Employment relationship

MTA finds that it is their advantage to cultivate a stable workforce since they make substantial investments in TWU Local 100 members in the form of costs of hiring and more importantly training and experience. Likewise TWU Local 100 members find it to their advantage to remain with one employer for a considerable time. One reason for this is economic in nature since wages and fringe benefits normally increase with tenure on the job. Another more psychological reason is related to the value TWU Local 100 places on security and familiar surroundings. 

The most important implication of the long term employment relationship - which both MTA and TWU Local 100 can claim a success for is its longevity. However that is only a facade because currently there is sensitivity in the current stalled contract negotiations. The MTA under Joseph Lhota appears to treat that employment relationship as a commodity. As we know that is the classic type of auction market where prices rise and fall daily, such as wheat or financial issues such as bonds and stocks. In the wheat market an excess supply of wheat quickly leads to a drop in its price as sellers underbid each other to attract buyer or buyers which in turn have little reason not to switch from one seller to another since all bushels of wheat are exactly the same.

In labor however an excess supply of labor typically does not lead to a fall in wages. While workers who are unemployed and want a job might offer to work for a firm at lower wages, most firms would find it unprofitable to hire them because the costs of hiring and training as well as the disruptive influence on morale would far outweigh the savings in lower wages. Thus while in commodity markets prices fluctuate up and down to restore a balance between demand and supply, in labor wage changes occur slowly (particularly in the upward direction). Because of this sluggishness of wages and imbalance between the demand and supply of labor may persist for a considerable length of time before wages rise or fall enough to bring about the necessary adjustment in the labor market (caveat - wages do not reflect the sky rocketing prices - this has been a sore point between MTA and TWU Local 100 that MTA tends to ignore - we wonder why).

On the other side of the coin where the employment relationship is a short term and turnover costs are negligible as for day laborers or migrant farm workers wages resemble the prices of the commodity markets.