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Anger over the lion's share

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Neil LaRubbio | Feb 16, 2012 01:00 PM

In a classic cartoon, a hulky lion sits in a rink as a frenetic lion-tamer waves a stool in front of its face. The smug beast represents a nameless corporate lion watching patiently as the government espouses threats. As the cartoon suggests, federal regulators often talk a big game, but cracking down on misbehaving industries is a different story. This applies to the transportation industry, where it will take more than threats to stop some companies from feeding off of cheap labor.  How will this all end?

West Coast ports have faced a series of labor revolts over the last decade. An uprising by 400 short-haul truckers, who picketed for past two weeks at the Port of Seattle, calls attention to an economic model used by a growing number of companies with depreciating effects on workers, the environment and the safety of the surrounding community.

The Seattle truckers want companies to bear the responsibility of providing a safe work environment. They say they’re forced by trucking companies and shippers to haul loads heavier than their trucks' chassis can handle, which puts them at higher risk of having an accident.  They want the trucking companies to treat them as employees, instead of as independent contractors, entitling them to better pay, benefits and more rigorous on-the-job safety standards.

By classifying truckers as independent contractors, companies dodge costly Social Security, Medicare and income tax expenses. (The Treasury Inspector General estimates that loss of revenue from misclassified employees costs the federal government $15 billion a year.) This business model relegates truckers to near indentured servitude. Across the port trucking industry, workers either lease or rent their truck from the company they serve, or scrape some money together to buy a beater. They are responsible for paying for fuel, mechanical tune-ups and repairs. Replacing tires costs around $3000. At that price, some truckers choose to heat an iron rod and carve new grooves in the tires themselves, but such shortcuts put them perpetually at risk of incurring safety fines. 

Truckers are also responsible for refitting their own diesel engines to comply with current environmental standards. The Environmental Protection Agency estimates that 87 million Americans live in port areas that violate clean air standards, largely due to diesel emissions. The EPA recently spearheaded a $5 million effort in Los Angeles and Long Beach to replace old trucks with liquid natural gas trucks at $150,000 a piece, as an incentive to comply with environmental laws. But to lease the new trucks, drivers must sign a contract with a single company until they can pay the truck off, giving them little leverage to negotiate future wages. The Port of Oakland launched a $2 million program in 2009 that required truckers to make $300 - $500 monthly payments for a retrofit that ultimately resulted in even greater maintenance costs.

Their pay is rarely enough to keep up with such responsibilities. Truckers transport container goods from the shipping port to warehouses or rail yards, and are paid $28 to $44 per load. On a good week, they make $700; on average, they make $500; and during bad weeks they’ll make less than $100. Their average income before taxes is $28,000 to $32,000 a year,  and they average 59 hours a week to make that. Dr. David Bensman from Rutgers University interviewed trucking executives who said their drivers work 60 to 70 hours per week. One Los Angeles driver he interviewed said,  “When it’s busy you will be working 14-16 hours per day with double log books so that you can make enough money for your truck. No one works only 40 hours per week. You’re working like a mule, sleeping in your truck.”

This basic labor scheme is common to all the major ports on the West Coast: Seattle, Tacoma, Portland, Oakland, Los Angeles and Long Beach. Misuse of independent contractors to the benefit of scrupulous companies is also common practice in a range of other Western industries. High Country News has covered a few such models within agriculture. Railroad contractors who transport rail employees from one yard to another require employees to stay on-call but they aren't paid for their time (not uncommon for low-wage jobs). And those workers face even tighter financial straits, as Congress considers stripping their overtime and minimum wage benefits.

Port trucking

Two primary economic forces drive trucker servitude. One is that huge vendors like Wal-Mart, Target and Home Depot force the vast number of trucking companies into a race to the bottom for delivery rates. Trucking companies complain they haven’t been able to raise their rates since the early 1990s, and using independent contractors helps them keep their costs low.

Another stems from what Harper's Magazine writer Barry C. Lynn explains as industry “tournaments,” where the goal is to extract the most work and capital from each employee. Those who produce more get paid more per task. Such systems are designed to maximize capital returns. “They do so precisely by setting individual citizens against each other, like cocks in a pit,” Lynn writes. Tournament systems are found often in the trucking business. At the Seattle port, for instance, truckers are paid by the load, not hourly, and larger loads are rewarded with higher pay.

The Feds have taken steps to combat the problem of employee misclassification. On October 13, 2011, Rep. Lynn Woosley, D-Calif., made a second attempt at passing the Employment Misclassification Prevention Act, which would force companies to keep better records of “non-employees" to make it easier to identify misclassified employees. It would also make misclassifying workers a legal offense. And in an 11th hour budget push last April, Congress allocated $21.3 million to the Department of Labor to hire more personnel to investigate employee misclassification. A joint IRS-Department of Labor task force was announced last September to spearhead investigations, and the state of California and Department of Labor signed a Memorandum of Understanding last week to reduce employee misclassification. 

Because employee classification is a legal gray area, though, companies still have many options to maintain their ability to use independent contractors. Some need only to restructure the language of their contracts to give truckers more liberty to find other employers or make their own hours.  Or, the companies can go through employee leasing agencies to hire workers on a temporary basis. Then, the leasing company gets to pay all the taxes.

On Valentine’s Day, the 400 short-haul truckers at the Port of Seattle went back to work. The State of Washington and California are currently reviewing their power to investigate employee misclassification claims, but with billions of dollars of goods flowing from their ports, they’ll have ferocious lions to tame.  

Flickr photo provide by janwillemsen

 Flickr photo provided by Bari Bookout

Neil LaRubbio is a High Country News intern.

Kristian Svindland
Kristian Svindland
Feb 17, 2012 09:42 AM
First off...you have the definition of employee leasing confused with staffing or staff leasing. Employee leasing companies take on the payroll and risk management of employees that are already working for a client company. They are not temporary workers. That would be staffing.

Kristian Svindland
Owner, President
HROplus
www.hroplus.com

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