Every Which Way but Regulated: The “Free Market” Trucking Industry
By Llewellyn Hinkes-JonesNovember 25, 2014
AMERICA WAS FASCINATED with trucking culture in the late 1970s. Movies such as Every Which Way But Loose, Smokey and the Bandit, Breaker! Breaker!, and White Line Fever, along with television shows B.J. and the Bear and country songs by Merle Haggard glorified the trucking lifestyle and the freedom of the open road.
Truck drivers — particularly independent truckers — were regularly portrayed as freewheeling open-road outlaws and concrete cowboys. Once a profession hidden in the background, truckers became a cultural icon as plaid shirts and mesh-backed baseball hats proliferated. Families looking to entertain themselves on long drives bought CB radios.
Much of the fascination with trucking culminated in the 1978 blockbuster movie Convoy, about a group of rebellious independent truckers that fight for their freedom against the police, the trucking unions, and speed limits. Not only was Convoy a huge box-office success with a self-titled hit song, it sparked a nationwide independent truckers’ strike partially due to its timeliness: it was released in 1978.
In the midst of skyrocketing diesel fuel prices, independent truckers demanded cheaper gasoline, higher speed limits, fewer limits on truck size, and removal of what they considered petty regulations on their cargo. Independent truckers not only refused to make shipments, they actively blocked traffic on highways, around gas stations, and nearby oil refineries. They emulated the final scene in Convoy by bringing the nation’s highways to a standstill with a caravan of tractor-trailers destined for the White House. The strike, which was exponentially more disruptive than previous union-led trucking strikes, also turned much more violent. Fistfights regularly broke out, and strikers attacked trucks with rocks and gunfire from highway overpasses.
The havoc of the independent truckers’ strike only exacerbated the economic chaos caused by stagflation: the simultaneous inflation and skyrocketing unemployment that had crippled the country as a result of the oil crisis. As jobs were scarce, gasoline was expensive, and money was increasingly worth less, industries that relied on independent trucking came to a standstill. The strike’s blockade of gas stations and oil refineries only compounded the woes of a country desperately dependent on oil.
Eventually, the combination of stagflation, the oil crisis, and the independent truckers’ strike helped push through trucking and railway deregulation. Led by Senator Ted Kennedy and economist Alfred Kahn and signed into law by President Carter, the Motor Carrier Act of 1980 would eliminate oversight on shipping rates and competition in the trucking and railway industry. It limited the Interstate Commerce Commission’s (ICC) authority over trucking (the ICC was later abolished in 1995), which had overseen the transportation industry for over 40 years. Combined with airline deregulation in 1978, it was the complete deregulation of the transportation industry.
There were no longer any restrictions as to what rates a shipping company could charge independent of whether they shipped by train, plane, or tractor-trailer. Deregulation also eliminated restrictions on competition within the trucking industry. Any company could now compete and bid for business whether or not they were union, non-union, or owner-operated rigs.
Significantly, the Motor Carrier Act of 1980 also eliminated what was known as the Agricultural Exemption: a special clause in the Motor Carrier Act of 1935 that allowed independent, non-union truckers to continue to operate but only for shipping unprocessed agricultural goods. The exemption meant that a family farm could still haul small loads of produce to market without employing a large, unionized trucking firm.
As benevolent as the Agricultural Exemption was intended to be for small farmers, it was an oft-exploited loophole. Large-scale, non-union trucking companies would regularly abuse it to compete with unionized firms to ship agricultural products. It would lead to ongoing debates about what determined produce or livestock as being “unprocessed.” Is a frozen chicken considered processed? Are chocolate-covered raisins? While such determinations could devolve into excruciating legal debates over petty semantics, deregulation eliminated the Agricultural Exemption outright. It immediately allowed independent truckers to ship all commodities and compete with the union firms whether their produce was frozen, fresh, or processed.
While independent truckers were certainly struggling during the oil crisis because of high diesel prices, deregulation of the trucking industry was an incredibly shortsighted endeavor. It may have opened up more opportunities for non-union and owner-operated rigs to compete for business at the time, but opening the floodgates of competition would create a race to the bottom that would only serve to undermine the whole trucking industry for years to come.
Without limits on competition, union trucking firms with good labor standards and respectable pay could no longer compete against non-union firms willing to cut corners and pay their employees less. The vicious competition it enabled would quickly see 188 trucking companies go bankrupt. It would decimate the ranks of the Teamsters, one of the largest and most powerful unions in the country, who had originally fought for trucking regulation in the 1930s. Altogether, deregulation drove down wages across the whole of the trucking industry.
Trucking, as a profession, never made a comeback. Once an entrance into the middle class through long stretches away from home, low wages and tougher working conditions made it an undesirable occupation, especially for long-haul trucking. No longer home to the open-road outlaws and concrete cowboys of the ’70s, becoming a trucker was now the equivalent of operating a sweatshop on wheels.
According to Michael Belzer’s financial history of trucking since deregulation, truckers are now earning less and working more than they did four decades ago. Earnings for truckers dropped 30 percent as a result of deregulation, while averaging over 65-hour workweeks. Turnover is rampant, and companies struggle to retain skilled drivers even through long economic recessions.
From a CDC report on truck driver occupational health, US truck drivers are now allowed to work longer hours than drivers in most other Western countries, and overtime pay does not apply to them under the Fair Labor Standards Act.
Low wages have forced the industry to hire drivers with undesirable characteristics, created perverse incentives that motivate drivers to cheat on their logs and motivate carriers to turn a blind eye to such cheating, and this has made it difficult to retain experienced qualified drivers.
With the flood of competition, there was less oversight to supervise and train the thousands of owner-operated rigs working for unregulated carriers. The lack of oversight and training combined with the highly competitive market for business only encouraged truckers eager to make a decent living to bypass safety standards. Following deregulation, the number of truck crashes spiked across multiple states. Congress was forced to quickly pass numerous Motor Carrier Safety Acts in 1983 and 1984 to stem the tide of unsafe trucking practices by a less regulated trucking marketplace.
Deregulation also saw a surge in the number of owner-operated rigs who were now allowed to compete with the big companies. But such self-styled entrepreneurs have little in the way of benefits, and bear all the risks of running their own business. It is sometimes a highly precarious labor status, rife with tragic instances of high debt and suicide.
Those who are now attracted to the profession and its combination of isolation, stress, and low pay are often what author Ginger Strand calls “marginal characters.” They are “less educated, less stable, less tied to unions, less rooted in family life.” High turnover rates have only encouraged carriers to accept more drivers with criminal backgrounds.
As a result, crime within the trucking industry has increased dramatically since deregulation. The most gruesome illustration of this trend is the high rate of serial killings connected to the trucking industry. Although serial killings in the United States have declined in the past few decades, it is a different story within the world of trucking. The prevalence of prostitution at truck stops has been connected to numerous homicides of women living transient lifestyles, and the FBI recently launched a special division solely focused on highway killings called the Highway Serial Killings Initiative.
But deregulation did more than that. Not only did it drive down the wages and labor standards of truckers, it also completely transformed commerce in the United States. Trucking regulation was the lynchpin that held the free markets at bay from completely destructive competition. Without it, the economy reverted itself to the gold-plated anarchy of a previous era.
Shane Hamilton, in Trucking Country, delivers an exhaustive history of how the trucking industry has affected commerce in America, and vice versa:
Trucking tied together a distribution system characterized by decentralized mass production, low-margin direct selling to suburban supermarkets, and minimal time in transit and storage. The combination allowed frozen food packers to achieve reliable profits by selling high volumes on thin margins.
By driving down the cost of shipping, transportation deregulation removed one of the last impediments to centralization of the American economic system. Combined with free-trade agreements and technological advancements, it enabled the vast economies of scale of today, from Walmart and McDonalds to Amazon.
Free-trade agreements allowed cheap imports to flood American markets and outcompete domestic manufacturing. New technology like advanced shipping containers, refrigerated trucks, and warehouses only drove shipping costs further down. Companies that operated on a massive scale could leverage these advancements with the lower shipping rates brought on by deregulation to dominate the market.
Rather than competing on quality of service and product, these businesses now competed solely on low prices. By running thin margins on vast scales, they raked in large profits while providing cheap prices to customers at the expense of the labor standards of their employees.
With such thin margins, other businesses have no shot at a competitive advantage. Small, local merchants making quality products and paying their employees a healthy salary have no chance of competing against centrally located, massive chains that sell low-quality merchandise in bulk.
Previously, local merchants and producers had the benefit of geography. They could save on shipping costs by providing locally sourced merchandise and food. But such benefits quickly disappear next to bargain-basement prices provided by a massive conglomerate like Walmart, which can use its outsized influence to drive down the labor costs of manufacturing, shipping, and retail.
The deregulated free market focuses less on the best provider of quality merchandise, and instead rewards the largest concentration of capital that is willing to undermine labor standards and monopolize the market. While some economies of scale are fine and companies like Costco willingly provide good labor standards for their employees, quality and character are often undermined by a focus on quantity and cheapness at scale.
Food in particular suffers the most in this regard. Without shipping expenses, cheap, preserved food shipped from far away easily outcompetes local and fresh. Fast-food chains like McDonalds can sell food sourced from mass-produced industrial food conglomerates with terrible labor and environmental standards for far cheaper than a family-owned restaurant ever could. Through franchising, they mass-produce stores for cheap while paying their employees minimum wage with little risk to the parent company.
A centralized meat packer like Iowa Beef Processors (IBP), which at one time had turnover rates nearing 100 percent in their processing plants because of the exhausting working conditions, can thrive by leveraging lower transportation costs, predatory pricing tactics, and new technology like boxed beef and refrigerated trucks. It didn’t matter if IBP experienced regular, violent protests against the working conditions in their slaughterhouses; they could prosper as long as they kept prices low for the consumer.
During regulation, these food conglomerates flourished largely by leaning on the Agricultural Exemption. They could use cheaper, non-union truckers to ship frozen farm commodities for the growing fast-food industry. But deregulation, which eliminated the Agricultural Exemption, drove shipping costs down further. It allowed large food conglomerates to expand their industry tenfold and become full-scale monopolies not seen since the Gilded Age. As a result, the beef and milk industries would be radically transformed into new beef and milk trusts not so different from their counterparts 100 years before.
Retail, as well, has certain benefits of locality. Small stores sometimes provide an anchor for a community, but they have little competitive advantage against a monolithic Walmart outside of town where parking is plentiful and land is cheap. The big box stores that have outcompeted small retail have only driven small towns further into blight and abandonment, increasing sprawl.
Online merchants continue this trend by eliminating the need for brick-and-mortar stores altogether. Amazon runs one of the most successful long-tail operations of all time by keeping margins thin and prices low. With no costs of running a physical store, no applicable sales tax on their orders, and low shipping rates, the company has no fear of market competition or labor unrest.
Low-wage workers, many of them truck drivers, have come to depend on these cheap prices for survival in an age of stagnating incomes. As much of a benefit as it is to have low costs, those low costs only contribute to a cycle of cheapness. Low-wage workers can only afford cheap merchandise made, shipped, and sold by other workers making poverty wages, here or abroad.
Streamlining of the shipping industry has its benefits, but it comes at the cost of labor standards, particularly of the trucking industry. Consumers who have become so accustomed to the convenience of cheap merchandise never see the costs of their lifestyle on the truckers who enable it.
Increasing shipping costs to help provide a better, more regulated trucking industry could easily be accomplished without a burden to consumers, but it would mean reining in the companies that have massively profited from economies of scale and diminution of labor rights. As the middle class has declined into monoculture, fast food, and cheapness, companies like Walmart and Amazon have only grown exponentially. They have slowly bled capital out of a system that is now intent solely on convenience.
Llewellyn Hinkes-Jones is a Washington, DC writer and author of Demented Agitprop: The Myth and Madness of Agenda 21 Conspiracies. His work has appeared in the Toronto Star, The Atlantic, The Morning News, Washington City Paper, and The Awl.
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