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?
BY HAROLD MEYERSON 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.
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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.
[ Continued at
https://prospect.org/economy/why-tru...ver-the-goods/ ]