Dec. 19 (Bloomberg) -- New York's economy has been hurt by a threatened bus and subway strike as negotiations between transit workers and the state-run Metropolitan Transportation Authority approach a midnight deadline.

Mayor Michael Bloomberg said he was told by Federated Department Stores Chairman Terry Lundgren that ``sales at the big New York department stores were off 30 percent or 40 percent on Friday just from the uncertainty of people not knowing whether they could get to work.'' Federated owns Macy's and Bloomingdale's. Dec. 16 was the original strike deadline.

After extending the talks and reporting no progress over the weekend, Transport Workers Union Local 100 took its members off the job at two bus lines serving Queens just after midnight today. The union threatened to shut down the rest of the city's buses and subways, which carry 7 million riders a day, at 12:01 a.m. tomorrow if a new contract isn't reached.

``I do not think we will have a deal,'' Local 100 President Roger Toussaint told union members at a rally late today outside the Manhattan office of Governor George Pataki, who appoints the MTA board. ``We want a contract that is honest and just and fair, and not one that was rammed down our throat.''

The rally followed an afternoon meeting between Toussaint and MTA Chairman Peter Kalikow. Authority spokesman Tom Kelly, who confirmed the meeting, declined to provide details.

Bloomberg has estimated a strike would cost the city economy $400 million per day. ``Everybody's just waiting with bated breath,'' said Colleen Cleary, spokeswoman for Sears Holdings Corp.'s Kmart chain, which has five stores in New York City.

Sales

Weekend sales looked ``particularly disappointing in New York,'' said Burt Flickinger, managing director of Strategic Resource Group, a retail consulting firm. ``A lot of people browsing, but few bags coming out of the store. Very little buying and not many people shipping.''

Jim Sluzewski, a Federated spokesman, declined to comment on the mayor's remarks or discuss sales figures.

The union's latest contract expired at midnight Dec. 15. During negotiations three years ago, talks continued 19 hours past the deadline until an accord was reached. The union shut down the U.S.'s largest transit system in 1980 for 11 days.

Wall Street executives said they would be able to weather a walkout with little trouble.

`No Problems'

``There will be no problems managing the portfolios,'' said Ben Halliburton, chief investment officer for Tradition Capital Management. ``There will be a little bit of a hassle for our employees making it to work, but no issue.''

Scotsman Capital Management Strategist Charles Crane, said he didn't anticipate a problem executing trades. ``Many trades are entered electronically now and those systems will be up and running, even if there are fewer people standing behind the machines that process those orders,'' Crane said.

Brian Gardner, Washington policy analyst for Keefe Bruyette & Woods, said if there is a strike he will walk to work, which takes 30 minutes, ``and hope that it's not too cold out.''

Retail chains such as Gap Inc., with 40 Manhattan stores, and Kmart issued employers vouchers to help employees pay for alternate transportation, such as taxis, and organized car pools.

Service on the Triboro Coach and Jamaica Bus lines, which carry about 50,000 riders daily, was suspended by the union today. In a posting on the union Web site, commuters were advised to ``be aware that all buses and trains may be shut down on Tuesday.''

The suspension of the private bus service allowed the union to increase pressure on the MTA, while not being liable for fines or sanctions under state law, said David Gregory, an authority on labor law and professor at New York's St. John's University School of Law.

Strike Penalties

Under New York state law, public employees including transit workers risk losing two days' pay for every day they are off the job. In addition, New York City has filed a suit against the union seeking about $22 million a day in damages for lost revenue and police overtime in case of a strike.

The MTA last week offered a three-year contract with annual raises of 3 percent, chief negotiator Gary Dellaverson said. Under the proposal, new employees hired after the contract is ratified would pay 1 percent of their paycheck for health-care premiums. That wouldn't affect the pensions or benefits of current employees.

New Employees

New employees would have a 401(k) option and would be eligible to retire with a full pension at 62, up from 55 for most current workers, Dellaverson said.

``When you sign up for this job, you've got benefits because the union fought for them,'' said Mario Galvet, a union shop steward and MTA worker for years. ``Guys should understand that one day they'll have to fight for them, too.'' Galvet said he had saved money to tide him over in case of a strike.

The union has asked for annual raises of 8 percent for each year of a three-year contract; an earlier proposal from the MTA offered 6 percent raises spread over 27 months. The transit union later indicated it would accept smaller increases if the authority agreed to reduce disciplinary actions against workers.

Subway train operators and bus drivers currently earn an average of about $62,500 a year, including overtime, according to the MTA. Train conductors average $53,900 and ticket booth clerks are paid $50,720.

`It's Silly'

``If they strike, they strike, I'm not going to be too happy about it,'' said Mike LaFargue, 27, of midtown Manhattan, while waiting for the 5 train at the 42nd Street station this morning. ``But I'm not going to spend $70 on a cab ride to the Bronx from Manhattan. It's silly.''

The MTA oversees New York City's subways and buses as well as the Long Island Rail Road and Metro-North commuter railroads. Unionized LIRR and Metro-North workers aren't party to the contract talks involving bus and subway workers.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

To contact the reporters on this story: Todd Zeranski in New York at tzeranski@bloomberg.net; Josh P. Hamilton in New York at jphamilton@bloomberg.net.

Last Updated: December 19, 2005 19:10 EST