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The Massachusetts Bay Transit Authority (MBTA) in Massachusetts has been facing a bus driver shortage for months, leading to canceled trips and reduced service. However, after the drivers' union negotiated new benefits, including an increased starting wage, the MBTA has seen a surge in job applications. This situation serves as a lesson for employers, both in the public and private sectors, who are struggling to hire.
In May 2023, the MBTA reported having 200 fewer bus drivers than before the pandemic, which has hindered public transit expansion plans. To address this shortage, the MBTA eliminated a probationary period that required new hires to work part-time for their first three to six months and started hiring them full-time right away. This change was a victory for the Boston Carmen's Union, Local 589, which represents over 6,000 MBTA workers.
Despite this improvement, the low starting pay of $22.21 per hour for bus drivers, even with years of experience, remained an obstacle. In fact, it was one of the lowest rates among major transit agencies, with only the Southeastern Pennsylvania Transportation Authority paying a lower starting wage. The combination of job security, better benefits, and higher wages led to new hires now earning $30 per hour, an increase authorized by the MBTA board through a new labor contract with the union in August.
This wage increase has resulted in a significant influx of job applications. Between August 1 and August 25, the MBTA received 753 bus driver applications, a 356% increase compared to July. This serves as evidence that offering higher wages can attract more applicants and improve the quality of job offerings. It also counters the notion that "no one wants to work anymore," as there is a higher percentage of Americans currently in their prime working age range (25-54 years old) than in the past two decades.
The current labor shortage is not unique to the MBTA but extends to other industries as well. However, the public sector has been slower to recover compared to the private sector. Private companies, which have seen increasing profits, have been able to raise wages to attract employees. On the other hand, public sector budgets are typically determined by legislators or city councilors and may not allow for higher wages, resulting in staff shortages.
These labor shortages are primarily related to wage shortages or job quality issues. Employers who offer higher wages and better job quality tend to have an easier time finding workers. Those who struggle to keep up with market wages or maintain job quality may face difficulties in attracting and retaining staff.
As shortages persist across the country, such as lifeguards in New York and teachers in Virginia and Michigan, the MBTA's experience highlights the effectiveness of pay increases in addressing these shortages. Other transit agencies, like those in Richmond, Virginia, and Chapel Hill, North Carolina, have also recently raised wages to attract workers.
Labor economist Aaron Sojourner points out that as more unions enter contract negotiations, wage growth is expected to continue. This lesson is not only for employers but also for legislators who control public service budgets. If communities are concerned about the inability to deliver public services due to staff shortages, the solution is clear: increasing wages and job quality. While this may require cutting costs, finding new revenue sources, or raising taxes, it is ultimately a choice that can make a significant difference.