Privatizing the Turnpike will do more harm than good for New Jersey's economy.By Janice Fine, Jeff Keefe
and Julia Sass Rubin
The Christie administration has placed privatizing significant portions of the New Jersey Turnpike workforce high on its to-do list, arguing that a private firm is likely to pay toll collectors two thirds of what they are earning now. To pave the way, the administration is waging a public relations campaign to impugn the integrity of toll collectors, maintenance workers and other Turnpike employees.
Based on our research and a review of privatization studies in other locations, we believe the administration’s Turnpike privatization objectives are “penny-wise but pound-foolish” in at least three ways.
First, turning good jobs into lower paying ones with few benefits will further erode the state’s economy. New Jersey has prospered when blue-collar workers have been able to rise into the middle class because good wages create broader benefits for all residents. When workers have more income to spend on products and services, it leads to increased wages for all workers. Dramatically lowering wages under a privatization scheme would have the opposite effect, reducing overall economic activity in the state.
The loss of living wages and benefits by these workers also would place greater demands on the state’s safety net, as the earning of public sector workers have helped cushion the consequences of the 99,400 jobs New Jersey lost between 2008 and early 2009.
A recent study found that an estimated 80 percent of private service workers used in federal contracts are members of the working poor. New Jersey can’t afford that. Do we really want to turn the clock back by turning good jobs into bad ones?
The second concern with privatization is that the quality of maintenance and services would suffer.
Experience in other states, and the research and interviews we have conducted surfaced dozens of specific issues. Some critical ones are:
• Outside contractors are often understaffed or juggling multiple client responsibilities, sometimes leading to missing deadlines, cutting corners, cost overruns, mismanaged maintenance and real public safety issues
• Outside contractors often charge astronomical fees for anything not in the original plan — including repair of something initially done wrong.
• Turnpike employees have more experience and have often been able to complete work in a cheaper and more timely fashion.
• In-house tradesmen and technicians have extensive training and licensing, and have built up skill sets that make them able to engage in creative problem-solving and repair, custom programming and engineering, and to handle unusual events and emergencies.
• In-house employees have institutional knowledge from years of working at the Turnpike and are used to working together across various specialties.
A private vendor’s approach to management will be significantly different. A vendor will run the highway with a singular eye on the financial bottom line. All decisions regarding investments and services will be evaluated on the basis of their effect on the vendor’s profits or cash flow, rather than quality of service.
Third, despite news reports, the Turnpike is one of the few state entities in strong fiscal shape. In 2009, it had net revenue (profit) of $252 million after paying for operations and debt service on $1.1 billion in toll revenue. The Turnpike is a cash cow for the governor.
Faith in the private sector to outperform government agencies seems to be Gov. Chris Christie’s governing philosophy, but real-world experience indicates otherwise. Private infrastructure deals are often characterized by the same shifting of risk, leveraging of debt and conflicts of interest that triggered the recent financial crisis.
Although we don’t often think of it this way, the New Jersey Turnpike and its workers are among our state’s greatest assets. New Jerseyans have been contributing to that asset for many years, and it is in our best interests to protect it, not privatize it.
Janice Fine, is an assistant professor of labor studies and employment relations at the Rutgers School of Management and Labor Relations. She wrote this op-ed with colleagues Jeff Keefe and Julia Sass Rubin.