The following is part of a longer article on the recent strike by school bus drivers in New York City:
In the school bus industry, [privatization] proceeded at a somewhat slower pace [than the rest of the transport industry]. Many school boards and local governments still operate their own school buses to this day. However, privatization has accelerated rapidly since the onset of the economic crisis five years ago. Budget crises at the state and local levels have been used to transfer busing into the hands of for-profit operators. Across the country approximately 35 percent of school bus routes are now operated by the private sector.
In New York City, competitive bidding has resulted in dozens of bus companies scrambling to offer service at the lowest price. Currently some 45 companies hold school bus contracts in New York City. While the Employee Protection Provisions (EPP) affords drivers and attendants a minimum level of job security, wages themselves have been held low. Companies find other ways to extract cost savings. Workers say they are often compelled to work overtime without additional pay and must shoulder the burden themselves of tolls and violations outside of their control.
By attempting to remove the EPP contract requirements, New York City is opening itself up to larger companies who have thus far refrained from bidding on account of relatively higher labor costs. Cornering the New York City market—and its $1 billion plus yearly student transportation payments—would mean a windfall in profits for any such company.
First Student, Inc., the largest school bus company in the US, reportedly offered up a bid for the first time. The company, three times the size of its nearest competitor, has grown rapidly since 1999 through mergers and acquisitions.
Its parent company, UK-based FirstGroup, originated from the deregulation of the UK municipal bus operations in the 1980s. The company, which also owns Greyhound, entered the US student transportation market in 1999 with the acquisition of Ryder Student Transportation and expanded much further with the $3.6 billion takeover of Laidlaw in 2007. Today it operates in 42 states, transporting nearly a quarter of the 26 million students who take school buses each day.
Key to First Student’s success has been attacking the working conditions of its drivers, pushing low wages, bare-bones health insurance coverage, and no guaranteed hours. A number of labor skirmishes with First Student have erupted recently, including in New Haven, Connecticut and Portland, Oregon. New Haven drivers walked off the job in September of last year protesting poverty level wages. Also last year, a federal judge ruled against First Student for unfair labor practices and refusing to bargain in good faith, awarding Portland drivers two years of back pay.
First Student dominates the New York City suburbs on Long Island. Its workers there are little more than casual employees, guaranteed only six hours a day, with little or no benefits. These miserable part-time conditions are overseen by ATU Local 1181, which bargains for drivers.
Like the airline and trucking industry, the student transportation business is consolidating in the hands of a few major monopolies with far larger resources and geographic reach. After decades in which workers suffered the devastating impact of bankruptcies, mergers and acquisitions, and the loss of their jobs and pensions, a few major players are now in position to reap vast profits based on a sharp reduction in labor costs overseen by the unions themselves.
In addition to First Student, other conglomerates that dominate the US market include Durham School Services [a subsidiary of the UK-based National Express Group] that is actively preparing to bring in replacement drivers in the event of a strike in two South Carolina counties. School bus workers in that state start at $10.50 an hour.
The third largest is Student Transportation Inc., based in New Jersey, which dominates many rural and suburban areas. The biggest in New York City, Staten Island-based Atlantic Express Transportation Group, is owned by hedge fund Greenwich Street Capital and had revenues of $440 million last year. All of the companies anticipate that further acquisitions and privatization will promise large profits for years to come.