The Broken Link in America’s Supply Chain
Heavy-duty trucks hauling containers of imported goods fill the highways between America’s seaports and retailers’ distribution centers and U.S. military bases. Driving these 80,000+ pound big rigs safely requires great skill, patience, and concerted effort. The port trucking industry, however, clings to an unlawful business model that rewards their retail clients with low drayage rates yet inflicts untold harm on:
- The air quality of harbor communities;
- The safety of drivers on regional highways; and,
- The welfare of port truck drivers and their families.
Trucking companies’ pervasive misclassification of drivers as “independent contractors” is in violation of state and federal labor laws. This scheme, which has benefited from lax enforcement, robs our schools, public safety and criminal justice services, and even our military services of necessary funding.
It is industries like port trucking that have directly led to a wage crisis in America. The ranks of low wage workers are rapidly expanding, and the income gulf between the wealthiest Americans – like the Waltons of Walmart and the Greenbergs of Skechers Shoes – and the everyday worker is getting wider with each quarterly economic report. Across America and at our nation’s seaports, low wage workers are rising up and demanding change.
How the “Independent Contractor” Scheme is creating poverty in America
Like many U.S. jobs that have deteriorated, port truck driving was once a stable, middle-class, union job. With trucking deregulation 30 years ago, a shadowy network of contract trucking companies that illegally classify their company drivers as “independent contractors” was born. Port trucking wages alone fell 30 percent from 1980, when independent contracting was rare, to 1995 when it was dominant.
Business consultants encourage the use of independent contractors over employees, routinely stating that a company can reduce costs and increase profits by 30-40 percent by avoiding classifying worker as employees. But with port trucking, the savings are even greater. Using independent contractors allows trucking companies to shift the vast majority of the cost of doing business – truck leases, insurance, fuel, maintenance, etc. – onto the backs of the drivers. Simply put, port driver misclassification defrauds drivers, local economies, and public coffers.
Today, 82 percent of port truck drivers are misclassified by their employers as independent contractors. The vast majority would be considered employees under common legal definitions. Independent contractor drivers:
- Report average net incomes 18 percent lower than employee drivers.
- Are two-and-a-half times less likely to have health insurance.
- Are nearly three times less likely to have any form of retirement benefits.
The independent contract scheme has driven down wages for employee drivers. Despite the professional skills and qualifications required to perform the duties of a port truck driver, even employee drivers – who are roughly 18 percent of the industry – do not receive professional wages or benefits. After working 50-60 hours a week, drivers struggle to support their families, and many qualify for government assistance and are forced to use public medical services.
Restoring port truck driving to a quality job: the myth behind the cost
Port trucking companies move enormous amounts of goods through the American supply chain. In 2011, $1.73 trillion worth of imports and exports – more than 11 percent of the total U.S. GDP – were shipped through U.S. seaports and hauled off-dock by port truck drivers.
An industry trade association spokesperson was recently quoted as saying that the American consumer could not afford the cost of improving the wages of port truck drivers. That is a myth that is based in rhetoric, not in reality. The cost of drayage is a drop in the bucket for the giant retailers who own the cargo. Lifting port drivers out of poverty add just 4/10ths of a penny onto the cost of a $75 pair of shoes.