Friday 17 December 2010

TTC: Essential Service vs. the Right to Strike

I ride the subway every day. I ride it to work; I ride it home again. My impression of the service is that it is a good one. Of course it may not be perfect (see my blog The Toronto Subway: The Better Poop... er, Way for a bit of a chuckle) but in the grand schemes of things, it works just fine.

To those however who complain about the service and service interruptions such as those caused by signal problems or delays during rush hour, I would say that these disruptions are minor. Then again, having to spend 45 to 50 minutes for my ride, I come prepared with a book or a laptop to ensure I can wile away the time unconcerned about the exact time of my trip. I am quite willing to admit that if I was literally standing in the car waiting to arrive at my destination with nothing to read, nothing else to do like Sudoku or a cell phone game, I might be getting a tad impatient.

It is in this light we all need to take a step back and weigh out the options before making any rash judgements. A while back, I needed to get someplace served by a TTC bus. Unfortunately, I didn't plan out my ride properly and left my home without leaving myself enough time. I ended up taking a cab which with tip cost me $25. An adult fare on the TTC is $3. I paid an extra $22 just to make sure I arrived on time. Pretty dumb, eh? Because I didn't handle the problem properly, I paid an extra $22. Well let me continue with my exploration of just what is dumb.

I have lived in Toronto since 1991. How many TTC strikes have I lived through? Wikipedia gives the following list:
  • 1952 - On strike for 19 days.
  • 1970 - On strike for 12 days.
  • 1974 - On strike for 23 days in August; service resumed when back-to-work legislation was passed by the province, which marked the first time the province was involved in a TTC strike.
  • 1978 - On strike for 8 days; service resumed by order of back-to-work legislation.
  • 1984 - On strike during Pope John Paul II's visit to Toronto.
    Note: A strike slated to start two days before a visit by Pope John Paul II was quashed by the province before it began.
  • 1991 - On strike for 8 days in September.
  • 1999 - On strike for 2 days in April; service resumed by order of back-to-work legislation.
  • 2006 - On strike for 1 day on May 29.
  • 2008 - On strike for 2 days on April 26 at 12:01 a.m.
By my calculation, that is a total of 75 days. The TTC was started in 1921 so over its 89 year history, it has been out on strike 0.84 days per year. However if I look back on the time I have spent in Toronto starting in 1991, how many times have I been affected by a strike and how many days have I been inconvenienced? Roughly speaking, I've been here about 7,300 days so 13 days of strikes equates to 0.18% of the total.

Excuse me? Where did the idea start that we are all so grossly put out by TTC strikes? Has anybody been to France? Heck, now there's a country whose name is synonymous with the word strike: les grèves sont toujours graves.

Okay, let's put that one aside for the moment and take a look at the idea of the TTC being an essential service. At face value, this seems like a good thing. With so many people depending on the TTC for their own livelihood, it seems like a no brainer to do something to ensure those people do not find themselves unable to get to and from work. However is what seems so obvious at first blush actually representative of reality? Is what we think is true in fact true?

The C. D. Howe Institute is a think tank located in Toronto. This non-profit, politically independent organisation publishes research about Canadian economic and social policy.

On September 11, 2008 they published a study called "No Free Ride: The Cost of Essential Services Designation". The author, Benjamin Dachis looked at public sector contract negotiations since 1976 studying differences in wages and services. His conclusions showed that wages increased more in situations where an essential service had been declared than when it was not. That is, situations which required an arbitrated settlement lead to higher wages than those where there was a strike.

In applying the percentages which represent the differences he found, Mr. Dachis speculates that the current costs of labour, $850 million per year would be $6 million more. That is to say that arbitrated settlements would have led to the TTC paying its employees $6 million more. He points out that in 2005, New York City saw an illegal strike even though their current legislation bans them. He also points out that in Quebec where transit has been an essential service since 1982, there have been several strikes which required legislation to order the resumption of services. In a nutshell, "essential service" does not necessarily mean there is no interruption of service and it leads to higher labour costs.

In June, 2010 the institute published a paper entitled "The Laws of Unintended Consequence: The Effect of Labour Legislation on Wages and Strikes" co-authored by Benjamin Dachis and Robert Hebdon. The opening executive summary states:

Canadian governments, both federal and provincial, heavily regulate labour relations between unions and employers. In both the private and public sectors, this government intervention has unintended consequences on wages and strikes.

As governments across Canada tackle their deficits, controlling labour costs will potentially be at the top of their agendas. This makes analyzing the effectiveness of government interventions all the more important. We find that legislation requiring compulsory arbitration in labour disputes involving public employees has increased wages by about 1.2 percent per settlement. Although politicians might view strikes in such situations as politically costly, they need to consider the long-term effects of arbitrated settlements; namely, higher labour costs that are borne by the taxpayer.

Once strikes are under way, many governments have also taken steps to end them. However, we find that resort to “back-to-work” legislation reduces the likelihood of a freely settled contract in the next round of negotiations, perpetuating the cycle of government intervention.

Two provinces – British Columbia and Quebec – have bans on using replacement workers during strikes, and a similar law has been proposed federally. The long-term effect of replacement worker bans is to increase strike length and duration while reducing investment, wages and employment. Similarly, the practice of providing reinstatement rights for striking workers has reduced wages while causing strikes to be more frequent and longer. The federal and provincial governments with these laws in place should recognize their economic costs and factor these unintended effects into any cost benefit analysis of the legislation.

Final Word
I have sometimes heard that a recommended course of action is "counter-intuitive" as if what is being proposed seems crazy. On the other hand, could it be that what we think of as intuitive is actually a completely incorrect assessment of the problem?

I expressed reservations during the campaign for mayor of Toronto about the promises being made by Rob Ford. I felt and I still feel that anybody can promise anything but it is only once one holds the reins of power that one discovers what can and cannot be accomplished. It all looks simple when you're standing on the sidelines. See my blog Rob Ford: Let the show being!, October 26, 2010 for a list of various campaign promises which were very dubious as valid ways of handling certain problems.

In this case of making the TTC an essential service, Rob is tapping into some sort of visceral and possible myopic view of the world held by a naive electorate. We are all for getting rid of "the gravy train" but does Ford have what it takes to actually make this fly? Here he is creating a problem which necessitates making the TTC an essential service when we haven't had much of an interruption of service. But more importantly, Ford hasn't done his homework. In trying to give us a warm and fuzzy, it could very well be that we collectively could end up paying more for the TTC labour and have just as much or even more disruption of service. This may seem counter-intuitive but I come back to the strong possibility that there was an incorrect assessment of the original problem.

It has always been my fear that we, the voters, latch onto the buzz words, the slogans and the unproven promises of the next candidate who assures us that they can make everything wonderful in the world. We seem to have short-term memories or we are just plain stupid.

The reality is that the political cycle is 4 years while the economic cycle is 10 years. The two are totally out of sync and any politician promises based on getting re-elected not necessarily what is good for us in the long run. Since 1991, I have been in Toronto approximately 7, 300 days. There have been 13 days of strikes or only 0.18% of the total number of days. That's an emergency which requires an "essential service" designation? That's nothing; that's diddly-squat. If it was 10% yes, but 0.18%, less than one percent, less than one fifth of one percent?

Rob has promised; we voted him in. He's trying to make good on the promise but now it looks like fulfilling this promise is going to cost us more than we realise. If this turns out to be the case, I can only say that we deserve him. Before we vote somebody into office based on their election promises, it is up to us to do our own homework. Are those promises doable and are those promises actually the best course of action? Rob is merely doing what we want and that may turn out to be intuitive but counter-productive.


Wikipedia: C. D. Howe Institute

C. D. Howe Institute

C. D. Howe Institute
No Free Ride: The Cost of Essential Services Designation

C. D. Howe Institute
The Laws of Unintended Consequence
The Effect of Labour Legislation on Wages and Strikes


Site Map: William Quincy Belle

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