Policy,Worker Power,and the Future of the American Trucker

COVID-19 has caused a massive disruption in global supply chains. A key part of those supply chains are the trucking services that move about 70% of the freight in the United States (USDOT, 2019). The disruptions began with slowing imports from China, which idled trucks at the West Coast shipping ports where container ships unload millions of containers onto trucks every year (USDOT, 2020). Shortages of all kinds were aggravated by changes in consumer purchasing, including more purchases of food and other staples, and new types of purchases associated with people spending more time working, schooling and entertaining themselves in their residences.

Today, as the economy is restarting, a lack of truck drivers has been identified by industry and the Biden administration as a critical concern. Industry and legislative proposals have focused on training more drivers and allowing younger drivers into the occupation (currently drivers under 21 years are not allowed to drive across state lines). The Biden Administration has so far been cool to this approach, with Secretary of Transportation Buttigieg and Secretary of Labor Walsh taking a view informed by the history of the industry – a history that suggests the industry’s trouble finding drivers is actually a retention problem and that policy has a critical role to play in ensuring that this important industry has good jobs that workers want to stay in long term (Buttigieg & Walsh, 2021).

As retailers and manufacturers strained to restock shelves during the early months of the pandemic, drivers hauling refrigerated trailers and sometimes dry vans – the standard box trailer used to haul just about anything that can go in a box or on a pallet – were in short supply. Other truck drivers, however, experienced what has happened to truckers every time the economy slows, they got laid off when carriers quickly downsized their workforce and equipment. Even while the supply chain was short of all kinds of goods, trucking companies laid off 88,000 workers in April of 2020 alone. Those laid off drivers hauled fuel, construction materials and other goods that were not moving.

The trucking industry has, like other industries, characterized this challenge as a labor shortage. As we move forward with massive investments in infrastructure and the workforce, it is critical to understand the real problems that left our goods movement so unprepared to serve the economy and our nation. In the late 1970s, the Carter Administration chose to deregulate the trucking industry as part of its response to stagflation. Prior to that time, trucking had a highly unionized, steady and experienced workforce. The wages and working conditions of the vast majority of truckers were set in the National Master Freight Agreement, a contract negotiated every four years between the International Brotherhood of Teamsters and an employer association representing a majority of large trucking carriers.

tRegulation was intended to stabilize the supply of trucking services and ensure that smaller communities received adequate service. Trucking carriers were granted licenses (known as operating authorities) from the Interstate Commerce Commission (ICC) permitting them to haul particular goods to and from certain locations. Carriers with the same licenses were allowed to collectively set rates to ensure profitability under the oversight of the ICC. Regulation favored less-than-truckload (LTL) systems, in which carriers bought licenses to maximize the use of terminal systems that allowed them to do local pickups of smaller loads, combine them in terminals based on destination and then send them over longer distances to other terminals where they were broken down and then sent out for local delivery. These systems led to regular routes that got most drivers home at night. Fixed investment in terminals made it easier for unions to organize drivers and limited entry and collective rate-making meant that increased labor costs could be passed on to customers. On the eve of regulation, the typical unionized trucker worked long hours but earned over $100,000 annually in today’s dollars. Workers rarely left these jobs for other kinds of work.

A single question guided the debate over deregulation by the late 1970s: what were the costs of regulation? Advocates of deregulation argued that regulation allowed carriers with authorities and labor to capture excessive profits and wages (or what economists call rents). Little effort was expended to clearly understand the benefits that regulation provided and to balance those with costs. The politics was understood as largely one that pitted the special interests of highly profitable regulated carriers and the Teamsters’ Union against pretty much everyone else from the average consumer to shippers and small business truckers. In the face of stagflation, the deregulators easily carried the day.

In hindsight, the political debate around trucking deregulation was stunningly inadequate to the scale of the policy implications. Deregulation immediately sent trucking markets into freefall as the number of trucking carriers and competition increased. Proponents of deregulation were right about one thing: the cost to move freight decreased dramatically. This gave large shippers tremendous cost advantages and fostered the dominance of big box supply chains in retail and global supply chains in production and eventually ecommerce.

While the benefits to shippers were enormous, the effects on truckers were terrible. Within a decade the vast majority of the largest trucking carriers were bankrupt, replaced by truckload carriers who moved things directly from origin to destination, avoiding the cost of expensive LTL terminal systems. The Teamsters union was quickly eliminated from most long-haul segments. The National Master Freight Agreement was ignored as a market standard for non-union drivers. Wages dropped precipitously. The norm for drivers became weeks or months on the road going from point to point across larger and larger swaths of the country, living out of their truck. Absent any labor power in the new segments, drivers increasingly absorbed the costs of inefficiencies. Drivers covering long distances were paid by the mile they drove – not time in the cab or on the road - but they had no control over how fast much of their work happened or when or if they worked. They increasingly sat unpaid at docks and truckstops, waiting to work, working unpaid while inspecting, fueling or fixing trucks and completing paperwork and dealing with customers (or waiting in long lines at congested shipping ports).

Instead of investing in workers long-term, many of the largest and most influential trucking firms in the US have sought short-term profits via a cheap, flexible labor supply and practices that shifted the costs of inefficiency onto workers and the public. Various government training grants and elaborate recruitment and training systems allowed firms to treat these drivers as a renewable resource. They are not, and today, consumers and businesses are experiencing skyrocketing shipping costs and even potential shortages of freight service because capable workers have left what used to be (and still can be in some parts of the industry) a good family-supporting career.

The cheapest labor model with inexperienced drivers and high turnover has come to dominate the critical truckload segment of the trucking industry, the largest single gateway to the industry for workers. While the industry is claiming a shortage of tens of thousands of drivers, that industry pipeline has recruited and trained millions of workers that could have made careers in trucking but ultimately chose other work. For instance, agricultural firms in California are currently complaining of a lack of truck drivers to haul crops to processing plants. They can point to a 2020 industry-funded analysis saying the State has 147,500 employee tractor-trailer drivers and will need 165,000 by 2026. Yet, a recent search of DMV records shows over 468,000 active Class A driver’s license holders in the state. ¹

Policy responses to the immediate need for transportation workers must address the long-term problems that made the trucking so vulnerable to the disruptions caused by COVID-19. Proposals such as lowering the age for interstate drivers or subsidizing training with business-as-usual practices are likely to worsen the situation, repeating short-sighted strategies that will burn through yet another generation of potential truckers. Instead, policy should find ways to incentivize long-term investment by firms in the next generation of truckers. In many cases, the policy required is on the books but simply unenforced. For instance, the Department of Labor requires that truckers be paid at least 24 hours a day of minimum wage when they are dispatched away from home for more than a full day. Instead, trucking carriers typically calculate minimum wage using the hours that drivers log to meet safety rules set by the Department of Transportation, hours that add up to less than half the hours drivers should be paid for. In addition to minimum wage violations, tens of thousands of truckers are likely misclassified as independent contractors, depriving them of the protections of the Fair Labor Standards Act.

The poor pay and working conditions of drivers lead to high turnover. Recruitment and training are also part of the problem. Large carriers and private train schools use funds from the Workforce Innovation and Opportunity Act, the GI Bill, and other public monies to subsidize the cost of training workers. This allows firms to externalize much of the cost of training new workers, who are most often put into the most difficult and dangerous long-haul jobs. Policy should instead incentivize a more robust and diverse pipeline for driver recruitment, training and entry level jobs. That pipeline should support participation by small and medium-size employers as participants in recruiting and training future generations of workers. It should also reflect the growing diversity of the US workforce and address the industry’s long-term difficulty in providing opportunities to women. Critically, it should meet the challenge of ensuring good stable jobs as the industry adopts transformative new technologies, including self-driving trucks, and adapts to the growing demand of ecommerce and last-mile delivery.

COVID-19 has clearly revealed deficiencies and weaknesses in the American goods movement system, which has prioritized long, cheap global supply chains and produced lots of bad jobs in the process. There are still good employers of truck drivers across the economy, including parcel carriers, like UPS, LTL carriers and private firms. These firms are models as we reinvest in our infrastructure and remake supply chains, but first we need to recognize the key linkages between regulation and job quality and the benefits of investing in the latter.