The NYC Subway Ripoff
Even if you don’t live in New York City, trust me, you’re going to want to read this amazing New York Times story about how labor unions, city politicians (the overwhelming number of whom are Democrats), featherbedding companies, a bloated bureaucracy, onerous regulations, and other factors make it staggeringly more expensive to build subways there than anywhere else in the world. Check this out:
An accountant discovered the discrepancy while reviewing the budget for new train platforms under Grand Central Terminal in Manhattan.
The budget showed that 900 workers were being paid to dig caverns for the platforms as part of a 3.5-mile tunnel connecting the historic station to the Long Island Rail Road. But the accountant could only identify about 700 jobs that needed to be done, according to three project supervisors. Officials could not find any reason for the other 200 people to be there.
“Nobody knew what those people were doing, if they were doing anything,” said Michael Horodniceanu, who was then the head of construction at the Metropolitan Transportation Authority, which runs transit in New York. The workers were laid off, Mr. Horodniceanu said, but no one figured out how long they had been employed. “All we knew is they were each being paid about $1,000 every day.”
The discovery, which occurred in 2010 and was not disclosed to the public, illustrates one of the main issues that has helped lead to the increasing delays now tormenting millions of subway riders every day: The leaders entrusted to expand New York’s regional transit network have paid the highest construction costs in the world, spending billions of dollars that could have been used to fix existing subway tunnels, tracks, trains and signals.
The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world. The recently completed Second Avenue subway on Manhattan’s Upper East Side and the 2015 extension of the No. 7 line to Hudson Yards also cost far above average, at $2.5 billion and $1.5 billion per mile, respectively.
The spending has taken place even as the M.T.A. has cut back on core subway maintenance because, as The New York Times has documented, generations of politicians have diverted money from the transit authority and saddled it with debt.
The critics pointed to several unusual provisions in the labor agreements. One part of Local 147’s deal entitles the union to $450,000 for each tunnel-boring machine used. That is to make up for job losses from “technological advancement,” even though the equipment has been standard for decades.
“I’m not anti-union at all, but it’s amazing how much they dictate everything that happens on a job in New York,” said Jim Peregoy, a Missouri-based cost estimator who has worked on 240 projects in 27 states, including the Second Avenue subway. Mr. Peregoy said labor was a far bigger part of his estimates in New York than elsewhere. “You have to account for it, because it’s huge.”
Fatcat labor unions are only one piece of this stinking pie, but a pretty big piece. The story goes on to compare a similar project in Paris — capital of a country where labor unions are very powerful — costing much less, in large part because unionized workers are not taking advantage of the system. These NYC unionized construction workers come off as like United Auto Workers in Detroit circa 1977.
But then, everybody in the Times story comes off as greedy, except the people who run the city’s Metropolitan Transit Authority, who come off as helpless dopes.
Read the whole thing. What a scandal. What’s so interesting about this is that every city has labor unions, regulations, bureaucracies, and so forth, to contend with when it undertakes projects like this, but no other comparable city on earth has remotely the costs that NYC does. What is the hard-pressed NYC taxpayer getting for his money?
Great job, New York Times!