Pretend you are on the board of directors of a government owned transit system called NJT.  Times are tough and money is tight.  The board must make some hard decisions that are in the best interest of NJT and the public it serves to deal with the shortage of money.   The governor just reduced NJT’s annual state subsidy of $296 million by $33 million.  The number of people riding on your bus and train systems is down four percent this year.  Which of the following hard choices do you make:

  • reduce the pay of all rank and file employees
  • increase all fares by 25 percent
  • Cut 33 daily trains.
  • Eliminate 3 bus routes
  • increase the amount of time between buses and trains
  • cut 200 jobs
  • reduce contributions to employees’ retirement plans
  • reduce executives’ pay by 5 percent
  • eliminate some discounts and cap other discounts

Faced with the above facts, the New Jersey Transit decided to all of the above except the single one that would have had the biggest affect.  The NJT did not reduce the salary of its rank and file employees.   Are these employees union members?  If so, it would explain why their pay wasn’t reduced, which is what many for profit businesses would do when faced with a huge deficit problem. Instead, the NJT brain power decided to ignore the laws of economics (higher price means reduced sales volume) and give NJT riders the largest fare hike in the history of the NJT.

This reminds me of what the Arizona Diamondbacks did to its fans before the 2009 season.  Up until 2009, I had been a season ticket holder since opening day of the franchise’s first year.  I had four great seats on the bottom level thirteen rows up just beyond first base.  Each seat was $1,743 for the 2008 82 home game season.  For 2009, the Dbacks billed me $2,905, which was just over a 66 percent increase.  Instead of making a small price increase and collecting almost $7,000 from me and my group, we declined to renew the tickets we had held for ten years and the Diamondbacks got nothing from us.  Dbacks attendance was down in 2009 from 2008.  I know probably more than 20 people who were original Diamondback season ticket holders who no longer have season tickets.

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