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Leaving the driving to others

November 4, 1983



Perhaps it only seems as though transportation strikes in the United States occur during holiday seasons -- or as the nation heads into a holiday. So with Thanksgiving and Christmas fast approaching, it is not hard to grasp public concerns about the Greyhound strike. Greyhound, after all, carried 57 million passengers last year and operates 60 percent of the nation's scheduled intercity bus service.

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Transportation experts are quick to point out that whatever the duration of the Greyhound strike, alternative services should in most cases be available. Indeed, part of Greyhound's financial problem is precisely that, namely, the rise of low-cost competition in the transportation sector -- from cut-rate airlines to new and feisty bus and trucking firms to the federal government's Amtrak system, which gets a $5 billion annual subsidy.

The deeper concern in the Greyhound strike goes beyond the immediate issue of available transportation, although that is a problem in many small towns, where transportation firms are cutting back marginally profitable services to help defray operating costs.

The larger issue in the Greyhound strike is essentially twofold: How can transportation firms financially adjust to the new deregulatory climate now under way in the United States? Second, can that process be shaped so that the costs of deregulation -- such as ending marginal routes or asking workers to take pay and benefit cuts -- are borne equally among all members of society?

Congress, which has now partially or fully deregulated four transportation industries during the past five years, should examine these issues. Airlines were deregulated in 1978; railroads and trucks in 1980; buses in 1982. What would be most unfortunate would be for the deregulatory process to be perceived by the American public as so disruptive -- as to an extent has already occurred with the airlines -- or for the public to believe that cost-cutting efforts are falling most heavily on employees, as to sour public support for deregulation.

Deregulation is essential if US industry is to regain its competitive edge. But whether deregulation has produced better management and union practices is questionable.

As the nation's largest intercity bus firm, Greyhound has been cutting costs, largely by ending marginal routes. But that will not be enough. Rival firms (including cut-rate airlines) can charge far less. And Greyhound's labor costs are higher than those of competitors.

But will asking its employees, many of whom have been with the company for years, to take a 9.5 percent salary cut (17 percent including cuts in fringe benefits) be the answer to survival? Several airlines have called on their employees for similar sacrifices.

Unfortunately, the US has allowed "worker elites" to develop in some industries, such as autos, steel, and perhaps, transportation. These workers receive higher wages than union workers in most manufacturing industries.

At the same time, some balance -- and compassion -- seems appropriate. Will slashing wages and bringing in nonunion or low-age workers promote that larger sense of worker loyalty needed in a firm? Management often needs to put its own house in order through more innovative practices.

As noted by Donald L. Kock, director of research of the Federal Reserve Bank of Atlanta, "An American chief executive officer customarily earns 40 times as much as a worker in one of his plants." The salary differential is smaller in other nations. In Japan, for example, it is around 20 to 1.

Deregulation is necessary. At the same time, the costs of deregulation should be shared equally throughout society.