New York Transit Strike Economic Damage Overblown

Tuesday morning in New York City was the first in 25 years without subways and buses. The Transport Workers’ Union Local 100 walked off the job in violation of the Taylor Law that prevents public employees from striking after failing to get a new contract from the Metropolitan Transportation Authority, chief management of which are largely appointed by the governor of New York. Mayor Mike Bloomberg, walking to work across the Brooklyn Bridge in a needless 20°F photo-op (his house and office are both in Manhattan) said the city would lose $400 million in business a day. That’s nonsense. He hasn’t got a clue what this is costing the economy, and no one else does either.

That there is an economic impact is beyond doubt. Many people can’t get to work, and for hourly wage earners, a day off means a day off without pay. Loads of shoppers can’t get to stores five days ahead of Christmas to buy crap their ungrateful families don’t need with credit they can’t afford. The police have gone to a 12-hour shift because so many of them don’t live in the 5 boroughs that commuting is a problem, and this means hefty overtime bills. And the MTA won’t have any money coming in from fares.

However, there are certain economic winners in any change, and the transport strike is no different. In the Outer Boroughs (Brooklyn, Staten Island, the Bronx and Queens, where most city residents live), the shopping malls will be open, and people who didn’t get to work, turned up to shop. This shifts sales from Manhattan to other places, but the 8.25% sales tax applies to them all. Contrary to what some believe, Macy’s at 34th Street doesn’t charge more than Macy’s on Queens Boulevard, so the city may not take much of a hit in this department. Then, there are the cab drivers, who can pick up multiple passengers, charge $10 a head (quite a raise) and who are doing the same job they always do (better than many would believe, none as good as their highly trained London counterparts). As for the police and their overtime, cops have families and holiday spending to do as well – the money will recycle.

The Mayor talked over the week-end with Terry Lundgren, CEO of Federated Department Stores (owner of Macy’s, Bloomingdale’s and Lord & Taylor to name a few). Based on that, “Hizzoner” (as the title is pronounced in New Yawk) said, “Sales at the big New York City department stores were off 30% or 40% on Friday, just from the uncertainty of people not knowing whether they could get to work.” Impressive, but simply wrong. Federated doesn’t break out sales by store or divisions. A quick review of the company’s 10-Q and 10-K filings is unnecessary as the company spokesman said to the New York Daily News that very thing. And December sales figures won’t be tabulated for another month. As City Comptroller Bill Thompson said in questioning the figure, “People would have known by the time they woke up Friday morning that there wasn’t going to be a strike.” Although the contract expired at 12:01 am Friday and a strike was expected right after that, the TWU waited until Tuesday before leaving the job. Friday morning’s newscasts made clear everything was running.

Using a tried and true economic model, the Kensington Review knows the actual cost to the City of New York’s economy will be precisely $257,683,231.19. The method is known as “guessing,” or in some cases, “plucking a number out of thin air.” However, the 19 cents makes it look much more professional than the Mayor’s wild guess. Moreover, any discrepancy between this and any other result future historians may calculate can be attributed to rounding errors. And this price may cover an hour, a day a week, or some other unit of time as needed to be accurate.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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