The New Jersey Turnpike Authority plans to issue a Request for Proposals (RFP) for toll collection services early in the new year, a spokesman told TOLLROADSnews today. He said the plan is to eliminate around 300 collectors at the Turnpike proper and 175 at the Garden State Parkway if contracting out proves a significant savings.
Costs of the 475 fulltimers is currently around $47m, or around $100k each in salary plus benefits. For a 40 hour week the typical toll collector pay is $55k/year, just over $1,000/week and $25/hour in base pay.
Costs of overtime, pension entitlements and health insurance payments are around $45k/toll collector/year.
Private toll collection services tend to have overall costs about half to two-thirds the $100k/person/year that has become typical for public toll authorities. That suggests the potential savings to the NJ Turnpike in the range of $16m to $24m/year.
These relate to overall toll revenues running at about $700m/year on 640m transactions. There's about a 65/35 split between electronic tolling (E-ZPass) and cash so the $47m annual cost relates to about $245m in revenue and 225m transactions.
On this arithmetic of each dollar in cash tolls collected about 19c goes in toll collector costs. That is potentially reduced to 9c to 14c with contracted-out, or privatized toll collection.
But electronic toll collection is in the 5c to 10c cents/transaction range and going down, so contracting out is not going to make the difference longterm.
Savings most dramatic in benefits area
Usually private contractors can recruit adequate staff for $15 to $20/hour, making annual salary costs $30k to $40k v $55k.
But the bigger savings are in the benefits area.
Rather than $45k/yr in benefits costs for unionized workers, private operators can generally get adequate personnel for benefits costs of $15k to $25k/year.
Contracting out of toll collection is common in Florida, Texas and California.
Indiana Toll Road has contracted out toll collection and the Chicago Skyway, both private concessionaires.
COMMENT: Technology and unions are pricing workers out of jobs. Electronic toll collection costs are a third to a quarter of cash collection costs. Being lower cost, tollers are increasingly offering lower toll rates to customers to get transponders. That encourages the uptake of transponders and reduces the number of motorists who pay with cash, and the need for toll collectors.
Few tollers recruit new toll collectors. Rather the jobs disappear as people retire or leave - "by attrition" they say.
Cash toll collection is a doomed job category, but the high labor cost that unions have extracted from public toll agencies is hastening the end of such jobs.
When your editor was a boy every multi-story building had an elevator operator, a man or woman who sat on a kind of bar stool often bolted to the floor of the elevator car, and "drove" the elevator with a lever on a wheel and a switch that opened and closed the doors.
There must have been many hundreds of thousands of elevator operators (not many as sexy as the one in the picture.)
With advances in electrical sensing and switching technology, the occupation of elevator operator went extinct in the 1960s.
Cash toll collection, similarly has no future as a job in the 21st century.
Defenders of elevator operators said that as well as avoiding the need for expensive new elevator technology, the operators on their barstools provided a useful service in directing people to their wanted floor, providing security, that they were safer, and were a "friendly face" (or see left, a leg) for the enterprise running the building.
All true to a point, but those subsidiary services weren't, in the end, judged to be worth the cost.
We'd bet the same will prove true of cash toll collection, and the demise will just be quicker with unions that insist on $100k+/year when there are people willing to do the job for half the cost.
"Mayhem" at NJ Turnpike offices
There were reports of noisy protest demonstrations at the Turnpike offices today where the board meeting was held. They said they were protesting "privatization." People are entitled to express their opinions on this, but we doubt it will affect the course of events.