Wage

Imagine if TWU Local 100 were a business firm, we would be based on the theory of  profit maximization. Economists are able to construct simple models that predict the price a firm will charge for its products. Now we can predict the wage rate by using the principle of business that TWU Local 100 should demand in bargaining. However it is first necessary to determine what it is that TWU Local 100 maximizes.

If the MTA demand for labor coupled with the supply of labor then the marginal revenue shows the change in the MTA wage bill caused by lowering the wage rate enough to result in the employment of one more worker. This is an unacceptable theory thus John Samuelsen president of TWU Local 100 has no lee way here.

Lets also imagine a nonunion firm that would set the wage at x if the workers of the firm vote to join the union, then the union must decide what wage to demand from the management in the ensuing negotiations. One objective of the union might be to maximize the union membership in the firm. The union’s wage demand in this case would be the market determined wage. However the problem with this bargaining goal is that workers could have obtained it without the union. To induce workers to remain union members the union would also have to provide some type of nonpecuniary benefit (for example a grievance system). However if we in the TWU Local 100 were to assess the current grievance system based on a sports franchise with its current performance or standings then the number of losses would outweigh the wins thus putting us in par with the New York Mets - so John Samuelsen’s performance as president of TWU Local 100 would be as good as Omar Minaya or Jim Duquette.

Lets imagine another objective might be to maximize the wage rate carried to its logical conclusion then this bargaining goal would result in higher wages in TWU Local 100. This would be appropriate for TWU Local 100 due to the fact that it would push the MTA labor demand up. This approach would be appealing to the TWU Local 100 membership however with John Samuelsen at the helm do not hold your breath.

Lets imagine an additional possible bargaining goal of TWU Local 100 to maximize the economic rents of the membership. This means that TWU Local 100 attempts to set the wage so that the membership receives the greatest amount of earnings in excess of the amount they would have obtained in a nonunion firm. To do this, the TWU Local 100 selects the point where marginal revenue and marginal labor costs are equal giving rise to a level employment with an optimal wage demand. This option would be based on the price charged by a profit maximizing monopolist. However as we know John Samuelsen based on his performance since January 2010 till now does not instill confidence.

Let’s imagine a further possible union bargaining goal is to maximize the wage bill this may be an option John Samuelsen may use by claiming the MTA total outlay for labor is maximized at the level of employment where the marginal revenue is zero.

We have given several theories of maximization of either the wage bill or the economic rents of the membership with the problem that neither of the bargaining goals are in the self interest of the individual TWU Local 100 member. The business firms’ goal of profit maximization is in the self interest of every stockholder, since each receives a share of any increase in profits. We members of TWU Local 100 are not like stockholders of a firm because the union has no internal transfer device to evenly divide the wage bill or economic rents among the individual members. As you have noted in the FORM LM-2 LABOR ORGANIZATION ANNUAL REPORT where John Samuelsen has awarded himself $150,632, Kevin Harrington $101,780, Stephen A Downs $91,065 - clearly this model does not distribute the wage evenly or even based on their performance. Those were the days my fellow co worker when Blackbeard had a code to observe. A pirate code was a code of conduct invented for governing pirates. Generally each pirate crew had its own code or articles, which provided rules for discipline, division of stolen goods, and compensation for injured pirates. Now can you guess which code we observe? It is obvious the membership receives no benefit from maximizing the wage bill, and if John Samuelsen would utilize any of those theories we would oppose due to their limitation.