Braking the RTD Monopoly : Private Competition Would Correct Bus Service’s Flaws

<i> Pete Schabarum is chairman of the Los Angeles County Board of Supervisors</i>

If you are feeling somewhat dismayed over the recent spate of problems afflicting the Southern California Rapid Transit District, take comfort, you are not alone. Absenteeism, accidents, drug abuse and driver’s license deficiencies have piqued public interest, resulting in a general decline of public confidence in RTD’s ability to provide safe, quality service.

Yet, as transit officials grapple for solutions, they fail to understand that driver-related problems are merely symptoms of a more pervasive problem. Drug testing, improved driver instruction, thorough license and medical card monitoring policy, as well as a management shake-up, may all help to reduce accidents and restore public confidence. But, in the long run, such measures will be as effective as using Band-Aids to cure skin cancer.

In seeking an effective solution to the problems that have recently plagued RTD, one must diagnose the disease that caused the symptoms--namely, that RTD is a public monopoly, immune from the incentives that breed efficiency.

In 1983 the state mandated a performance audit that identified driver absenteeism as a major problem that cost RTD--or more precisely, riders and taxpayers--millions each year. RTD adopted control policies, yet nothing really changed. The 1986 performance audit determined that “there has been no tangible improvement in performance to date.” On the average, operators miss 32 days of work a year, exclusive of vacation, sick leave, military leave, holidays and instruction; 20% miss 81 days a year. This translates into a loss of more than $23 million annually.


Exacerbating the cost of absenteeism, current provisions in the United Transportation Union and the Amalgamated Transit Union labor contracts encourage driver and mechanic absences on scheduled work days in favor of volunteering on their days off when they are paid a premium rate of time-and-a-half. To put the labor costs in perspective: In 1984, 2,700 nonmanagement employees made more than $30,000; 400 of them made more than $40,000.

Such organizational excesses translate into a real cost increase of $700 million since 1976. These increases--in excess of inflation--are equivalent to the entire cost of building the Long Beach light rail project.

There have been some efforts directed at controlling RTD’s costs, but those efforts have largely failed. Following the recommendations of the 1982 performance audit, RTD introduced part-time labor to help reduce the escalating cost of providing service and mitigate the epidemic absenteeism. In addition, RTD restructured performance measurements to give management more effective tools for controlling costs. The impacts of both efforts have been inconsequential.

For the most part, RTD management is incapable of addressing the problems besetting the district. Throughout the 1970s, the cornucopia of federal, state and local subsidies provided no incentive for management to take a hard line during the collective bargaining processes. Capitulating to union demands has resulted in employee wages far in excess of comparable wages paid in the private sector. Today, with many of the subsidies being cut or eliminated, RTD is forced to reduce service and raise fares.


It has long been my belief that the private sector can provide better quality service in a more cost-effective manner. Across the country, more than 300 transit systems employ private sector companies to provide some or all of their service. An Urban Mass Transit Administration study has shown that such competitive contracting with the private sector has resulted in cost savings of 10% to 50% over what it cost public transit operators, such as RTD, to provide the same service.

The San Gabriel Valley currently is studying a proposal to form its own transportation zone which would operate much of the service now being provided by RTD. The preliminary analysis indicates that simply contracting the identical service to the private sector would save $22 million, even after purchasing new buses. Those savings could, in turn, be used to expand service and reduce fares.

It is not so much that RTD has failed, or even that the private sector is inherently better than the public sector. It is that competition is inherently better than monopoly. It is time to realize that merely tinkering with the internal mechanisms of public transit agencies will never result in cost-effective service.

Short-run efforts to improve the quality of RTD service, including mandatory random drug testing and closely monitored license and medical card requirements, are essential. But, in the long run, it is the vision of enlightened policy-makers to develop a system that lives within it’s means and serves the needs of it’s riders, not the special interests which dominate the public transit industry.


The bus-riding public deserves the finest service available. The taxpayers deserve the most responsible use of their tax dollars. And the citizens of Los Angeles County deserve the assurance that the free-market system is being utilized to guarantee those benefits to everyone.