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Autumn 2014
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By Nicole Gelinas

After The Fall: Saving Capitalism From Wall Street--and Washington

Eye on the News

Nicole Gelinas
Enter Stage Left
The Carnegie Hall stagehands’ victory is emblematic of New York City’s labor problems.
17 October 2013

How do you get to Carnegie Hall? Practice. How do you create a new union job at Carnegie Hall in a time of nonprofit austerity? Exploit upper-class fears of looking unfriendly to the working class.

Earlier this month, the 57th Street institution was forced to cancel its fall season-opening concert because of a stagehand strike. The five members of Local One of the International Alliance of Theatrical Stage Employees, who make an average of more than $400,000 annually, weren’t protesting a pay cut or reduced pension or health benefits. They were objecting to Carnegie Hall’s plan to open a separate educational concert space without hiring union stagehands to staff it. The workers characterized Carnegie Hall’s position—that educating students is a different business than putting on public concerts—as union-busting. Two days later, the concert schedule was back on and both sides were declaring victory, but the winner was Local One. Carnegie Hall will hire a union stagehand for the new space and more “if needed,” according to the New York Times.

Why didn’t Carnegie Hall fight? After all, it had the facts on its side.

Even in New York City, total compensation of nearly half a million dollars is a lot of money. Some of Carnegie Hall’s concertgoers are well-heeled, but many other attendees are not. Go to a concert, and you’ll be just as likely to sit next to a retiree who cuts coupons to save money for concert tickets as to a banker checking his iPhone. Even an audience member who makes $100,000 or so annually has to think before purchasing concert tickets more than a few times a year; New York is an expensive place to live. Moreover, except for the global stars, the people who work for the various national and international orchestras performing at Carnegie Hall are lucky to earn salaries in the low six figures. One might think that Carnegie would have won over its performers, audience members, and the public by refusing to be held hostage by five people whose incomes nearly put them in New York’s top percentile of taxpayers.

The makeup of Carnegie’s board of directors is likely responsible in part for the agreement ending the strike. Chairman Sanford Weill is also the former chairman of Citigroup, which in 2008 was the recipient of a massive taxpayer bailout. Carnegie’s other board members make up a who’s who of the New York financial community. Generous and civic-minded, they probably don’t want to invite public attention to their own sky-high incomes, which, in certain cases, are many multiples of the $400,000 that the stagehands are pulling in.

The same dynamic plays out on a larger scale when it comes to the city’s municipal workforce. For nearly 12 years, New York’s billionaire mayor has been squeamish about confronting the city’s public-sector labor unions on pay and benefits. (One of the first things Mayor Bloomberg did when he took office was to give teachers what amounted to a nearly 50 percent raise over time.) City employees don’t make salaries in the mid-six figures, but they do make more than private-sector workers for similar work, and they have for some time. More damaging to the city budget and to city services, though, are public-sector pension and health benefits that far exceed anything available in the private sector. New York’s uniformed employees can still retire after 22 years at half pay, and nearly all city workers can expect to pay nothing for health care during and after their working years.

Bloomberg isn’t the only powerful New Yorker who takes a subdued approach to the city’s unionized labor force. The front-runner to succeed him, public advocate Bill de Blasio, has made the centerpiece of his campaign a five-year, nearly 13 percent tax hike on the wealthy to pay for an increase of half a billion dollars in the city’s annual education spending. The idea is fiscally damaging. It would spur wealthy New Yorkers to restructure or delay their incomes to avoid the tax. It would also make New York even more dependent on its top earners, who already pay 43 percent of personal income taxes (wealthy earners’ incomes are volatile and thus have a disproportionately damaging effect on city deficits when they fall during recessions). In a practical sense, an extra $500 million a year in a $24.6 billion education budget won’t make much difference.

Yet New York’s business leaders have been muted in their criticism of de Blasio’s plan. The Democrat’s opponent, Republican Joe Lhota, has had trouble attracting donors and supporters. New York’s wealthy residents, particularly self-conscious in the wake of the 2008 bailouts and the Occupy Wall Street movement, don’t want to be perceived as attacking the blue-collar working class—even if the unionized public-sector working class is itself pretty privileged. But the rich don’t pay all, or even most, of the city’s taxes. While New York will get about $4 billion in personal income taxes this year from high earners, it will get another $5 billion from the not-so-wealthy, plus $6 billion in sales-tax revenue paid by everyone, including the poor. The city will also take in $19 billion in property-tax revenue—including money from apartment-dwellers, who shoulder more than their fair share of the property-tax burden, thanks to breaks for single-family homeowners.

In the end, the city’s inability to deal with its public-sector labor costs hurts the private-sector middle class most of all. Carnegie Hall’s capitulation to its stagehands illustrates the problem well, and it helps explain why New York taxpayers have spent the last decade paying more for less.

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