The True Cost of the NYC Transit Strike

New York City officials say the ongoing mass transit strike could cost the city $400 million dollars a day. Mike Pesca investigates the true cost of the strike and the facts behind the official estimate.

MADELEINE BRAND, host:

In New York City, this is the second day of a major transit strike. If city residents want to drive into Manhattan, they need four people in a car. There is a two-hour delay for the start of public schools and a million dollars a day in fines for the union. But what's the big number, the cost of all of this for the New York economy? Hundreds of millions? Low billions? NPR's Mike Pesca walked over to the New York bureau to file this report.

MIKE PESCA reporting:

In his novel "Watership Down," Richard Adams posited that his characters, rabbits, can count up to four. Anything bigger than four becomes simply `a lot' to a rabbit. Human beings are probably better than rabbits, but the difference between $400 million and $660 million is a little difficult. Those were the upper and lower daily estimates that were floating around as generated by the New York Economic Development Corporation. Mayor Michael Bloomberg put out the $400 million figure, and that has been the one most widely quoted. But New York City Comptroller William Thompson says that if the strike lasts a week, it could cost $1.6 billion; $400 million for the first day, but tapering off to an average cost of $225 million a day, almost half of Bloomberg's total.

To get an idea if any of these numbers are right, I talked to an economist, Bansari Saha. I called him for two reasons: One, he studied the economic impact of the 2003 blackout for the consulting firm ICF; two, he doesn't work in New York so he was able to answer his office phone yesterday. Saha looked at the 11-day 1980 New York transit strike, which was said to cost a billion dollars. He compared that with the estimate for the current strike.

Mr. BANSARI SAHA (Economist): Just sort of to get a sense of--OK?--what kind of cost numbers are we talking about, in the billions or ,you know, tens of billions or what? It just gives me a sense, because $1 billion in 1980, if you adjust it for inflation, it turns out to be more than $2 billion. But at least that tells me that this $1.6 billion is not completely out of whack. It's not unreasonable.

PESCA: Estimates generated by politicians are, of course, affected by politics. Here's what's going on in New York: Mayor Bloomberg probably wants to emphasize the disruption as he backs management. Comptroller Thompson, who ran for office with the Transit Workers Union endorsement, is more pro-labor. In fact, he got some headlines last summer when he contradicted Bloomberg by saying the Republican National Convention would wind up costing the city millions. Thompson, it should be noted, is the official who pegged the 2003 blackout costs at $800 million, if you take out food spoilage, which shouldn't be a problem with the subway strike. Eight hundred million is exactly twice as much as the $400 million-a-day figure the mayor has cited. But there's a big difference between this strike and that blackout, a difference heard when you call for tickets to Broadway shows.

(Soundbite of telephone recording)

Unidentified Woman: As you may be aware, the New York City Transit Authority is on strike, affecting MTA bus and subway lines. At this time, all events will go on as scheduled.

PESCA: Unlike the blackout, which was unexpected and total. Entire stores were shut down. Duane Reade, the city's biggest pharmacy, reported in its SEC filings that quarter that it lost $3.3 million in sales. Walk into any Duane Reade in the city today or yesterday and the lines seemed just as long; the cashiers say they don't see a significant drop in sales.

William Greene is an economist at NYU's Stern School of Business. He says the blackout was much more disruptive than the strike.

Mr. WILLIAM GREENE (NYU's Stern School of Business): That kind of rapid disruption probably would be very costly, more so than this. As people adjust to the disruption, the cost, on a daily basis, will go down.

PESCA: Here's one solid figure to look at, trading on Wall Street. Most days, more than two billion shares are traded on the New York Stock Exchange; yesterday, about 1.5 billion. So check the Wall Street trading tables tomorrow. Forget if the Dow goes up or down. If trading is more than 1 1/2 billion shares, you'll get a sense that the city is learning to cope with the disruption. Mike Pesca, NPR News, New York.

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