Michael Swartz / July 20, 2022

California Gums Up the Trucker Supply Chain

Shortages at your local store may be thanks to a law in the Golden State affecting the trucking industry.

Inspired by trucker convoys that grabbed headlines last winter in Canada and our nation’s capital, a renegade group of about 100 truck drivers did their level best to make their opposition to California’s Assembly Bill 5 (AB5) heard last week by bottling up traffic around the ports of Los Angeles and Long Beach. Their complaint should resonate with every American because at stake is the supply chain.

The state’s law “requires workers satisfy a three-part test to be considered independent contractors, or else be seen as employees entitled to job benefits,” reports Bloomberg. “The trucking industry relies on contractors — who until now have had flexibility to operate on their own terms — and has fought to be exempt from state regulations for years.”

The truckers’ mission is to get the state of California to carve out another exemption to the independent contractor law, adding truck drivers to those occupations such as insurance agents, investment bankers, real estate licensees, and others that were granted exemptions in the bill.

If the truckers fail, you may find it even harder to find that item you’re looking for on the store shelf, and if you do, it will be more expensive.

While AB5 was passed and signed by Governor Gavin Newsom in 2019 as a wet kiss to his Big Labor backers, the bill’s effects were delayed thanks to a 2020 injunction placed by a state district court. However, the case was rejected for hearing by the U.S. Supreme Court at the end of June, meaning the injunction could be lifted at any time, and up to 70,000 California-based truck drivers will see their options for employment significantly limited. Meanwhile, union leaders celebrated the end of “unscrupulous trucking companies” that “weaponized deregulation to maximize their profits” by taking advantage of the “indentured servitude” of independent drivers. Needless to say, Teamsters and others are licking their chops at the prospect of unionizing these reluctant employees.

As the Washington Examiner’s Zachary Faria put it: “California Democrats had to run these truckers out of their jobs because they shouldn’t like being independent contractors, even if they say they did like it. California Democrats know what’s good for you, even when that means ruining your livelihood and forcing you to the unemployment line.”

Yet these truck drivers are the lifeblood of freight movement. For example, at the port of Oakland, 90% of the 9,000 trucks working the port daily are independent contractors. “In a case like my company, we just eliminate owner/operators and just reduce the workload,” said trucking company owner Bill Aboudi.

On the other hand, trucking groups believe in the existing model. The American Trucking Associations explained it this way: “The [independent contractor] model in trucking is a win-win-win. It benefits consumers by ensuring store shelves are stocked and orders are delivered on time. It benefits trucking companies by giving them the resources they need to serve their customers during peak seasons. And it allows independent truckers to run their own company on their own terms.”

All this would be placed in jeopardy once the injunction against AB5 is lifted, and it couldn’t come at a worse time since the railroad industry is having labor issues of its own. “We’re in peak harvest season,” said Eric Sauer, senior vice president for government affairs at the California Truckers Association. “We’re also in peak construction season. And this is the time for peak holiday imports coming into the ports.”

And as has often been the case, California is a trend-setter here: similar bills were proposed in Massachusetts, New Jersey, New York, and Washington. “A lot of the laws and regulations that get adopted in California blow east,” added Sauer. Moreover, the union-friendly Biden administration has been pushing to enact an AB5-style law nationwide.

The best advice we can give you: Shop local and stock up. We’re in for a bumpy ride.

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