The Essential Service of Transit

No one argues that our police and firefighters are essential to society.  The good news is that when you are essential, you are generally well compensated and often organize your employment in a unionized environment which helps ensure that you are treated fairly .  The bad news is that when you are essential you lose the right to go on strike.  This is a trade-off that everyone hopes is fair in the circumstances.  Arbitrators are keenly aware that forgoing the right to strike takes away an important feature of collective bargaining and as a result arbitrators are very attentive to the actions of employers to be sure that these front-line workers are not bullied into unfair contracts.

If you missed the news about Detroit lately, it is about their Detroit Lions football team.  Detroit is finally playing good football after decades of poor performances that border on complete incompetence.  Since I live in Windsor, I am completely captured by the ‘new’ Lions.  Detroit didn’t win the Super Bowl this year – but they came as close as they ever have.

What in the world do these stories have to do with each other?  Transit!  Transit Windsor is our local bus service which is a mini version of the Mississauga Transit that I rode until I was about 25 years old and moved out of my parent’s home to live in Toronto full-time.  Still lost?  Transit Windsor runs a ‘tunnel bus’ which runs between downtown Windsor and downtown Detroit through the Detroit-Windsor Tunnel (I can hear my buddy Tal saying ‘take the tunnel’ right now).  When I moved to Windsor just over 20 years ago it seemed odd to me that you could take a bus over an international border.  But as you get your head around it, you realize that if you are going to a sporting event and want to have a few drinks, public transit is a great option.  Detroit’s baseball, hockey and football teams all play right downtown, an easy walk from where the bus drops you off.

I Missed the Bus

On the night before the Lions first playoff game this season – which was the first playoff game in more than 30 years, Transit Windsor cancelled the tunnel bus for Sunday because the union and management were unable to reach a new contract and the union was fed up trying.  In that moment I realized that if you had a grand plan for Sunday to take the bus you would be scrambling to make alternate arrangements.  I wrote off the whole situation to ‘life’ and didn’t give it much more thought.

Then, a few weeks ago, public transit workers in Vancouver went on strike.  I have a few friends in Vancouver, and one complained that a small group of workers were holding the entire city hostage.  I simply pointed out that this was how collective bargaining works.  His response was that transit workers should really be considered an essential service.  My friend has the ability to work around a transit strike, but it is true that transit is especially essential for lower income workers that do not have the luxury of a car.

Life’s Not Fair

One argument that gets a lot of sympathy from me is that when management eliminates buses or routes to make the numbers balance, it is the drivers that hear about it from passengers.  Although not surprising in this day and age, it is still sad that not every passenger shows respect for the drivers which makes the job that much harder.

What is harder to address is what is fair when it comes to total compensation.  As I understand it, the fight this time around was about sick days.  I wrote about sick days here.  In review, sick days are a valuable part of a work environment since sooner or later almost everyone misses some work because they are sick.  The healthy don’t want the sick to come to work as much as the sick don’t feel up to it.  At the same time, sick days have a value since you are being paid to not work.  Employment contracts, whether verbal or written, whether bargained individually or collectively, should reflect the value of sick days, just like the value of vacation days should be reflected. 

Vacation is an entitlement on which it is easy to put a value.  Sick days are a contingent benefit that one worker might use, and another might not.  It is much harder to put a value on sick days when no one really knows in advance how many will be used.  The other problem with sick day programs is that once you feel like you had to give up other forms of compensation to ‘pay’ for sick days, then you feel like it is an entitlement.  Having workers try to take all their sick days every year is not how ‘insurance’ is supposed to work and ultimately trying to provide enough sick days for everyone gets more and more expensive.

Total Rewards

This story started me thinking about how hard it is for actuaries to put a value on an entire package of ‘total rewards’ that sum up to the cash and non-cash compensation workers receive.  It is easy to see wages and vacation and therefore easy to count.  Dental and drug coverage vary by worker and even the aggregate spending on these benefits varies year-to-year.  The value of sick days is only known after the year is over and the sick days are taken – and again the value varies widely among workers that are more, or less, immune to illness.

When I was writing this commentary, I came across a comment that after a strike by transit workers in Halifax, the workers wanted to buy back their lost pension by paying both their missed contributions and those of their employer.  When the calculations were done the workers found the buyback unaffordable.  I tried but cannot find clear documentation that this ever happened – but if one of my readers has more insight, I would be happy to hear what really happened.

The Halifax story is a reminder that with defined benefit plan pensions, it is very difficult for workers to fully appreciate their cost.  The Fraser Institute published a very good report on the confusion over the true cost of pensions and I wrote about it here as well.  One of my pet peeves is that the lack of understanding on the cost of pensions perpetuates unsustainable pension promises by governments which include super-generous early retirement and indexing of pension payments.  We are seeing governments start to recognize that some of these pension deals need to change and I expect that we will see more and more shared risk and target benefit plans emerge as the years pass. 

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