How Goldman Sachs and Other Companies Exploit Port Truck Drivers
Photo Credit: Michael @ NW Lens via Flickr
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It's the time of year when lights are strung, trees are decorated, and holiday cheer is spread. It's also the time of year when people pepper-spray fellow shoppers and camp out in front of box stores, and retail clerks risk death by stampede. Savvy shoppers prowl the malls for the best deals, the cheapest bargains, looking to see if they can find the lowest of low prices.
Astute consumers may know that the rock bottom we see advertised on endless TV and internet commercials are often the result of companies manufacturing their goods overseas, using sweatshop labor where poorly paid workers often toil in dangerous and unhealthy conditions so that we can enjoy the latest electronics, the coolest pair of jeans.
But what many people may not know is that these sweatshop conditions don't end when those goods hit American soil. Between the dock where the cargo is unloaded and the shelf from which you pluck your treasure, there are several critical lynchpins. One of them is port truck drivers. These drivers (around 110,000 of them in the United States) are responsible for moving approximately 20 million containers a year from the ports to railway yards and warehouses. Drivers operating large trucks are expected to safely haul loads up to 80,000 pounds. It's a job for professionals, only these professionals are earning poverty wages, sometimes even less than you'd make flipping burgers at a fast food restaurant. Once a middle-class profession, the port trucking (or drayage) industry has now been dubbed "sweatshops on wheels."
Drivers, along with clergy and their union, environmental and community allies have been fighting for years for better working conditions and wages, but their plight has recently caught the attention of the Occupy movement. On Nov. 2, during a day billed as a general strike, tens of thousands of people swarmed the Port of Oakland, temporarily stopping work during the evening. Now, Occupiers are calling for a shutdown on Dec. 12 at all West Coast ports.
Occupy organizer Kari Koch in Portland says that their action is aimed at disrupting business as usual for "Wall Street on the waterfront." In particular, they are targeting EGT (Export Grain Terminal) and Goldman Sachs. EGT is part of a multinational conglomerate, and the company is engaged a labor struggle with the International Warehouse and Longshore Union in Longview, Wash., and Goldman Sachs, much maligned for its shady business dealings, which were part of the economic collapse, owns half of SSA Marine, which operates four terminals at the Port of Long Beach and also owns the trucking company Shippers Transport Express (more on them below).
"We will be creating a community picket in front of the port, and we expect to have a work stoppage, and we expect the workers to not cross the picket line," said Koch. "We are disrupting it for one day, but it is also a symbolic action to show that the workers are actually the ones with the power in this country." Actions are planned at major West Coast ports such as Oakland, Portland, Long Beach, San Diego, Seattle, and others, but solidarity actions are springing up as well in Albuquerque, Denver, Houston, Salt Lake City, and even in Japan, where Doro Chiba railway workers plan to strike at a trading partner of EGT.
If work is shut down at the ports, "It's one more day that Goldman Sachs and Wall Street firms are unable to create profit," said Koch. And as the website for the action says, "U.S. ports have thus become economic engines for the elite; the 1 percent these trade hubs serve are free to rip the shirts off the backs of the 99 percent, who turn their profits."
That's how port truck driver Leonardo Mejia from Los Angeles sees it, too. Drivers, he says, "are part of the 99 percent." Mejia drives for Shippers Transport Express in Los Angeles and says that he's excited about the action, even if work stops at the nation's largest port complex. It means that he and most of his fellow drivers (not just the 1 percent) will also not be making any money that day. Mejia is part of the 82 percent of port truck drivers in the United States that are classified as independent contractors and not employees.
Mejia and other drivers (as well as a massive coalition of labor, religious, community, and environmental organizations) believe this is a misclassification. The difference between being an independent contractor or an employee in this industry is critical to earning a living wage.
"Right now, all we do is work to live," says Mejia, who has been working as a port driver for 10 years. "I know drivers that work 16, 18, even 20 hours every day. Every day," he says. "They can't spend time with their families. I have a few friends that, when I started working on the ports, they were married, had children. Now most of my friends are divorced. They spent too much time working, or they didn't have enough money to support their families."
Drivers are struggling to make a living, and most are living without any safety net — no health insurance, disability insurance, unemployment insurance, or retirement funds. But it hasn't always been this bad. The culprit, as with so much of our financial woes today, stems from deregulation. As David Bensman of Rutgers University writes in the report Port Trucking Down the Low Road: A Sad Story of Deregulation:
It is ironic that port trucking has become the poster child for destructive deregulation, because the passage of the bill that deregulated the trucking industry, The Motor Carrier Act of 1980, was hailed by liberals and the business community alike as a triumph of policy reform. Senator [Ted] Kennedy and Ralph Nader led the reformers who charged that trucking regulation meant high rates for consumers, and monopoly profits for businesses. Large shippers lobbied Congress for an end to the rate setting and route planning which limited competition and drove up the cost of freight transport. Civil Rights organizations argued that deregulation would lower barriers that impeded African-Americans from gaining a just share of decent trucking jobs. Despite these high hopes, deregulation has wrecked the drayage industry.
Unfortunately, deregulation was disaster. As Bensman writes, "Before 1980, trucking companies had to get a license from the Interstate Commerce Commission to haul freight to and from the ports. The ICC limited the number of trucks to assure stability; the resulting rate structure was sufficient for companies to earn stable profits while providing workers with decent wages with benefits. The International Brotherhood of Teamsters organized and bargained for most of the port truckers, who received wage and benefit packages comparable to those of autoworkers, steelworkers, and over-the-road drivers."
After deregulation, union companies were forced out of the market, and new companies found a way to squeeze even greater profit at the expense of workers. They sold their trucks back to drivers, Bensman explains, and then made them "independent contractors," meaning that the drivers would not make an hourly wage but instead would be be paid per load, and companies would no longer be responsible for costs such as health care, social security, worker's compensation, pensions, and payroll taxes.
The report, The Big Rig: Poverty, Pollution, and the Misclassiﬁcation of Truck Drivers at America's Ports by Rebecca Smith, Dr. David Bensman, and Paul Alexander Marvy, found that just four years after the industry was deregulated, wages dropped 15-20 percent and fell to 30 percent lower by 1995. According to the report, today contract drivers make an estimated $11.91 per hour, compared with $14.71 for employees. Even despite the several dollar difference in pay each hour, real wages for contractors are even lower — closer to $8 an hour.
"While these figures represent net earnings after truck expenses, they do not include tax burdens, a fact that widens the gap between independents and employees," according to The Big Rig's authors. "Independent contractors must pay the employer's portion of Social Security, Medicare, and similar taxes, as well as their own." Drivers surveyed for their report also worked nearly 60 hours a week. "Average net earnings before FICA, income, and other taxes was $28,783 per year for contractors and $35,000 per year for employees. Minimum wage violations appear to be widespread," they wrote.
Most port truck drivers can't afford to buy the newest trucks. Instead, the late model trucks that are most common at ports are spew dirty diesel fumes — a health hazard for drivers and those who live in communities near the ports. Around 87 million people live or work near ports in the United States and are at risk of health problems from pollution, the EPA estimates. A report from the Pacific Institute in 2009 found that pollution from diesel emissions from just the port of Oakland cost the Bay Area $153 million a year because of impacts on health and quality of life.
The Los Angeles Clean Trucks Program has sought to clean up the air and would have improved conditions for these workers in the process. Drivers sold their old polluting rigs, companies were given money to buy new, cleaner trucks, and then workers were to be hired as employees of the trucking companies. But while most of the program has been implemented, the American Trucking Associations unraveled it in court. While much of the industry's lawsuit failed, the provision that would require drivers to be hired as employees (which would also give them the right to unionize) as the means to transfer truck ownership and maintenance responsibility back to the companies was shelved two years ago on appeal. As a result, many companies have bought new trucks with public subsidies and port money, and now drivers classified as independent contractors are forced to lease the trucks back, essentially meaning they have to pay to work.
That's the situation that Mejia is in. He pays each day to lease a truck (some drivers pay as much as $2,000 a week), and every day that he shows up for work he has to sign a new contract, which means inspecting the vehicle to make sure there is no damage (otherwise he's held liable for it). Waiting for a truck and an assignment from a dispatcher can take hours (and he can spend hours more waiting in terminal lines after he has his load). But contract drivers like Mejia are paid only by the load, not by the hour. Mejia also does not know when he takes a lease in the morning and pays for his truck how much he'll be making that day. He doesn't know how many loads he'll get to deliver, or how much he'll be paid for them.
"Today, I just make like $70 — in about eight hours," says Mejia. "I have a commercial trucker's license. I'm a professional. For me it is very offensive. At the end of the week, my paycheck last friday was $1,600 gross. I ended up with a check for $720." And this is where contract drivers get screwed again —- Mejia's check is docked for leasing the truck, for the diesel that the truck eats up driving to deliver the load and return the truck, for insurance on the vehicle (where he currently works, that is 11 percent of whatever he earns). He's also charged an addition $10 each time he signs a lease for a treatment that is put in the tank to make the diesel burn cleaner. He's also charged $50 if he accidentally parks his truck in the wrong spot, or if the yard is so full he can't put the container where it is suppose to go. And he's liable for any damage that may occur to the shipping container or the truck.
And that's not all. He does not have an employer that is paying into Social Security for him, as an employee would, nor does he get health coverage. If he is hurt on the job, he's not eligible for workers' compensation, and if he gets laid off or is unable to work (which can happen if drivers own trucks that are not compliant with health or safety laws, and they can't afford to fix their trucks), he is not eligible for unemployment.
"We believe the drivers are misclassified," said Valerie Lapin of the Coalition for Clean and Safe Ports. "Government regulators should crack down on these companies and bring them into compliance so drivers can receive the rights they are entitled to."
Of course for companies, it all comes down to the bottom line. By privatizing profits and socializing losses, they lining their own pockets at the expense of workers — and the rest of us. "I know of a driver who was a 20-plus-year veteran, professional driver," said Lapin. "His truck wasn't compliant, and now he has been unemployed for two years and ended up on welfare. His company should have been paying into the unemployment for him, and now we taxpayers are paying for him to be on public assistance, which is tragic, because all he wants is to be driving."
And we lose out in other ways, too. According to The Big Rig:
Unpaid income taxes, payroll taxes, unemployment insurance, and workers' compensation premiums mean that misclassification contributes significantly to the nation's tax gap, currently estimated by the Treasury Inspector General at $345 billion. A recent government estimate put the loss from just unpaid Social Security, Medicare, and Unemployment Insurance taxes due to misclassification at $15 billion. Similarly, as much as 20 percent of workers' compensation premiums in New York — $500 million to $1 billion — go unpaid each year due to misclassification. Total tax loss in California due to misclassification has been estimated to be as high as $7 billion.
In the port trucking industry, independent contractor drivers, or "owner-operators," as they are also known, bear the costs of truck ownership, operation, and maintenance. One estimate put those costs at 60 percent of drivers' gross incomes."
As Andrew Leonard writes for Salon, "Mejia is part of the shadow economy, though not in the sense that that term is commonly understood: as an autonomous netherworld entirely off the books and underground, invisible to the taxman and mainstream society. Mejia's shadow economy is something a little different; purposefully created from the top down, its growth driven by employers increasingly eager to shed costly, legally mandated commitments to their employees."
Not only does this shadow economy rip off taxpayers and hurt workers, it's also extremely dangerous. In 2009, Felipe Curiel, a 42-year-old truck driver was nearly crushed to death when an SSA Marine crane operator dropped a cargo container on his rig. A week earlier, port driver Pablo Garcia was killed at an SSA Marine terminal, when a forklift driver hit his truck, pinning him between two chassis.
Basic health and safety laws do not apply to contract drivers. "If you see a hazard in your work place, and you want to report it to OSHA [the Occupational Safety and Health Administration], there is no recourse. You are not covered, because you are not an employee," said Lapin. "Drivers are asked to do things that are not safe a lot of times, and they feel like they can't fight back and let their bosses know, because then they won't renew their contracts. I hear this all the time — they ask them to carry loads that are too heavy. The federal government sets limits on how much a truck can carry, and they are required to go and stop at scales that the Highway Patrol mans. Sometimes a company will tell them to avoid the scales — the driver knows it is an overweight load. They should be able to say, "No, I'm not going to take that," but as an independent contractor, they feel pressure if they do, they might not get dispatched the next day."
Not only may the trucks not be up to safety regulations, but the chassis, the platforms with wheels that the container goes on, are often in bad shape. At ports like Oakland, drivers have to spend time trying to find a chassis that looks to be the safest, and if they see problems, they have the option of bringing the chassis to the shop area and asking for fixes to be made. But all of that takes time — time that contract drivers are not paid for. Many of the chassis they are forced to pick may have underinflated or flat tires and brake lights that don't work properly. In Seattle the situation is even worse, says Lapin — there drivers are not even given a choice of chassis, and they are also not allowed to get out of the truck to inspect them. "As soon as they pull out of the terminal, there are state troopers randomly pulling them over. They haven't even had a chance to inspect the chassis, and they get ticketed. This can put their commercial drivers license at risk."
An investigation by KING 5 News found numerous safety violations stemming Port of Seattle trucks. Police inspections found that one out of three of the trucks pulled over had problems so serious they had to be taken out of service. One officer and his team "found a container hauler with a flat tire, one with no brake lights, and another with a window and headlight that were held together with household duct tape," the news station reported.
For drivers who own their own trucks, it can be difficult to make enough money under contract conditions to keep up with maintenance (and Oakland drivers have additional clean air regulations that require retrofits or newer trucks).
As theLos Angeles Times reports:
Profit margins for the independent operators who serve the Long Beach and Los Angeles ports are thin — so some, like Miguel, cut corners whenever possible.
For example, because a gauge showed that the weight of his load exceeded regulations — and because he views his truck's brakes as untrustworthy — Miguel used the trailer's brakes to stop the entire rig. The CHP considers that maneuver particularly dangerous — and illegal.
Drivers often visit "llanteros" who use hot knives to carve new treads into bald tires when drivers can't afford new ones — a legal, though dicey practice that can put drivers and the rest of the public at risk.
Whether contract drivers own their own trucks or lease from companies, they still face the same situation because of their misclassification. "They should have to classify us as what we really are, which is employees. We're not independent contractors," says Mejia. "That would make my life — not just my life but every port driver's life — better. If the companies declare us employees, that will be much easier for our life, because we will get paid by the hour, not the move, and we will have the basic rights. I think the most important thing at least for me is the opportunity or the right to form a union. Now, every time when a driver gets injured at work, we have to collect money from the rest of the drivers just to give that money to that driver, and that way he can pay the medical costs. The companies don't give us our rights."
Mejia hopes the Occupy protest will help drive some more attention to the situation he faces. "We've been fighting this for six years," he says.
"If it's your job to safely command the wheel of 80,000 pounds of consumer goods from our shores to America's stores in one of the nation's most dangerous industries, shouldn't you earn a middle-class paycheck and have the freedom to form a union to negotiate improvements to protect public safety and the environment?" asks TJ Michels, a spokeswoman for Change to Win, the Teamsters' labor federation and a port area resident.
"These men and women are taking action in the workplace and calling on the government to end the Wall Street–style trickery that has tainted the waterfront for so long," said Michels. "And it's no wonder the Occupy movement is helping expose Goldman Sachs' SSA Marine terminals. The global shipping conglomerates and trucking companies are peddling poverty and pollution to squeeze a few more pennies per iPad in profit. The Teamsters are encouraging protestors who hear the drivers' call for justice on Dec. 12 to pledge their ongoing 99 percent solidarity with these workers. They are fighting louder and harder than ever before to win back their collective bargaining rights from the 1 percent they serve, and they need real and lasting support."
So far the Occupy movement has already helped to shift the national dialogue back to the most pressing economic issues that Americans are facing — like failing wages, unemployment, foreclosures, and now the rights of workers like Mejia who are trying to claw their way out of globalization's shadow economy and back into the middle class. It's not just the shipping companies and terminal operators that are solely to blame, but the larger system, too. As the authors write in The Big Rig, "Major cargo shipping companies like Walmart, Target, and Home Depot demand rock-bottom prices, while continually imposing greater service requirements on port trucking firms." Every sale sign we see during the holidays is another reminder that a worker here or abroad is likely paying the difference.
It's unclear how many hundreds or thousands will show up at ports along the West Coast on Monday, but Mejia is encouraged. "We are organizing ourselves. Hopefully, this 2012 will be better for every port driver. Hopefully we will work together in the future for better conditions for every worker in the U.S."