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The Partnership for Rubenstein Associates, Inc. |
'A Debilitating Situation'
A financial expert assesses the local-and national-economic impact of New York's transit strike.
Mario Tama / Getty Images
While many commuters walked into work, delays and lost cost New York hundreds of millions of dollar
New Yorkers woke up Tuesday to news they’d been dreading for nearly a week. Tense overnight negotiations between the city’s Metropolitan Transportation Authority and the Transport Workers Union had faltered. The union ordered its 33,000 workers to close subway stations and take buses off their routes leaving the seven million metro residents who depend on mass transit to walk, carpool, or telecommute to work.
Talks continue in an effort to avoid a repeat of the last New York City transit strike, 25 years ago, which lasted 11 economically devastating days. In the meantime, the city’s businesses braced themselves for a huge loss in retail sales and productivity during what is normally the busiest shopping week of the year. Mayor Michael Bloomberg, who bundled up and headed over the Brooklyn Bridge on foot along with thousands of other New Yorkers, estimated that this strike would cost the city $440 million to $660 million per day in lost economic activity.
“This is a death by a thousand cuts in terms of inconvenience. It adds up to a very debilitating situation for the city,” says Kathryn Wylde, president of the Partnership for New York City—an organization that represents chief executive officers of 200 of New York’s largest companies. NEWSWEEK’s Susanna Schrobsdorff spoke with Wylde about how the strike will affect New York City’s $450 billion economy and what businesses have learned about coping with transit disruptions since the September 11 attacks. Excerpts:
NEWSWEEK: Which businesses will be most affected by the strike?
Kathryn Wylde: The most difficult and the biggest challenges are falling on small businesses—like my butcher. He was complaining that he can’t make deliveries and people can’t pick up their goods. Retailers will also be hurt. This is the most important week of the most important shopping season of the year. One major citywide retailer told us that sales are already down today 45 to 50 percent.
Do you have any idea of how many people aren’t able to get to work?
Generally it looks like about 20 to 50 percent of the workforce can’t get in or will be late. But if you have a small business which only has a small staff, then the loss of a even a few people is a big impact. I talked to one large accounting firm that probably has about 7,000 employees in the city, and they said 1,000 of them could not get to work. Already, that puts us in the hundreds of millions of dollars in lost productivity.
How has the experience of 9/11 changed the way the city’s businesses handle transportation problems?
In a sense, 9/11 helped prepare New York City for major catastrophic events. The major employers who lived through 9/11 understand what the loss of mass transit means. They were well prepared with contingency plans like having employees work at home or work at alternative business locations outside the central business districts. They also made plans to get their employees to work by chartering shuttles and ferries as well as getting hotel rooms in the city. It’s a major cost, but it’s one that big business made to ensure continuity of operations.
How do you expect Wall Street firms to fare?
It’s been fine so far. This is a down time for financial companies anyway. In terms of client visits, this is not a great time of year for that. Right now it’s more closings and year-end reviews. [Also,] Wall Street has the resources to invest in cars, ferries to get their employees around.
If this strike goes on for more than a week, as it did 25 years ago, will the economic effect be compounded?
The damage day by day grows, but it doesn’t grow incrementally. People’s frustration does grow, however. Obviously for workers with fewer resources, or older workers for whom walking in the cold is an issue, it’s a huge inconvenience. There will be holiday parties cancelled, deliveries cancelled. This is a death by a thousand cuts in terms of inconvenience. It adds up to a very debilitating situation for the city. But assuming we get a settlement in the next week or so, I think it’s a short-term setback.
How do you think the strike will affect labor business relations?
I don’t think this will be seen to characterize labor relations in the city. The TWU [Transport Workers Union Local 100] has always been a militant union and MTA [Metropolitan Transportation Authority] is particularly difficult, so I don’t think this sets a tone for the rest of labor management relationships in New York.
Can you give us any sense of what a disruption to New York’s economy means to the country?
New York City is a $450 billion dollar economy and the whole metro area is $808 billion. We’ve bounced back after 9/11 and are even bigger now. It’s an economy that, if it were a country, would be the 10th-largest in the world. We have 41 of the Fortune 500 companies headquartered here and we are the international capital of financial services and media. So, it is absolutely a blow to the national economy.
Editor's Note: On Dec. 22, three days after the strike began, union leaders voted to resume negotiations and send their members back to work without a new contract.