A TTC Strike Costs the City 50 MILLION DOLLARS a DAY!! And Other Myths …

Have you heard that a TTC strikes costs the city of Toronto $50 million a day!   Wow, that’s a lot.  Mayor Ford and his people have been citing this number like a broken record for weeks.  The media cites it in almost every story, as if it is fact.  Yesterday, the Liberal government introduced legislation banning TTC strikes.   In his speech introducing the legislation, the Minister of Labour said this:

Work stoppages at the TTC, according to a city of Toronto staff report issued in 2008, have an estimated economic impact of $50 million every workday. The impact of TTC service disruptions would send economic and environmental shockwaves across this province.

There is it again.  The number made it into the Minister’s justification for the law.  The economic cost to the City is the principal justification for the law, and the $50 million figure is the supposed “evidence” of this cost.   If the Minister is saying that a TTC strike costs $50 million a day, and the media, and Rob Ford, then it must be true.  Right?  Why would they say it if it wasn’t true?
Where Does The $50 Million Number Come From?
One theme in my courses and on this blog (see here and here) is that statistics and economics used to advance a particular labour law reform agenda should always be looked at suspiciously.  For example,  in this post, I questioned how the National Post uses statistics creatively to argue that raising the minimum wage causes all sorts of havoc on businesses and the economy, while giving CEOs and executives huge wage increases has no harmful effects whatsoever.  Stupid.  But if you just accept their numbers without question, you could believe this rubbish.

This $50 million figure has been thrown around recklessly by all of the advocates of a TTC strike ban and the media without any assessment of how it was calculated.  It is such a nice large figure that most anyone confronted with it would agree that it is a huge cost to impose for just the rights of a few people to strike.  It shapes the whole debate.
But what if it is nonsense?  Would that change the debate?

The $50 million figure comes from a “study” done at some point by the Economic Development, Culture & Tourism Division at the City.   However, few people have seen that “study”.  Was it done by a professional economist, or some guys with bachelor’s degrees in sociology?  I have no idea, and I doubt that the Minister of Labour does either.  What people are citing is not the “study” itself, but a Staff Report on the TTC by the City Manager in 2008 that refers to the “study”.  That report is available here [Amusingly, that report actually recommends NOT making the TTC an essential service after weighing all the economic implications]. Here is the extent of what it tells us about the mysterious $50 million dollar figure (p. 7):

According to the City’s Economic Development, Culture & Tourism (EDCT) Division, the main impact of a TTC strike would be a reduction in the total output of goods and services produced in the City, resulting from increased travel times and commuters making alternative work arrangements. Peak period commuters from the rest of Toronto to the Central Area are likely to suffer the greatest impact. Some people will work at home or will make arrangements to travel off peak. However, non-TTC commuters will also be affected, because increased congestion on the roads will increase travel times for all commuters. EDCT have estimated the short-term effects on the City of Toronto’s economy caused by a strike at the TTC are approximately $50 million per day (Monday to Friday). This estimate is based on the assumption that a TTC strike would reduce the total output of goods and services produced in the City of Toronto (over $500 million per day) by about almost 10%.

That’s all we got, folks.  That is the basis for the media and politicians’ claim that a TTC strike “costs $50 million a day”, and  the main justification put forward by the Government to justify the new law.
Are you convinced by this sophisticated calculation.  What is the scientific basis for the assumption that production in the City is reduced by 10% just because people have to find alternative arrangements to get to work or the roads are busier?  If people get to work one hour later than normal, are they staying one hour longer to make up for the time?  Are any short term economic impacts simply made up once the strike is over?  Are people who work from home less productive?  Does the calculation include the increased revenues of cab drivers, parking lots, gas stations, Go Transit, and hotels that will be busier because of the strike?  Is there any actual evidence that production decreased at all during TTC strikes, let alone by 10%?  Or is this simply a back-of-the-letter guestimate by a city bureaucrat?
The answer is that we have no idea.  We would need to study the report that invented this number and test  the calculations and assumptions used.  But no one engaged in the debate whether to ban TTC strikes has bothered to do this.  Politicians who want to ban TTC strikes found the number useful to their argument and they locked onto it without any thought about whether it is an accurate claim.  The media just accepted the number as fact.  This is how “economic” studies are often used in labour law reform debates.
My point is not that a TTC strike has no impact on the economy.  It is that the $50 million number could be complete fiction, and the public would have no idea, since there has been no informed discussion of how the number was calculated, tested, and verified.   But the Minister has now used the figure to justify a controversial law that significantly restricts labour rights.  Indeed, the main justification for the law, according to the government, is this economic impact on the City.
Do you think that a government relying on an economic statistic to justify a restrictive law should carefully examine how the statistic was calculated?
Without the $50 million claim, the economic justification for the law disintegrates, and the government would need to justify the law on some other basis, such as, O, I don’t know, we want the people who voted for Rob Ford to vote for us in the next election.
As I’ve said before, question any economic argument used to justify labour law reform and insist on knowing how calculations were made and what assumptions relied on.