All Commentary
Monday, December 3, 2012

School Buses, Teamsters, and Rent-Seeking

A new statute in Illinois makes safety the primary consideration in public schools awarding contracts to school bus operators. This replaces the taxpayer-friendly rule that contracts should be awarded to the qualified provider that bids the lowest price. Safety has already been part of qualification. The statute passed the Illinois legislature at the behest of the Teamsters Union, which has a master agreement with First Student School Bus Transportation Services (a subsidiary of the UK's First Group). The agreement makes it difficult for First Student to compete on price with relatively union-free operators such as Durham School Services (a subsidiary of the UK's National Express Group).

John T. Coli, a Teamster official, exclaimed, “The new law will finally ensure that driver safety, skills and student security are not trumped by reckless, fly-by-night owner-operators hoping to win contracts with the lowest possible bid.” Which operators are “reckless and fly-by-night”? To the Teamsters and their political satraps, they are, by definition, union-free operators.

Another Teamster boss, James T. Glimco, passionately proclaimed, “It’s one thing for the state to want to save money on its transportation services, but we cannot jeopardize student safety to help Illinois save a few extra bucks on its contracts.” But the new statute has very little to do with student safety. It is really about rent-seeking—that is, decreasing the competitive advantage of operators who are relatively free of excessive Teamster-imposed labor costs. Illinois safety bureaucrats will always rank a Teamster-impaired school bus operator as safer than any of its competitors, notwithstanding that actual safety records show no significant differences.

And First Student is definitely union-impaired. In its commentary regarding First Student's financial prospects for fiscal year 2012, Bank of America wrote,  “We believe that the current school bidding season will be challenging, with [First Student] protecting its margins at the cost of volume, and thus potentially losing a number of contracts to competition.” It has to protect its margins because of its Teamster-driven increases in labor costs. 

How did First Student fall prey to the Teamsters? Beginning in 2001 the union undertook a corporate smear campaign to depreciate First Student's reputational capital. In 2006, Martin Gilbert, the chairman of FirstGroup, signaled surrender when, at the UK company's Annual General Meeting, he promised to “stamp out anti-union behavior” and declared that the company “would do everything in its power to ensure the company was neutral on the issue of employee representation.” From 2006 to 2008 the Teamsters and their favorite academic union apologists—e.g., John Logan of San Francisco State University and Lance Compa of Cornell University—attacked First Student for its alleged failure to live up to the promises of 2006. Curiously, Logan and Compa argued that United Nations and International Labor Organization rules require employer neutrality in union representation campaigns.

In 2008 First Student fully surrendered to the Teamsters by adopting a “Freedom of Association” policy that compels it to remain neutral in all Teamster organizing efforts. First Student’s freedom of association policy requires it “to refrain from management conduct . . . which is intended to influence an employee's view or choice with regard to labor union representation.” The result? According to William Gould, chairman of the National Labor Relations Board in the Clinton administration and a monitor of First Student's neutrality policy, First Student's “union membership increased from approximately 18 percent to more than 80 percent” from 2008 through 2010. Gould thinks this is wonderful, but it is actually nothing more than a malign consequence of surrender through neutrality.

When a company that is a target of union organizing refrains from providing its employees with reasons to remain union-free, it trespasses against its employees' freedom of association.

Freedom of association has two parts: any person can agree to associate with any other person (or group) and any person can refuse to associate with any other person (or group). In brief, freedom of association means any person is free to associate with any other person who is willing to associate with him.

To give effect to worker freedom of association the National Labor Relations Act (NLRA) was amended in 1947 to permit and encourage employer free speech in union organizing campaigns. Freedom of association requires that workers make an uncoerced, informed choice regarding unionization. That choice requires that workers hear both sides of the unionization debate. Employer neutrality is a trap for employers and employees.

The Teamsters are trying to capture Durham in the neutrality trap, but Durham has chosen to speak vigorously and truthfully against unionization whenever and wherever  the Teamsters try to corral more dues payers among its employees.

Durham has a Workplace Rights Policy (WRP) to protect its employees’ freedom of association. Item 1 of the policy states that “Everyone shall have the right to freedom of association with others, including the right to form and join trade unions.” Further, “No one may be compelled to belong to an association, either directly or indirectly through the compulsory financial support of such association.” This is in exact conformity with Article 20 of the UN's Universal Declaration of Human Rights (1948), which says: “(1) Everyone has the right to freedom of peaceful assembly and association,” and “(2) No one may be compelled to belong to an association.”

Item 2 of the WRP guarantees employee freedom of choice through secret-ballot representation elections. It affirms that “[E]veryone shall have the right to vote for representatives in genuine elections which shall be held by secret ballot, guaranteeing the free expression of the will of the electors.” Durham will not agree to surrender its employees to the Teamsters through cowardly card-check agreements in which secret-ballot elections are replaced by employee signatures collected by union organizers in threatening face-to-face encounters with employees.

Item 3 of the WRP guarantees that in representation elections, “Everyone shall have the right to freedom of expression. . . . and the freedom to hold opinions without interference.” This conforms to Article 19 of The UN Declaration of Human Rights which asserts, “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.” Durham tolerates no gags on employer or employee free speech.

Item 4 of the WRP underscores the importance of free speech by stating that “Everyone shall have the right to obtain or impart information necessary to make an informed choice [which is] a necessary corollary to the rights of freedom of association and secret ballot elections for representatives.” This conforms to the 1947 amendments to the NLRA.

In Conclusion

In May the Teamsters sent alleged employee victims of Durham's resistance to unionization to National Express's Annual General Meeting in London. Fortunately all their weeping and wailing fell on skeptical ears. The National Express board of directors affirmed that Durham would continue to speak vigorously and truthfully against unionization whenever and wherever the Teamsters try to importune its employees. Debate, yes; surrender, no!

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.