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In the positive theory of public bureaucracy, the prevailing view is that the structure of public agencies is designed from the top down by political superiors. Faced with bureaucrats who may disagree with them on policy and who are advantaged by private information, superiors choose rules and procedures to try to ensure that agencies do what they are supposed to do. At least some portion of bureaucratic structure, however, cannot be explained in this way. It emerges from the bottom up through collective bargaining, it is driven by the organizational power of ordinary bureaucrats rather than by their information power, and it results in work rules intended to promote their occupational interests rather than to have any specific effects on implementation or policy--although the unintended consequences for the latter may be significant. When this happens, the theory overlooks an aspect of structure that is essential for understanding the way government operates. This paper begins to explore the connections between collective bargaining, bottom-up structure, and bureaucratic behavior. The empirical focus is on the public schools, the bureaucrats are public school teachers, and the analysis shows that a very common type of contract rule--which gives senior teachers transfer rights over jobs--affects the way teachers distribute themselves across schools, and leads to a situation in which disadvantaged schools (those with high percentages of minorities) find it especially difficult to attract quality teachers. What the analysis shows, more generally, is that even very simple types of bottom-up structure can have significant effects on bureaucrats and their agencies--and the current theory needs to recognize as much. (Contains 5 tables and 23 footnotes.)