- Juan Gonzalez, Democracy Now! co-host
AMY GOODMAN: Juan Gonzalez, on the line with us, Democracy Now! co-host, columnist for the New York Daily News, has been covering the transit strike, longtime labor reporter. And in Wisconsin, Frank Emspak is with us in studio, Executive Director of the Workers Independent News, national labor news service, and professor of the School for Workers — I think that’s an unusual school in this country — at the University of Wisconsin-Madison. We welcome you, Frank, as well. Can you talk about the New York transit strike? The last one was a quarter of a century ago. It’s the largest public transportation system in this country. And in the context of the pension crisis today? Welcome, Frank.
FRANK EMSPAK: First of all, thank you, Amy, and nice to be with you. It’s the School for Workers, 80 years old. Yes, this strike is actually, as Juan pointed out, extraordinarily important, because it comes in the context of basically the collapse of the employer-based pension system. Sometimes people think that pensions are some kind of favor, but they are really an obligation. They are deferred wages. They are a social obligation. They are a political obligation in the case of the public sector. And, of course, they are a financial obligation.
What has happened is that our system, which is based on the employer paying and the employees taking often wage cuts or deferring wages to put into a pension plan, has had it. Other countries have a universal system, where the pension is like Social Security, which is actually in this country doing okay. In this country, we don’t do that. And the net result is that individual plans become overtaxed or become under-funded, and then the employer comes back and says, 'Well, we can't do this anymore. Too bad about the people who’ve worked for 30 or 40 years, or you guys who have been working, we are going to try to reduce the pension.’ So it doesn’t work.
And what has happened is, both in the public sector and the private sector, the notion of a defined benefit — that is, after you work x-number of years you will get something for life — has been eroded consistently over the last ten years, and here in New York, I think as sort of a beacon to the nation, the transit union is saying, 'We are not going to do this any more. We've worked. We deserve what we get. We made sacrifices to get it, and we are going to stand up for this.’
I think there’s other things happening here, too, and Juan alluded to them, that there’s maybe a political agenda going on here. It’s very, very rare, in fact, impossible and usually designed to defeat a settlement in a collective bargaining relationship when you have made compromises on three or four major things, as the press has reported, and then at 1:00 in the morning the employer comes in with a major new structural demand that completely changes the framework of the negotiations. First of all, it’s usually impossible for the union to respond. And secondly, it means that you have thrown a whole new wrench into the procedure. So, if you’re looking for settlement, you generally do not bring whole new ideas to the table, particularly ones that result in effectively wage cuts for some people, a restructuring of the wage and benefit system, at the last minute. Usually that means you are not looking for a settlement.
AMY GOODMAN: Frank, can you put this in the context of the airlines and the pension issue for the workers there?
FRANK EMSPAK: Well, you have in the private sector a little bit different than the public, but in each case, the Delphi thing, each of the major airlines, General Motors, the key issue that the firms have raised is the pension, that unless they can get out of their pension obligations, they will either declare bankruptcy, as many of them have, in order to get rid of their pension or have threatened to declare bankruptcy for the same thing. And it gets back to: you have obligations, and did the firms act in a responsible way to fund those obligations? It appears not; and if not, what are the consequences? And the consequences are almost all on the workers.
So, this issue here in the public sector with the pension is also being faced in many, many other public sectors throughout the country, where the employer has come and said, 'We cannot maintain this burden any more,' and then appealed over the heads of the people they have obligations to, to the general public, and say, ’You’re not getting this pension, why should these people?’ So you have a system where the basic contract, the social contract here between those who have worked and those who have been retired is being attacked by the employer, and this is consistent across the board.
So this pension issue, this is why this strike is so crucial, is where people have said, 'We are not going to do this. We are not going to go down this road of selling out the people that are coming along or somehow impacting negatively the future. We are just not going to do it.' And this is why this is so important, because the transit workers have said, 'We will not allow the pension to become a football here.' First of all, it’s illegal under a state law. But, more importantly, politically they are not going to permit it, apparently. They’re in the position to do something.
AMY GOODMAN: Frank Emspak, Executive Director of Workers Independent News. The issue — does Congress have a role here, and what about the federal agency, the Pension Benefit Guaranty Corporation?
FRANK EMSPAK: Well, the PBGC — yes, Congress definitely has a role, and the PBGC has a role, but it’s not clear what the role is in the public sector. MTA is a public entity, the Metropolitan Transit Authority. In the private sector, the Pension Benefit Guaranty Corporation is something that guarantees a minimum pension for the companies and the workers that are covered by it, which is private sector. People pay in or the companies pay in a certain amount like an insurance company.
However, what you get out of that is much less than what you put in and much less than what has been promised. All kinds of other aspects of the pension, never mind medical care, are out the window with the Pension Guaranty board, so it’s a band-aid on a system that is nonfunctional.
A much better system is what the rest of the civilized world uses, which is a universal retirement and health system, so that individual firms and individual unions are not with this huge burden. The other thing is this: when you have universal benefits, the entire society pays, and so everybody can benefit and the cost is spread. But when you have this kind of system we’ve got, it’s much more difficult in a time of rising and uncontrolled cost, which is another thing, for individual firms or workers to bear that cost.
The PBGC is a last resort and inadequate resort, because the firms, in fact, are not paying in the cost of paying the pension for the people that they need to cover. So, it doesn’t really serve people as well as it was designed to do. And in this case, with the Metropolitan Transit Authority, it’s not clear what the purpose is at all. They have a billion dollar surplus, it is a publicly funded agency, and this is up to the state legislature to fund this pension properly. There’s no indication here, incidentally — I’m sorry, there’s no indication that the plan has been under-funded, as a matter of fact, in New York.
AMY GOODMAN: Frank Emspak. I want to thank you for being with us, Executive Director of Workers Independent News, national labor news service, and professor at the School for Workers, University of Wisconsin-Madison. Special thanks to Wisconsin Public Television and to WYOU Public Access in Madison, and our friends at WORT, that broadcast us across the week.
Final comment, Juan Gonzalez, as we come back specifically to New York, to the pension and to the really vicious media approach to this union strike. It’s quite astounding, very much following on Mayor Bloomberg talking about the workers as thugs, as selfish, as illegal.
JUAN GONZALEZ: Yeah, well, Amy, I would like to first of all say something about this pension situation, because I have done a lot of investigation into this pension issue and had conducted numerous interviews with folks, including the New York City actuary. The transit workers pension is part of the overall New York City employees’ retirement system. The transit workers represent about 25% of the entire retirement system of New York City. And, interestingly, it is my analysis that there is no pension crisis and, in fact, that the effort of the City to take such — the MTA and the City to take such a hard line on this is precisely because they want to restructure the entire pension system for all New York City workers, and they know that the transit workers are the toughest union to deal with on this.
The facts are that throughout the 1980s and the 1990s New York City was paying far more money, in real dollars into pensions as a percentage of overall salaries and in absolute terms, than it is today. And, in fact, from 1981 until the stock market crash in 2000 and 2001, the City’s contribution was dropping dramatically from 21% of total payroll in 1981 — it dropped, it plummeted to almost just above zero — less than 1% of total city payroll in 2000 was being paid by the City into the retirement system. Why was that? Because the stock market was doing very well, and the employers stopped contributing to the pension system. Virtually, they just weren’t putting any money into the pension system. They were just living off the returns on the stock market. Then, in 2000, when suddenly the market crashes, municipalities and governments around the country suddenly had a problem that they hadn’t been paying their fair share into the pension system, and now the system was taking huge losses.
So, since then, since 2000, there has been an up-tick, a rapid up-tick in the contributions necessary, but even now, it’s only about 6% of total payroll costs, whereas in the 1980s it was 21%, so that the reality is that, yes, because of the stock market crash and because of the erroneous policies of governments that used the savings from not contributing to pension funds — they used it for other parts of their budgets — they are now facing an increase in cost. But it is not clear that this is a structural problem that will go on for decades and decades.
AMY GOODMAN: Juan, we just have 30 seconds, but on the issue of the viciousness of this, how unusual is it?
JUAN GONZALEZ: Well, I think that it’s — this always happens when there are major labor strikes, that the press unites with the city officials or corporate figures to do everything possible to portray workers in the worst possible light. Unfortunately, the problem is that the labor movement today is so weak in many respects that it’s not mounting as effective a counterattack as it can. But I think that this is par for the course. It’s especially difficult this time, because the workers are 70% minority, and there is an under-the-surface reality of racial tension, and it’s the New Orleans factor all over again here in the transit workers strike of 2005.
AMY GOODMAN: Juan, thanks so much for joining us. Juan Gonzalez, Democracy Now! co-host, New York Daily News columnist, longtime labor reporter and leader, led the Daily News strike years ago.