Bureaucratic red tape. Lack of competition. Unaccountable labor unions. It sounds like “waste, fraud, and abuse” that conservatives might fabricate to make the case for free-market reform. But it’s real, and it’s happening in the most famous city in America, as exposed by a bombshell New York Times investigation released Thursday.
The Times report details how New York City’s “East Side Access” project became the most expensive mile of subway track on the planet, at $3.5 billion per mile, at the same time other New York projects were as high as $2.5 billion – several times the global average. As Brian M. Rosenthal reported:
For years, The Times found, public officials have stood by as a small group of politically connected labor unions, construction companies and consulting firms have amassed large profits.
Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show.
Construction companies, which have given millions of dollars in campaign donations in recent years, have increased their projected costs by up to 50 percent when bidding for work from the M.T.A., contractors say.
Consulting firms, which have hired away scores of M.T.A. employees, have persuaded the authority to spend an unusual amount on design and management, statistics indicate.
Public officials, mired in bureaucracy, have not acted to curb the costs.
This modern-day Tammany Hall boondoggle is a case study in the inherent susceptibility of government to inefficiency and corruption at taxpayers’ expense, and it's not hard to see why: The parties involved are unaccountable, and elected officials are more concerned with their political allies than the people they are supposed to represent.
A primary driver of New York’s exorbitant costs are politically unrivaled labor unions. There are dozens of unions working on any one project, and they negotiate contracts without giving the taxpayers who are funding it a voice in the process.
As one analyst told the Times, “I’m not anti-union at all, but it’s amazing how much they dictate everything that happens on a job in New York.” Another explained simply, “Nobody at the negotiating table is footing the bill,” which is how taxpayers end up paying some workers as much as $400 an hour and funding duplicative, unnecessary jobs that similar projects in other cities simply don’t have.
The report acknowledges that nonunion labor could bring down costs, but that hiring nonunion labor is “not politically realistic.”
Another force driving skyrocketing costs are construction companies themselves, and a lack of competition in the bidding process. A Times analysis of roughly 150 contracts worth more than $10 million found the average project received less than four bids, while projects in other cities often see eight or more. Less competition allows companies to submit costlier bids. Moreover, they earn as profit a percentage of the project’s cost, and thus have no incentive to work with unions to control costs. City officials have also demonstrated a track record of giving projects to vendors that donate to their campaigns. Imagine that.
Worse yet, government ineptitude is baked into the cost of the gravy train – a tidy 15 to 25 percent is added for the burden of the “bureaucracy of the transit authority.” Vendors complain that they are often correcting government errors, awaiting time-consuming and byzantine approval processes, and dealing with officials who change their minds midway through projects. In a jaw-dropping admission, one MTA official called the agency's own process “self-defeating.”
As the report explains, other cities that face the same challenges as New York are able to complete similar undertakings at a fraction of the cost. New York is uniquely pathetic in this regard, but New Yorkers are also uniquely short-tempered – so perhaps there is hope for reform as their frustration builds, slogging through an unpleasant commute that shows no signs of improvement because of the gold-plated inefficiency of the projects Big Apple taxpayers are bankrolling.
Obviously, sweeping collective bargaining reforms are probably a bridge too far in New York. But taxpayers should demand the city consider nonunion labor and eliminate or lighten the burden of the “prevailing wage” mandate that artificially inflates costs in New York City by up to 25 percent.
They should also demand that the city receive a minimum number of bids on large projects before moving forward, and that the process be transparent so taxpayers know they are receiving bang for their buck in a competitive manner.
And city officials must reduce red tape with simple reforms like requiring elected officials to approve costly new regulations rather than let bureaucrats pile them on in relative anonymity and without repercussion. Another common sense step would be to eliminate duplicative approval requirements for projects that are essentially identical to other projects that have already been approved.
These and countless other necessary reforms will be heavy lifts in a city where many residents have given up any hope of good government, and elected officials like Gov. Cuomo and Mayor Bill de Blasio unfailingly prioritize campaign donors who profit off of taxpayers over taxpayers themselves. But if voters don’t demand it, there is little reason to expect change – unless, of course, Congress and President Trump demand it before sending New York another dime of federal funding for mass transit.
Akash Chougule (@AkashJC) is a contributor to the Washington Examiner's Beltway Confidential blog. He is the director of policy at Americans for Prosperity.
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