Although urban mass transportation began in the private sector, the public sector had taken over most u.S. Transit systems by 1980. The reagan administration reversed this trend by making privatization of transit a major policy approach. This policy has been controversial; it has been opposed by many transit officials, some members ofcongress, and especially labor unions. There are numerous opportunities for private enterprise to become involved in mass transit, and the process has taken place increasingly in recent years. Privatization gets many favorable reviews: it is claimed that private firms are more economic, efficient, productive, flexible, and innovative in providing transit service. The emphasis has been on cost savings because transit operating costs have risen greatly in recent decades. There is ample evidence that private firms often achieve lower costs.There has been little study of the reasons for the cost savings. The existence of unions may be the significant factor, rather than whether the enterprise is public or private. The limited data availableshow that nonunion private workers receive much less compensation than public workers. Unionized private workers fall in between. The welfare of transit workers should be a matter of public concern. One important issue is whether private firms are exploiting their employees. This topic deserves further study because transit workers should not shoulder an undue burden for reducing the subsidies for transit service. This paper appears in transportation research record no. 1297, Public transit research: management and planning 1991 .
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