Monday, February 7, 2022

Something to Know - 7 February

Continuing on with our look at issues with the "supply chain", we now look at the trucking industry.   HCR is taking the day off, and the rest of the folks are talking about Pence's remark that Trump Was Wrong.  Nothing beats good summer weather, especially when it is in February in Southern California.  Temps are going to run up close to the 90s here in Claremont later this week.   Very nice!   But, what is it going to be like later in the year when July and August hit us?   The LA County Fair used to be always in the middle of September to early October; it has been changed to some time in the month of May (5-30), which is an adjustment to the reality of climate change.  If you tune in to the Super Bowl this coming weekend, I imagine that there will be lots of chatter about the beautiful new Sci-Fi stadium, with panoramic views of the LA basin and mention of how hot it is, while folks back east are stuck in slush and cold temps.
This article appears in The American Prospect magazine's February 2022 special issue, "How We Broke the Supply Chain." 

Why Trucking Can't Deliver the Goods

The yearly turnover rate among long-haul truckers is 94 percent. And you wonder why you're not getting your orders on time?



FEBRUARY 7, 2022

For the past dozen years, Omar Alvarez has been a key link in the nation's supply chain. He's one of some 12,000 truckers who haul the containers from the adjacent ports of Los Angeles and Long Beach (where 40 percent of all the ship-borne imports to the United States arrive) to the immense complex of warehouses 50 miles east of L.A., where the goods are unpacked, resorted, put back on other trucks, and sent to all the Walmarts, Targets, and the like within a thousand-mile radius.

In the course of his daily rounds, Alvarez promotes the general welfare to insure the domestic tranquility of manufacturers, shopkeepers, and consumers. For which the economic system of his grateful country rewards him with … a pittance.

Alvarez works for one of the largest trucking companies at the ports, XPO Logistics, but XPO insists that Alvarez and his fellow truckers aren't really employees. As far as XPO is concerned, they're independent contractors and it treats them as such—though they drive XPO trucks they lease from the company or its adjuncts and can't use those trucks for any other jobs. As independent contractors, they receive no benefits and aren't covered by minimum-wage statutes. They must pay for their gas, maintenance, rig insurance, and repairs themselves; and, ever since the pandemic clogged the ports with more goods than ever before, they've had to wait in lines for as long as four to six uncompensated hours before they can access a container and get it on the road. If they get in the wrong line at the port, they literally can't get out, surrounded by other trucks and doomed to waste more time. Many ports don't even provide bathrooms for waiting truckers, because they aren't port employees.

According to a 2019 study by the Labor Center at the University of California, Berkeley, the median annual pre-tax income of Alvarez and his fellow port truckers, once their expenses are factored in, is a munificent $28,000.

"We have no health insurance," Alvarez says. Like the majority of port truckers, he's an immigrant who doesn't qualify for Medicaid. "When I need to see a doctor," he says, "I drive [not in his truck] to Tijuana."

Perhaps one-fifth of port truckers actually are independent contractors; nearly everyone else is, like Alvarez, misclassified as independents. Over the past decade, dozens of lawsuits from misclassified drivers have resulted in judgments affirming that they've been misclassified and awarding them compensation from the companies that misclassified them. XPO recently paid a $30 million fine to a large number of its drivers. But neither XPO nor any of the other fined companies have stopped misclassification. It's cheaper for them to pay a fine than to pay their drivers a living wage.

Not surprisingly, given the long waits and meager rewards, a lot of drivers have simply stopped showing up. According to Gene Seroka, the executive director of the Port of L.A., fully 30 percent of the port's 12,000 drivers no longer show up on weekdays, a percentage that rises to 50 percent on weekends. Once the waits exceed six hours, as they now sometimes do, drivers would run the risk of exceeding the 11-hour federal limit on trucker workdays if they then were to actually get a load—which means the port must turn them away, and they'll have spent an entire workday for no pay at all.

And you wonder why the supply chain isn't working very well?

THE PLIGHT OF THE PORT TRUCKERS may seem extreme, but the plight of the great majority of long-haul truckers is dismal as well. It wasn't ever thus. Until 1980, long-haul truckers were generally employed by regulated companies whose routes and rates had to pass muster with the Interstate Commerce Commission. Under the terms of the 1935 Motor Carrier Act, the ICC kept potential lowball, low-wage competitors out of the market. Drivers were also highly unionized, under a Master Freight Agreement between the Teamsters and close to 1,000 trucking firms. For which reasons, truck driving was a pretty damn good blue-collar job, with decent pay, livable hours, and ample benefits.

The Motor Carrier Act of 1980 changed all that, scrapping the rules of the 1935 act so that startups, charging far less than the pre-1980 rates and paying their drivers far less as well, flooded the market. Facing that competition, established companies dropped their rates and pay scales, too. By 1998, drivers were making between 30 percent and 40 percent less than their pre-1980 predecessors had made. According to the Bureau of Labor Statistics, following the steep decline in wages in the decades after the 1980 deregulation, trucker income has flatlined for the past 20 years. The median income of long-haul truckers who are employees was roughly $53,000 in 2018; for contractors, it was $45,000—though drivers in both groups had to put in many more than 40 hours per week to reach these totals.

The story of trucking deregulation is a story of the decentering of workers from liberalism's concerns.

After 1980, the share of long-haul drivers who are contractors increased as well. Of those contractors, the Berkeley Labor Center reports that over one-quarter are misclassified, too (including the drivers for FedEx and Amazon). Like the port truckers, long-haul independent contractors also have to wait, unpaid, in pandemic-lengthened lines to pick up their loads, so that their hourly wage often falls below the legal minimum. Nor have the legacy companies that have allowed their workers to retain employee status, with the notable exception of UPS, maintained their unionized status. With wages plummeting throughout the industry, the thousand companies that had been party to the Master Freight Agreement with the Teamsters in 1980 had dwindled to a bare five by 2008. Fully 57 percent of truckers were unionized in 1980 (nearly all with the Teamsters). A threadbare 10 percent were union members at the turn of the millennium.

Not surprisingly, the supply chain in long-haul trucking suffers from the same ailment as port trucking: no-show-ism. The American Trucking Associations estimates that the nation needs 80,000 more long-haul truckers to move its goods in a timely fashion, and that by 2030, that shortfall may double to 160,000. Confronted with jobs that take them away from their families and require long hours for low pay and scant if any benefits, America's truck drivers don't stay truck drivers for very long. A 2019 study by University of Minnesota economist Stephen Burks and Kristen Monaco of the Bureau of Labor Statistics found that the annual turnover rate of long-haul truckers is a breathtaking 94 percent. And this, I hasten to point out, was before the national quit rate reached new highs in 2021.

The combination of fewer drivers and more goods to be moved has slowed delivery times on the interstates no less than on the port-to-warehouse runs. Phil Levy, an economist who measures such things for a San Francisco–based logistics company, says that before the pandemic, moving a shipment from L.A. to Chicago took on average ten days; it now takes 22. Returning the empty container from Chicago to L.A. used to take 20 days; now it takes 33.

And you wonder why the supply chain isn't working very well?

WHAT HAPPENED IN 1980 that led to the transformation of trucking from a regulated industry with a willing workforce to a deregulated, dysfunctional mess whose workers bail after a year or less on the job? In the largest sense, the story of the progression from the 1935 act to the 1980 act is a story of the decentering of workers from liberalism's concerns.

In the first couple years of Franklin Roosevelt's presidency, the chief concern was to arrest the deflationary downward spiral that had diminished production, incomes, prices, and employment. Its first stab at a solution was a kind of worker-friendly cartelization: creating production and pricing codes and standards for industries and granting workers the right to collective bargaining. Unbridled competition in a deflationary time, FDR's advisers believed, only produced a race to the bottom.

In 1935, the Supreme Court killed this strategy, declaring the National Industrial Recovery Act unconstitutional. A few interstate industries, however, had been regulated long before the NIRA—notably the railroads. In 1935, Congress preserved and revised rail regulations, and as interstate trucking was beginning to supplement the railroads, devised new legislation to ensure that trucks wouldn't be racing to the bottom, either.

Hovering over their considerations was an unprecedented outbreak of trucker militancy. In 1934, truckers in Minneapolis had gone on strike, waging a prolonged battle with their employers and, eventually, the police, at whose hands several strikers were killed. In the process, their job action ballooned into a general strike—following which, their employers collectively agreed to recognize their union (the Teamsters) and grant many of their demands for decent pay and hours.

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At the Ports of Los Angeles and Long Beach, more than 7,000 truckers are misclassified as independent contractors, per one analysis.

So, the Motor Carrier Act of 1935 combined the spirit of the "First New Deal"—the regulation of commerce, and of interstate transportation in particular—with the "Second New Deal," the pro-worker policies to which Roosevelt turned after the Court had struck down the first. In 1935, the New Deal also enacted the National Labor Relations Act, giving workers an unambiguous right to collective bargaining, and the Social Security Act as well. It embarked on the massive public-works programs of the WPA, in which millions of the unemployed were put to work building, among other things, highways and byways. A number of more progressive unions broke away from the hidebound AFL and began organizing the factory workers whom the AFL had shunned. The Teamsters remained in the AFL, but inspired by their Minneapolis brethren and enabled by the NLRA, embarked on organizing campaigns that increased membership from 75,000 in 1933 to 370,000 in 1939. In 1933, according to a study by University of Wisconsin economist James Peoples, a flat zero percent of intercity truckers were unionized; by 1948, 80 percent of them were Teamsters.

One Teamster staffer who played a supporting role in the Minneapolis general strike was a young Jimmy Hoffa. A lesson he took from that strike was that organizing on a citywide basis was more effective than a shop-by-shop approach, and given that truckers were routinely crossing city lines in their daily rounds, and increasingly crossing state lines, too, Hoffa applied that lesson to his hometown of Detroit, then all of Michigan, then all the Midwest, rising in Teamster ranks with each expansion of the Teamster membership. Harvard University labor expert John Dunlop hailed Hoffa's "area contracts" as a strategic advance in labor relations.

Once Hoffa assumed the Teamster presidency in 1957, he embarked on a hitherto unheard-of innovation in American labor relations: bringing all the nation's long-haul truckers under the terms of one master contract. Over the next seven years, constantly traversing the country, he schooled his members in the logic of sweeping, multi-employer contracts. In 1964, having convinced his far-flung locals that establishing nationwide standards for generous pay, health insurance, and pensions was a good idea, and having persuaded 800 long-haul trucking companies that the 1935 Motor Carrier Act ensured that they could raise their rates to cover these labor expenses without fear of being undercut by competitors, he signed the National Master Freight Agreement with representatives of those companies. Every one of the approximately 450,000 Teamster long-haul truckers (close to half of all truckers in America) was covered by the contract. The New York Times termed the agreement "one of the most significant developments of the postwar period."

Then, in 1980, it all fell apart.

had the 1930s specter of deflation all but vanished from American memory, but the very real specter of inflation stalked the land. The spike in prices came chiefly from the oil shock of Middle Eastern nations raising the cost of their universally needed commodity. The rising costs of fuel hiked prices across the transportation sector, not because airlines, railroads, and trucking companies sought to raise prices but due, rather, to the oil shock.

Still, all three industries were regulated in ways that largely forbade them from cutting other expenses—like, say, the cost of labor, particularly inasmuch as all three were heavily unionized. In short order, all three became targets for deregulation—the airlines in 1978, rails and trucking in 1980.

But the deeper causes of these deregulatory drives lay in the changes to the nation's political economy. Popular revulsion at the Watergate scandal, paradoxically, pushed Democrats to the right. They gained 50 new House members in the 1974 and 1976 elections, largely from middle- and upper-middle-class districts they hadn't ever carried before. Most new Democratic members of Congress, labeled "Watergate babies," faithfully represented their constituents' politics: liberal on social issues, moderate to center-right on economic issues. Business interests increased their contributions to those officeholders who'd determine their future: the Democratic moderates. One prominent House Democrat—Tony Coelho from California's Central Valley—launched a major initiative of raising campaign funds from Wall Street and other corporate interests, which fed the coffers of many of his colleagues.

The new breed of Democrats—personified by such figures as Gary Hart, Paul Tsongas, Jerry Brown, and President Carter himself—had no particular affinity for organized labor. Most of the Watergate babies represented districts with insubstantial union membership. As Carter's economic adviser, the pro-deregulation Alfred Kahn once said, "I'd love the Teamsters to be worse off."

Moreover, labor at the time was personified by such cigar-puffing old white guys as AFL-CIO President George Meany, who had led the mainstream of labor in its support for the Vietnam War, and spearheaded its opposition to those Democratic candidates who'd opposed the war or emerged from such newer social movements as second-wave feminism. And if there was one union that the New Dems found especially repulsive, it was the Teamsters, widely known for its occasional violent tactics, its links to the Mafia, and, at the level of presidential politics, its support for Republicans. (To fend off Justice Department interest in their own doings, the Teamsters had provided funds to keep the first tranche of Watergate convicts from fingering higher-ups, and continued to back Republican presidential candidates for years thereafter.) Worse yet, the Teamsters were seeking to undermine the organizing efforts of one of the few unions the New Dems supported—Cesar Chavez's United Farm Workers—in hopes of supplanting them in the fields.

Two other transformations boded ill for labor generally and the Teamsters in particular. First, the rise in inflation undercut the claims of government's ability to manage the economy, and with it, the hold that Keynesian economics, with its de facto emphasis on boosting employment and worker interests, had on the economics profession. Regulation came to be seen as a driver of inflation. Second, with mainstream labor largely abandoning any efforts to organize the unorganized (disproportionately women, people of color, and the poor) and opposing many of the initiatives of feminists and civil rights activists, much of the left had come to view labor as a part of the corporate establishment. The rising consumer movement of the 1970s, spearheaded by Ralph Nader, sometimes found itself butting up against labor, as it did when Nader gave congressional testimony in favor of airline deregulation. Those efforts were led by liberal lion Ted Kennedy, with the assistance of his chief aide on such questions, future Supreme Court Justice Stephen Breyer. In 1980, even as he was challenging incumbent President Jimmy Carter for the Democratic nomination, Kennedy joined forces with Carter to move trucking deregulation through Congress.

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Jimmy Hoffa spent seven years persuading Teamster locals and 800 trucking companies to sign the Master Freight Agreement.

That year also saw Congress deregulate much of the rail industry, but railroads were in horrible shape and clearly needed some kind of remedy. Roughly 20 percent of the nation's rail lines were owned by companies then in bankruptcy, and the 1970 bankruptcy of the Penn Central line had been the largest to date in the nation's history. [See Matthew Jinoo Buck's "How America's Supply Chains Got Railroaded."] Trucking, by contrast, was thriving—but somehow, it fell to the deregulatory chopping block, too.

As it became clear that deregulation was likely to pass, the Teamsters found themselves devoid of a strategy to stop or mitigate it. They weren't a union that rallied its members to political causes (their support for candidates was almost entirely financial) and, having been expelled from the AFL-CIO for corruption, they had few allies within labor or without.

One ploy, alas, remained. On January 10, 1979, Teamster Vice President (and soon to be President) Roy Williams and mob-connected Teamster pension fund honcho Allen Dorfman met with Nevada's Democratic senator (and chair of the Senate Commerce Committee) Howard Cannon in Cannon's Las Vegas office to discuss how he could kill the pending legislation. FBI wiretaps of subsequent phone conversations of Williams and Dorfman had included comments indicating that Cannon had suggested he might be able to sink the bill if the Teamster pension fund let him take ownership of a six-acre Vegas lot the pension fund owned—an offer to which Williams had given his hearty assent. Williams and Dorfman were later convicted and did time for bribery, though Cannon, denying the allegations, was never indicted, though he did lose his subsequent bid for re-election.

In the end, Cannon either couldn't or didn't stem the rush to deregulation. With the strong backing of Carter, Kennedy, and even Dan O'Neal, Carter's appointed chair of the Interstate Commerce Commission, the House voted by a 367-to-13 margin to pass a new Motor Carrier Act, repealing the industry's minimum rate standards; the Senate followed suit in a 70-to-20 vote.

With deregulation in place, all it cost to enter the industry was the price of a few trucks. Thousands of drivers and small businessmen took the plunge. Alongside the small-timers, some mega-companies—most prominently, FedEx and, more recently, Amazon—entered the field, declaring their drivers to be independent contractors, though no one has ever seen a FedEx or Amazon truck used by its "independent" drivers delivering balls and bats to their kids' Little League games..

Within a decade of 1980, as new entrants jumped into the industry, the number of truckers nearly doubled, from one million to two, most of them paid far less than their pre-1980 predecessors. Today, after competing to drive down earnings, that workforce has shrunk to the point that it can no longer keep up with the demands of its nation.

Ultimately, what doomed trucking as a decent occupation was more than the self-marginalization of the Teamsters, the estrangement of Democrats and progressives from labor, the increasing clout of business and declining clout of unions, and even the supplanting of the post–New Deal social order by a crueler neoliberalism. It was that in 1980, after 35 years of the postwar broadly shared prosperity that the New Deal had created, few if any could imagine that American workers were on the verge of becoming downwardly mobile. A handful of union leaders—notably the United Auto Workers' visionary president, Doug Fraser—warned it was beginning to happen. In the discourse of 1980, however, such voices went unheard and unheeded—and, though growing progressively louder, largely remained unheeded until the past decade.

So, how do we fix this mess?

TO THE EXTENT THAT THE PILEUP at the ports is the result, on the trucking side, of misclassification, the state of California is working hard to remedy it. Newly enacted legislation that took effect at the start of this year holds retailers (like Walmart and Amazon) liable if they use the services of companies that are repeatedly found guilty of misclassification. The city of Los Angeles is also engaged in long-term litigation against the companies with warehouses at the port (that is, on city-owned land) that use non-union workforces.

Julie Gutman Dickinson—the attorney who, with backing from the Teamsters, has represented misclassified drivers in an unbroken string of successful lawsuits against those trucking companies—has long been frustrated, however, by those companies' refusals, even after they've been compelled to make payments to those drivers in the millions of dollars, to shift to actually employing those truckers. In 2014, working on one such case, she had what she calls "an epiphany: What was it that restrains an employee's right to have a voice on the job and to bargain collectively? Misclassification—it's an inherent violation of the NLRA."

Drivers deserve a political economy and legal superstructure that takes the rights of workers seriously.

At the time, the National Labor Relations Board's general and deputy general counsels, Richard Griffin and Jennifer Abruzzo, both Obama appointees, wanted the regional NLRB attorneys to make that case to the administrative judge, but the case was settled before it reached that stage. In 2019, the Trump-controlled NLRB, in its Velox decision, ruled that misclassification did not violate the NLRA. (The brief arguing that it did was written by Gutman Dickinson.)

But in a dissenting opinion, Board member Lauren McFerran argued that Gutman Dickinson was right: Misclassification did violate the nation's labor law. Today, McFerran chairs the now-Bidenized Board, and Jennifer Abruzzo, the Board's new general counsel, has sent a memo to the Board's regional offices that will likely turn up cases whose particulars could enable both Abruzzo and the Biden-appointed majority to rule that a walking, talking, quacking duck is actually a duck, regardless of what its employer might contend. On January 19, Omar Alvarez and his fellow XPO drivers provided just such a case, asking the NLRB to rule that they are actually employees and thus entitled to a unionization election.

At the ports of Los Angeles and Long Beach, according to the Los Angeles Alliance for a New Economy's Mike Munoz, the 50 largest trucking companies currently have more than 7,000 drivers whom they misclassify as independent contractors. Should Abruzzo and then the Board rule that this violates the NLRA, the companies would be compelled to reclassify them as unionizable employees. By the same logic, the Board could find that the drivers for Amazon and FedEx, not to mention the rest of the long-haul drivers who are misclassified, could become employees as well—as could the drivers for Uber, Lyft, DoorDash et al.

The NLRB may be the nation's best hope for ending the gridlock in trucking. In early January, two of Biden's Cabinet departments—Labor and Transportation—unveiled a joint program to help unclog the current pileup, by increasing the number and accessibility of trucking apprenticeship programs, and lowering the legal (if not the safe) age for truck driving to 18. As more than 450,000 Americans obtain commercial driver's licenses annually, making them easier to get when the problem is the nature of the jobs themselves doesn't seem likely to make appreciable improvements.

But even if the NLRB is able to transform the gig economy portion of the transportation industry into a more rewarding, stable, and efficient employer-employee model, and if (a big if) the courts uphold such transformations, that still would leave the greater part of the industry—the part that's not misclassified but is merely underpaid, overworked, and in constant and total flux—unchanged. What the drivers, and the nation that needs the goods that the drivers bring them, deserve and require is a political economy and legal superstructure that takes the rights of workers seriously. It may require the kind of upheaval that the Teamsters brought to Minneapolis in 1934—only on a far vaster scale—followed by regulations that improve job quality, to create an economy where trucking, literally and metaphorically, can again deliver the goods.

Insurrectionists and the destruction of the principles of Democracy have no place in the United States of America.

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