Odd Lots - This Is Why the Nation Is Facing a School Bus Driver Shortage

Episode Date: December 9, 2021

There have been a lot of stories about the challenges of keeping schools open over the last two years, much to the consternation of many parents. But, for many students, going to school involves first getting on a school bus. And that industry is facing its own stress. As with many other industries, school bus operators around the country are saying we're in a drivers shortage. On this Odd Lots, we speak with Corey Muirhead, Executive Vice President of the Logan Bus Company — the largest school bus contractor in the NYC area — to explain how the business works, and the challenges it faces in this environment.See omnystudio.com/listener for privacy information.

Thanks for listening to Oddlots. Follow the show on Amazon Music for more future episodes or just ask Alexa play the podcast, OddLots on Amazon Music. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. So Tracy, obviously everyone knows about the so-called labor shortage this year. Like we've talked about it many times on the show. But numerous employers up and down different industries have all talked about. about the difficulty they've had in hiring, or at least hiring at the same levels and wage points as they had pre-pendom.

Yeah, truly, it's been a year of shortages, or I guess maybe scarcity is a better way of putting it, both in terms of like the supply chain, which we've spoken a lot about, but also in terms of labor market. So a lot of employers saying that they can't find the right employees or if they find the right employees, then they don't turn up to actually work,

or they're all quitting on mass. asked to do something else. I have a lot of questions about what the else is that other people are actually leaving to do. But that seems to be, you know, the anecdotes that we keep hearing over and over from the labor market. Right. And it's important to note anecdotes from the employer side, obviously, the anecdotes from the labor side might look different. One area that from what I understand is have, and we'll get drilled down to specifics, but public sector employment has been tough. And I think a lot of governments too, particularly areas where people have pensions that they can retire to and so forth. You know, for a long time post-grade financial crisis, the public sector cut a lot of

jobs. But my understanding right now is it's the opposite where the public sector, by and large, is having a really hard time recruiting. And of course, public sector is more limited and budget flexibility and so forth than businesses are. But that's a whole area or some component of the labor market shortage that we haven't really talked about. Yeah, it's kind of an interesting one because, you know, for years, if you worked in the public sector, it was considered a very safe and stable and to some extent desirable job. And I have to say, I'm kind of speaking slightly from experience here because I just realized my mother worked in the public sector for Austria and she just took early retirement last year. I think she was one of the people that basically like threw her hands up and said, it's not worth it anymore. I'm just going to retire early and avoid all this pandemic-related stress and, you know, take my

retirement benefits and go live my life. So, yeah. Now, of course, when it comes to government, there are varying degrees to which the public actually interfaces with the government. But there's no question that for a lot of parents, particularly including myself over the last two years, one of the big issues has been schools and getting to school. And that is sort of for people, for parents who have children, kind of one of the key ways that they interact with public institutions. And so whether those are functioning, whether they have staffing, whether they can get the kids to school, hint, hint as to what we're talking about, that is a huge way in which these shortages can, or again, these mismatches perhaps, or this scarcity. I keep using shortages, even though I really think

that's like sort of employer-side framing, ends up being a real issue for the general public. Yeah, so the only thing I know about this is basically from your tweets, but there is apparently there is apparently a shortage of school bus drivers. And as you just pointed out, I mean, this is particularly a sensitive issue for parents. And you know, we talk about inflation being painful for people who feel like they're no longer able to feed their families or it's going to cost them a lot more than it used to. And I feel like you're right, this is probably one area where the labor shortage would actually be particularly felt by parents. And the question I have is whether or not this is an idiosyncratic development because maybe there are

individual things around the school bus driver market that make it more difficult to hire the right people or whether this is a reflection of that broader trend that you were just describing of people really, you know, the great resignation that we keep hearing so much about. and people just deciding that they don't want to drive school buses for a living anymore. Well, I'm really excited we're going to dive right into it. Before I do, I just want to say my daughter, she goes to school very close to our house so she can walk. But she did go to summer camp on Staten Island this summer. So she did have to take a school bus for the first time.

So this is an important topic for me. And we have the perfect guest to discuss it. We're going to be speaking with Corey Muirhead. He's the executive vice president at Logan Bus Company and affiliates. It's the largest New York City public school bus contractor in the area. It has 2,000 buses in New York City plus another 500 on Long Island. And up until very recently, he was the president of the New York School Bus Contractors Association. So we have the perfect guest to talk about what is going on with school bus drivers.

Corey, thank you for coming on AdLOT. Hey, Joe and Tracy. Thank you very much for having me. So obviously, we're going to talk about the claims that there's a school bus shortage or a driver. shortage to be more specifically. But before we do and before we get into current conditions, why do you give us like a brief overview of what a, what pre-pandemic normal looked like in terms of how the market works and how many drivers you employed and how much they're paid and just sort of like just what what normal looked like pre-pandemic. So pre-pandemic people were coming through

the door and they wanted to be hired. One of the things that we see now post-pandemic that was still very prevalent pre-pandemic. And one of the big things that we're pushing as an industry is no matter what time frame it was, it's always extremely difficult to become a school bus driver. It's one of the most heavily regulated industries and it is a regulatory marathon. But for good reason, right, you want to put on the most professional expert people, drivers that are transporting kids. You know, we're transporting the most precious cargo. So for obvious and for safe, reasons, you need to have those regulatory hurdles in order to put the best and brightest on the road. So be that as it may, back before the pandemic, people were coming through the door, but there was

certainly a little bit of a stagnation happening there. And, you know, was it wages? Was it because the drivers were only getting six hours per pay? A lot of the companies outside of New York City don't offer pensions and they don't, they offer 401ks or the benefits. You know, one of the things that you see, there's a dichotomy between New York City and the surrounding areas of Westchester, Long Island, et cetera, because New York City offers family benefits full-time, 40-hour paying jobs with pension, and Long Island and Westchester do not. So you certainly saw some people leaving the industry because with everything going on, people were coming into this industry. The pay may have not been as good as other industries, but they were coming because of, one,

the stability of a pension, and two, because of the family health benefits that you were able to receive. Now, another big thing about the city in Long Island, and this is what we're all kind of getting together and racking our brains about, is you have a job is, like, despite being the length of a school year, like a teacher, and the teachers are obviously better paid than school bus drivers. School bus drivers are paid basically 40 weeks out of 52 weeks of the year. So if you're looking for a full-time job, that's extremely difficult to not be paid for three months out of a 12-month year. So we started to really see people exit the industry there as well. A lot of times this industry was flooded with retirees because of just the flexibility of the hours, the shortness of

the routes, certain things that you were able to do that it was, you know, a lot of retirees in the NYPD, FDNY, sanitation, other second jobs that people would retire 45, 50, and then come and drive a school bus because it only took a couple of hours a day for them. That was all great and well, pre-pandemic. Now, we'll get into why post-pandemic, that is just completely non-existent, but that was the flexibility we had where we had the full-time people and the part-time people. So can I just press you on this point? Because I think it will inform the rest of our discussion. But can you give us like, you know, if you were trying to sell someone on becoming a school bus driver, what would be the big selling points that you would give them? What is the

attraction about the job. And historically, what kind of people, I realize you just mentioned retirees, but what kind of people would have been most interested in becoming drivers? The people that would be most interested in becoming drivers are community members, time flexibility, right? So you have people that maybe haven't been in an industry or are new to entering the job workforce and they say, hey, what can I do that's something around the block or that gives me the flexibility if I have children, if I have other things to do. So the reason why a lot of people became school bus drivers is because you got your job done early in the morning. You had the flexibility to do some of the things in the middle of the day, what you needed to do.

And then you did the afternoon route and you got to do whatever you needed to do at night. As well as being a part of your community. You were around your neighborhood. Many of these school buses, school bus companies, facilities are in heavily densely populated neighborhoods. So a lot of people walk to work. There's very seldom do I have many drivers that are driving to the facilities. So that was another big, big sticking point. Now, once again, probably the largest thing, and with certain companies, was the stability of the industry, pre-pandemic.

Our industry is recession proof, but it's not pandemic proof. So what we saw during the Great Financial Crisis back in 0809, we saw, we had so many people applying for jobs that there had to be layoffs and waiting lists. That has completely gone, done a 180. So it's very interesting to see in this life cycle, you know, from 2008 to 2000, 2021, it's the complete opposite. But like I said, you had people lining down the block because you were able to do. And as, you know, as we get into it there, as you continue to escalate through your years of longevity and tenure, you get paid more. But because of that flexibility, some people do have second jobs. And when the financial crisis happened, that's what we saw.

A lot of people or retirees or people from, you know, the finance. sector were saying, you know what, I need a job. They are hiring. School buses aren't going away. I can do this job in the morning and the afternoon and then I can do what I need to do in the middle of the day and at night as well. So that was the attractiveness of the industry pre-pandemic. You know, it's interesting. You mentioned regulation and we have high barriers to entry in the space for a very good reason because it's children. And it's the same with daycare and child care. but there's also this tension in child care and daycare where the regulation of child care facility is extremely high, but a lot of the people who are in child care itself, particularly the teachers aren't paid particularly well.

Can you just give it a little more clarity on sort of like what school bus driver pay grades look like in normal time? So we'll talk about the greater New York area. And for New York City, it's 40 hours paid per week. and there's an average between $20 and $22 per hour. Okay. When you get outside to Long Island and Westchester, that average dips down to about $18 an hour. There are certain different companies offer different packages. If you don't take benefits, then you can be offered a package as high as $25 an hour,

but then you start to cut back on the number of hours that you're paid. So many times in Westchester or Long Island, and even upstate, you'll start to see a five-hour guarantee or a six-hour guarantee. And that's really the problem with our industry right now that really needs to be addressed is if you want to attract people, this has to be more of a full-time job. That's something that the industry has really, it's really shined a light on what's going on right now that no longer do people just want the $25 an hour for five hours a day. You need to give them a full day's pay of work. The retirees section, that's kind of where that marriage came from because these retirees only wanted to work part-time or quote-unquote part-time. And that's the

non-existent, as I said before. So, you know, it runs the gamut between $18 and $22. There's different types of school buses that we can get into a little bit longer of why other people aren't coming into this industry, as you mentioned before, the Great Retirement. There's type A, which is minivans. These minivans transport special needs education children. And then there's type C, which is your conventional big school bus that you guys see on the road quite often. And that transports the general education children. Could you maybe describe how the contracting system works in New York because I think not a lot of people will necessarily be familiar with it. But, you know, if a district needs school bus drivers, how do they actually

go about acquiring those or, you know, striking a deal with a company that can provide them? So there's two different ways that this industry operates. There's the public sector and the private sector. So let's go micro to macro. New York City is a hundred percent privately contracted. New York State is 60 percent privately contracted. The nationwide is 40 percent privately contracted. So the majority of the majority of the nation is publicly contracted, but New York State is majority privately contracted. How you get a private contractor or a public contract? So it works two ways. It's an RFP or an RFB. An RFP is. An RFP is a request for proposal and an RFB is a request for bid.

The difference between the two is very simple. An RFP has a select criteria of about 10 agenda items that you have to master and you get scored based on that criteria. So it's safety, operational history, insurance, age of vehicle, driver abstracts. It's a select criteria so that you are the most fit and professional operation. And obviously, price is, of course, one of the big. ones, but there's a myriad of different things that you need to score the highest on to be selected as that vendor. And you are selected by a panel of about three people within the school district or the municipality, and they look at your entire proposal and they say, we deem this

operator the most fit operationally, financially, and we would like to go ahead with them. On the opposite side of that is what's called a request for bid. A request for bid is very simple. It is the lowest responsible bidder. So if you bid the lowest number, so long as that district and municipality goes in there and they say, okay, they have the facilities, they have the buses, they have the drivers, there will go with them. It's very simple. A lot of the districts, the majority of the districts, opt for an RFP because of all of the extra things that you have to put in there, right? You know, you want a safe, reliable, good company. You want newer buses on the road. So a lot of people in their RFPs they'll put in, we're going to promise to purchase 40 brand new vehicles. You know,

if you do an RFB, you don't have to put in the age of your fleet. Now, if you're a school district and you don't want to have 15-year-old buses, dirty diesel buses for every single bus on the road, no. When you look at that, when you're a Board of Education or a superintendent and you're looking at these RFPs and RFPs, you have a fiduciary responsibility to put the safest, most reliable and also environmentally friendly vehicles on the road. So many oftentimes they opt for an RFP rather than an RFP. The news doesn't stop on the weekends. Context changes constantly.

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Make us part of your weekend routine on Bloomberg television, radio, and wherever you get your podcasts. So let me ask you another question. You as Logan Bus Company, your company, largest NYC contractor, you have 2,000 bus in NYC. What is the market share of those 2,000 buses in New York City? And how do market share decisions work? How can they change over time to what degree do you compete with other fleet operators that are New York City school bus contractors? So there's very little competition outside of the two bids that went on in 2013 and 2014. As far as market share, we're about 22 to 25 percent fluctuating on how many routes are created each year.

And how it works is you pick your routes at the beginning of each year, the DOE and OPT, have to route each child and you know, you have a certain, what's called restoration rights and you get restored your contract routes. But overall, with including pre-K, there's about 10,000 school bus routes in New York City and we operate 2,000. So just, you know, for easy context, 20% of the market. Now, as far as competition and how we grow and, you know, how we scale or things like that, this is an extremely difficult job. It's an extremely difficult industry. I should say job, excuse me. It's extremely, extremely, extremely capital. intensive. And a few of the things that are, I'd call threats to the industry in terms of

businesses staying in business are the cost of vehicles, the cost of real estate, and the cost of insurance. Obviously, because we are school buses transporting children, we have very high levels of insurance. And with high levels of insurance come high levels of litigation. So many school bus companies have gone out of business or they have closed up shop because they could not afford to pay for these expenses. Vehicles are six figures. You know, brand new type C school bus cost about anywhere from 100 to 120 grand, depending on which original equipment manufacturer you're coming with. And then, of course, the other thing being who can pay the most for the same pool of people. We all operate in the five boroughs of New York City.

And some of us have the same collective bargaining agreement with unions. Some of us have other unions. But when you are all operating in the same space and you're fighting for the same person, you have to get very creative and crafty on what you're willing to offer these people. So a lot of the smaller companies, you know, if I were to go and offer an extra five days paid off on top of the New York City five paid leave, a smaller company that operates 100 or 200 buses, it's going to be very difficult for them to offer an additional five paid days off for 100 people. That's going to really, really hamstring their operations. So that's where we see a lot of companies fold and consolidation of the

industry out, whether it be acquisition or for the most part, it's just, it's companies throwing in the towel and then the Department of Education distributing the work to the vendors. So this is something that I wanted to ask you based on your previous description of how the contracting process actually works. But if you're a school bus company, how do you actually make money in this business while providing a sort of economic rate to the people who are buying your services? Because I imagine the ceiling on running a school bus. bus operation could, in theory, be almost limitless. You know, you could have totally brand new school buses because everyone would love to have their kids driven in a brand new vehicle. You could have the

best possible school bus drivers, people with years and years of experience, because obviously parents would feel more comfortable with that. It feels like the cost could rapidly spiral out of control. But clearly, people are in this industry. You have lots of companies competing for these contracts. So how are they actually making money and how do they sort of balance safety with the need for profit? So that's a great question. And it's a very difficult one. So here are the couple of easy answers to that. And I say easy facetiously. But the ways that we maintain and mitigate exposure when you talk about being able to turn a profit is you have to stay on top of your insurance and your insurances and safety. So what I mean by that is,

is accident courses to limit the number of vehicle, vehicular accidents you get into so that your auto liability claims stay low. Workers compensation. We have such an extensive workers compensation program because as I'm sure you can imagine, I have 2,000 buses, 3,500 employees. We have quite a bit of workers' compensation claims. So to stay on top of that program, mitigate the workers' compensation claims, mitigate the losses, return to work policies, things like that. when you're able to control and mitigate those type of costs, that is a way to turn profit. You know, you can't sacrifice safety, right? So you still have to put the best, latest and greatest vehicles on the road.

But what you can do by that is if you have great credit and you build a good company, you can leverage debt. So if I'm going to make sure that I pour the money in my company back into labor and back and I reinvest into my vehicles, I can buy vehicles at an extremely large number of quantity and I can have great rates to buy those vehicles. So that's a great way to leverage debt in our industry, is that if you want to have a good, safe operation, you reinvest your money or you use the money that you have

to buy debt down on brand new vehicles. And then, you know, as far as other things, it's a juggling act between the labor and the number of employees that you have to run your operation. You know, as far as efficiency-wise, you really have to, in like, operational logistics, you have to take a really deep, deep dive in understanding your personnel. How many people do I need to run dispatch to get out 100 buses?

What's the answer to that? Oh, man, it's two. Okay. And that may seem like a lot, but at the very least, you need one dispatcher per every 50 buses. Think about that for a second. This person's responsible for GPS and answering phone calls and making sure that they can get driver on the radio. So even 50, 50's a lot. But that's exactly it. So you really have to get down into the weeds. And it's more about, you don't make money. You don't make more money on each route.

You have to find streamlined operational efficiencies in order to make more money. So I think we've got a pretty good understanding of like how the market structure generally works in the space. So why do we now address the so-called the school bus driver? shortage. So you talked a little bit about what 2019 looked like. You said this is a recession-proof industry, but it's not a pandemic-proof industry. You said post-GFC, you had applications out the door because it was stable, very different today. Why do you talk us about, here we are, it's December 2021. What are the new stresses on the running of your business? And what are some of the overall numbers? How have things changed? Sure. So let's go back to March 2020 when the entire

school bus school education system shut down. Obviously, we were low on the pecking order, right? Respectfully, I completely understand that. But here's the problem. And as we say, you know, the school bus starts the education process, especially, especially in minority neighborhoods and lower income neighborhoods where you see twice as many, nearly twice as many people take the school bus to school in those neighborhoods to get their education. So we were being spoken to by the contractors were not being spoken to by the school districts. The school districts had a lot on their hands. Municipalities had a lot on their hands. But we tried to explain to them, this industry is not just a light switch. You don't turn it on and off. These are some of the most heavily regulated

and highly licensed individuals in the state. You need to have a plan for us. They didn't have a plan for us. And what happened was you saw a lot of these CDL drivers say, you know, what the heck is going on with my job? What am I supposed to do? And a lot of the the school districts and municipalities said, we're not going to pay the school bus contractors because it would be seen as a gift of public funds. Now, I'm not an attorney. I can't unpack that, but that was, that was, you know, a full statement. And what we saw was a lot of these school bus drivers, as I mentioned before, that operate in the same communities. They live in the communities they operate. They're very upset in the sense that they felt like they're, you know, the school districts

and the municipalities turned their backs on them. You know, for me, obviously, we tried to work with the unions to keep them paid for a certain period of time. We tried to keep their benefits for a couple of months and things like that. But when I am receiving zero revenue, I, of course, had to lay off. I lay them off. And, you know, that keeps you up at night. But concurrently with all of that going on, you hear terrible, terrible stories that the transportation industry was the second deadliest job during COVID.

Even in New York City alone, MTA experienced 156 deaths. Now, the MTA union, one of the MTA unions, one of the school bus unions. They all speak to each other. So it became a very, very difficult job. You were laid off the people who were working, which by the way, school bus drivers and transit workers are considered essential employees. They never get the same respect. And I'm not saying whether they should or not, but they should be at least, you know, acknowledged as essential employees. So you had a really bad, perfect storm of you were laid off, you weren't getting paid. The contractors couldn't do anything. And you were hearing about these transportation.

deaths, and then you were expected to come back that September, and you were expected to drive a school bus filled with 50 unvaccinated children. Now, this industry is the median age of a school bus driver is 55 years old. So this is a pretty old, and I say that relatively, this is a pretty old workforce. Right. There was quite some fear amongst a lot of people to come back to work. I'm talking back in September 2020 now, quite a lot of fear about people coming back to work, transporting children that were unvaccinated. Despite all the measures that we took, whether it was mandating masks, we had cleaning solutions to wipe down the buses. We lost quite a bit of workforce then because of the fear of unvaccinated children. So at the same time during the pandemic,

when school bus drivers weren't working, they still had their CDLs. What was the number one industry that boomed during the pandemic. Trucking. Trucking and delivery. So many drivers went to go work for Amazon and other delivery services. Wow. Because that was pandemic proof. That was a pandemic proof industry.

In fact, it skyrocketed during the pandemic. So if you are a CDL driver holder and Amazon warehouses and last mile services are popping up every day in a new neighborhood, whether it's Brooklyn, whether it's Rockaway, whether it's Staten Island, they have all of the United. they have all of their bases covered in the five boroughs. You can walk in there with the CDL and your drug testing and all of your licenses still intact and say, hey, put me on the road immediately. So that further decimated our industry.

Last year, if you remember, in September 2020 to June 2021, many of the schools were remote learning. So it was a hybrid mix. It was some days in school, some days out of school. and there were quite a bit of problems on how we're going to be paid for that from the school districts. And then that trickles down to quite a bit of problems on how you're going to pay your drivers. So how was a driver expected to only work three days out of the week or only work two days out of the week? Once again, that strike three. That once again decimated the industry.

So those are the three really big points from the 2020 school year on why we see today, 2021, when they said, In September, hey, we're going back to 100% ready to go fully back in school. And the industry said, whoa, hold on. We've been telling you guys for the last 18 months, there's going to be an issue here. So two things here. Is it possible to give like a rough estimate of how many drivers were lost because they were, you know, slightly older retirees who were maybe worried about actually catching COVID versus people who needed money or found better alternatives in the form of Amazon and simply couldn't

hang on to the school bus job. And then secondly, I'm assuming that the older generation of bus drivers probably isn't going to come back into the workforce. Correct me if I'm wrong. But on that assumption, where do you start to look for new drivers? So the first part, there was about, nation and statewide, there was a 15 to 20 percent driver shortage. So you lost, you know, if it's to 10,000 in New York City, you lost 1,500 to 2,000 people. Now, New York City does a little bit better because of the things that I spoke about before, the 40 hours, the union, the health benefits and pension and things like that. But no, across the state and across the nation, you saw about a 15 to 20 percent decline. And then to your second point, yeah, it's a very,

very, very, very scarce job market because there are no retirees and there are no older workforce to be here. So some of the creative things that we've been doing is we're trying to hire younger, trying to hire people as a stepping stone. And, you know, whether it be, hey, drive a school bus for a couple of years before you get your class A and go on to trucking or drive a school bus before you do something bigger, it's been a challenge. And we're still racking our brains. There's no right answer here. We're offering sign-on bonuses. We're increasing our pay. something you mentioned before that is really big and something that the whole industry is taking about you know right now inflation you know and we measured in our industry but just by CPI right

now CPI is outpacing ECI and ECI is the employer cost index so if those increases are if if you're bottom up there how are you expected to hire workforce how am I expected to fill my fill my void if inflation's outpacing the the employer cost index so you know we're really trying to get creative here and think of ways outside of the box to attract new people. One of the things when I mentioned in younger workforce is once again trying to hit on that flexibility of hours. Hey, if you only want to do a PM route because you don't want to work in the morning, we'll take you. Yeah. I was wondering on that, like, you know, like artists, like any thought of like just like sort of the more classical gig worker types or people who don't want to make it

a career but need a little extra money while they pursue their passion? Is that a possible, Is that a possible future school bus driver? It is to a certain extent, but this goes back to the difficulty it takes and the longevity it takes to become a school bus driver. You know, you have to take five written test, five written permit tests to pass. You have to learn about air brakes. You have to learn about pre-inspections. You have to know about transmission and suspensions, leaf springs. You know, I'm just throwing names out there.

You know, if you're a part-time person, if you're developing an app or if you're an account, if you're doing something like that. But what are you going to learn about shock absorbers and brake systems? You know, it's a very difficult, difficult, cumbersome process. And then on top of that, you still have to get behind the road and pass your road test. And you need training. It's not like you just get in this car and pass your DMV road test. No, we do driver's ed.

And then the same thing for school buses. So we're trying. We're trying to figure out ways for people to think of like, hey, we'll do split shifts. We'll do, you know, medical positions and things like that. But no, it's become very difficult. So one of the things that's obviously happening right now, and I should just include our usual caveat, which is that we are recording this on December 6th,

but clearly there are concerns over the Omicron variant of COVID, and we are seeing some additional steps to maybe not go back into full lockdowns, but people are talking about, you know, more vaccination requirements, and perhaps more restrictions on the movement of people and things like that. How do you expect that to impact the school bus driver situation now? And are you worried that it's sort of, I guess, undoes some of your efforts when it comes to recruiting new drivers? Absolutely. It's extremely, extremely, I am extremely, extremely nervous,

especially if you go into a remote option or if you do a full lockdown, in both of those scenarios, very hard to pay labor because if they're not going to pay the contractors for the days that you are remote, then the contractors can't pay labor, then they're going to look for other industries where they can continue to work five days a week. You know, as we spoke about before, if you're only working nine months out of 12 months and you have three months off being the summer and the holiday breaks, you know, you're going to continue to further destroy the industry if you don't pay them for the time off during the remoteness. So all of the efforts that we've had paying for training,

we've been working with government to make the road tests and the regulatory process more efficient and eliminate some of the unneeded things. And all of these, all the goodwill and the progress that we've built over the last four months, I'll call it from September to December, would be destroyed because all of that uncertainty, just like how the markets move with Omnacron, the job markets,

going to move. If they, if they see the writing on the wall is that there's going to be a shutdown, they're going to look for businesses that do not shut down when school shut down. So I want to get your take. I think in September, Governor Hockel announced these plans to ease the school bus driver shortage somewhat, perhaps streamline the efficiency of the CDL system. Can you talk about, have you seen any effect of those proposals? And what? What more could the city or states or municipalities be doing to continue to ease some of the stress you're facing? That's a great question. And that's once again a lot to unpack. So let me try and address all of that. We worked with Governor Hockel's office. They were great. Sometimes when you work with government, I'm sure you guys know this, they write down notes and then nothing comes of it respectfully.

And it's because it's difficult. They have to hear from every industry and every sector. And they don't know what is right and what is wrong. And they take it with a grain of salt. But not her office. They did great. So we had meetings and we had conference goals with them. And here are the couple of things that they did that really helped our industry. As you guys remember, federal unemployment stimulus packages where people were staying home in New York State. They were making about $900 a day, I believe, or maybe a little bit less than that. It didn't end until September 6th. By the way, trying to hire people when you were already making $900 for September 1st rollout for schools,

that was another very difficult task, right? You know, if you're already sitting home making $900 an hour, why are you going to come in and drive a school bus at 6 a.m for, you know, the same pay? So with that being said, when we spoke to the governor's office, we explained to them that it's very difficult to have people come in the door when we have all of our people who are still sitting home on unemployment and the benefits haven't exhausted. But we know that there's a lot more CDL people. So one of the biggest things that she did is she released a survey with about 3,000 responses of C. GDL workers that were on the sidelines, we'll call it, on unemployment, to come back to work. And she said, hey, look at your local school buses. They're offering sign-on bonuses.

They have new pay packages. Are you interested in driving for a district or for a private contractor? And the responses were overwhelming. There was 3,000 responses. And they released the data to all of us. And we were able to call these people and get them, pluck them off the list to come work for us. That was extremely, extremely helpful. The other thing that was extremely helpful, as we've spoken about quite a bit, is the time it takes to become a driver.

It takes anywhere between 16 and 22 business days to become a driver. Now, that's very, very difficult. And I should say it could take even longer than that. If you need a job immediately, the last thing that you want to do is wait three, four, five weeks to get put on the road unpaid. So that's always been a problem with our industry. And the governor's office recognized that. And they said, hey, that's not right. that's really tough. So what they did is they suspended the two weeks between the written test and the road test, that if you were ready, if you passed all of your written permit test and you were ready for a road test, you could schedule that immediately and you could get on the road.

Now, another thing, like any other industry, and as you alluded to at the beginning of this podcast, you know, government was short staff during the pandemic also. So DMV had less people working the road test. So sometimes you can have all eliz. your licenses in place, your drug testing, fingerprinting, everything done, and then it would still take four weeks to schedule yourself a road test. Now, when they heard that, they said, oh, my God, that's really terrible because not only did you take the three weeks to get all of your things done to become a driver, but now you have to wait on the government four weeks to take your road test to become licensed. So she put on more DMV inspectors and test instructors. And test and that really helped us as well. So after that happened, we certainly saw a good number of people come into this industry. And we were very, very thankful that we had an ear because the previous

administration, and I'm not going to get political, the previous administration completely tuned us out. So this kind of leads into a slightly philosophical question that I want to ask you. But, you know, if we all decide that school bus drivers are a valued, part of the labor force, essential workers. What are the chances that governments actually start paying them more or, you know, start paying more for contracts and then the contractors can actually pay school bus drivers more? Like, is that the natural solution to this is just to pay them more? And if so, why isn't that happening? Or what are the obstacles to that happening? I think that's a loaded question. I mean, I understand. Sorry.

okay. No, it's great. I understand you're saying. I think it's difficult. Hey, I'll ask it in good faith. Yeah. I know. I know that. I'll say this, though. The public companies, the public school districts, excuse me, do quite often pay more than the private contractors to a certain extent. And they're still having an extremely difficult job of hiring people. So I don't know if money is just the answer. And I think it's because of the type of job it is. And I think that the workforce right now, because there are other jobs out there that, and you, you know, you said the else, the other thing at the beginning, I think that the other jobs out there are more enticing to the new workforce. I don't think people want to wake up at five o'clock in the morning and hop on a school bus and transport unvaccinated

children right now. I think that that looks like a difficult job for them when they can work for Amazon or work for other delivery companies and they can wake up at eight o'clock, nine o'clock. obviously there's some other things with the federal, with the New York State marijuana legislation in that past that we lost some of our people as well, you know, not to speak on Amazon, but Amazon doesn't, you know, in delivery services, they don't drug test. Obviously, school buses, of course, we're going to drug tests. It's we're governed by the federal motor clearing safety administration and it's not federally regulated.

So they have to make sure that they're still not smoking marijuana. So I think you lost people there as well. workforce is going to tail off to more jobs that do not drug test to a certain extent. So, you know, I'm not sure it's just pay. Obviously, pay needs to be looked at. Let me just ask one more question on pay, though, and all your other points make a lot of sense. In a, you know, a company like Amazon, though, like, they could announce tomorrow that

every one of their warehouse and logistics workers gets $2 more per hour. I don't know if they would, but obviously they could do that unilaterally. To what extent are your revenues fixed and how long did the contracts last with the municipalities and what kind of flexibility is there in terms of repricing those contracts from your perspective as the labor market reprises? So the contracts are extremely fixed, but for the most part, by New York State Education law, a contract can go no longer than five years. So a five-year extension is the maximum.

them. And what would happen if you wanted to give, like an hour industry, if you wanted to give a $2 raise, you would have to go, what we call quote unquote, go out to bid. So what go out to bid means is you, you know, you tell the municipality the contract numbers no longer work. We would like to go out to bid and try and get our numbers. And then you go out, you put pen to paper and you put in a new number. Now, obviously, you know, the contract, the school districts look at all the bids that come in. They once again have to find. the safest, most reliable, fiscally responsible bus company. But, you know, that's the competition. So a lot of times I certainly do think you see more activity in the bid space now more than ever. So sure. And I think that that's where this industry is going, is that you'll continue to see. And it's healthy competition, but there is still a very extremely, there is still

huge barriers to entry for any new existing bus company to come in. But that's what's going to have to happen. And contractors are going to have to bid out their work and get their numbers up and then enforce that, of course, must go back down to giving increases to labor. One other thing I'll say, by the way, and some of the other contractors will get mad at me for saying this, but I already do it. So, guys, I'll say here. Spill all the secrets. I like this. All the things you're not supposed to say. It has to be an eight-hour job. It can't be five hours. It can't be six hours. The retiree pipeline is no longer there. If you're only working 10 months out of the 12 months, you have to give them the full eight-hour job so that people can see it as a 40-hour work week and a full-time job.

When you start to get to those levels, I think you'll see even more people come into this industry. It's kind of interesting because we're told over and over again by other types of employers that the younger workforce is looking for flexibility. And they want to be able to work from home or they want to be able to dictate their own work. working hours, but you're sort of advocating going in the opposite direction. Well, unfortunately for us, we don't have that flexibility, right? School buses operated six in the morning and two in the afternoon. So whoever wants to come into the industry, the school bell times aren't going to change. Right.

So let me just ask you one last question before we go. So right now, you know, one of the things that strikes me about school buses and schools in general, and I mentioned this in the intro, it's one of the most clear ways that parents are people interact with their government, especially if their kids are in public school. But it's a clear, it's a service that people expect. What is the quality of service right now? Are there fewer routes being run? Have you to consolidate routes?

Do parents need to take their kids further from their front door to find a bus route? Like, what is the current level of adjustment that's been required because of the difficulty in hiring? Sure. So the contractors and municipalities and school districts have really worked together well, but there is still some pain points that are being filled. there are certainly less routes being run. We'll call them multiple routes being ran on the same bus. You know, some kids are not taking the bus any longer, so you have that flexibility.

But say you have a middle school and a high school, one of the bell times is 8 o'clock. The other one is 8.30. You'll put both of those groups of kids on the same bus and you'll do that route back to back. So that consolidation of route has been helpful. Now, the only reason you're able to do that is because it's not at full capacity. but some of the times the routes still do run late. You do not have that flexibility on special education routes. Special education routes, they go all over and you can't double up, what I'll call

putting two routes on one. So, you know, other things are obviously home to school is the most important thing. The school bus starts the education process. So we've worked with the athletics departments and the athletic conferences in the state to explain, you know, hey, we have to make sure that we do our role. routes get the kids back home from school and then we'll do the athletics. So whereas athletics used to start at 3 o'clock, 3.30, they're starting at 4 o'clock now. And that's been a big help because, you know, it's one of the things that people understand.

It's one of the few things that even the parents understand, you know, it's more important to get the kids home. It's more important to get the kids home from school right now than to get the kids to practice, which, by the way, I play two-season athlete. I completely understand it stinks. It's a very unfortunate situation right now, but that's the type of creativity we need to get everybody to and from school right now. Well, Corey, that was fantastic. I learned a lot from that.

Corey Mirrorhead of the Logan Bus Company. Thank you so much for coming on AdLOTS. Thank you both very much. This was great. That was great, Corey. Yeah, so good. Thank you. Tracy, I really like that episode. You know, I like all of our episodes

where we go deep into something. But now I kind of want to do more on things related to public sector provisioning because it's like it's a whole different world or thinking about business realities and things like how RFPs are done and RFBs and all that stuff. And listening to Corey explained it all is super educational. Yeah. And I mean, I think it fits in with the broader theme of odd lots over the past year or so, which has been this idea that, you know, we're talking supply chains. We're talking all these invisible processes that you don't normally. think about and suddenly in 2020 and 2021, you actually have to think about them. And that, you know, includes things like, where do school bus drivers come from and where do we get more of them when an entire generation of older driver decides that it's not really worth the time or the risk anymore? The other thing and, you know, thinking about future Oddlots episodes is like the Amazon effect on the labor market overall. Because I really think,

think, like, that's its own fascinating story. This is, like, you can make the argument, like, Jeff Bezos. But he retired. He's not the CEO. Whoever the CEO of Amazon is at any given moment is, like, our de facto minimum wage setter right now in America because there's so many warehouses all over the country. They have such a large footprint. And as soon as they set up shop in an area, as Corey said, like, for a lot of his employees,

it may just make more sense to work at Amazon. And when, you know, I didn't think about that, you know, when you think about the conditions of last September, especially before the vaccine, you're on a bus, getting up, you know, a bus full of unvaccinated children, your school bus drivers typically on the older end. And suddenly the just competition from other areas, you can see why even pay aside, you could see why other types of jobs become more appealing. And then you have this behemoth Amazon that's just growing and growing and growing. Yeah, and I mean, minimum wage setter is a great way to put it. And you kind of wonder what the response from the government is going to be, right? Because you think of Amazon and normally people think about it in the context of taking potential workers away from private businesses or crowding out some sort of private business. And you don't necessarily think about it crowding out public services.

But in this particular case, that's exactly what it's been doing. Yeah, no, totally. And, you know, I hadn't thought like his point about how. hybrid two days on, three days off and how maybe that might have worked for the teachers, but it was very unrealistic for school bus drivers, like slashing all their routes and the barriers. So many interesting things. Like, yeah, I guess it just goes back to so many interesting things I had never thought about. I mean, part of me also just continues to be stunned by like the lack of a social safety net or

job security in the states and the fact that school bus drivers seem to be at-will employees. and even though they might have expected to drive school buses every day for a school year, the pandemic happens and suddenly it's like, oh, no, we don't need you anymore, so goodbye, you're out of work. That's kind of stunning and unfortunately different to the way some other countries would do this. Yeah, pretty fascinating lens into how things actually work. All right, shall we leave it there? Let's leave it there. This has been another episode of the Odd Lots Podcast.

I'm Tracy Alloway. You can follow me on Twitter at Tracy Allaway. And I'm Joe Wisenthall. You can follow me on Twitter at The Stallwart. Follow our producer, Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca Today. And check out all of our podcasts at Bloomberg, under the handle, at Podcasts.

Thanks for listening.