I'm in finished vehicle logistics, and I've worked directly with a wide variety of truckers, including three years in California. You are very right that the amount of cargo that needs to be moved will not change because of this law, but you are, in my opinion, wrong about everything else.
I don't want to stereotype truckers because it is a diverse group. But I will say that in my anecdotal experience, this is a job that tends to attract people who want to be left alone. These are people who value freedom and hard work above everything else and many of them will change careers or retire if they are forced to work for big corporations. The average trucker is 55 years old, and many of them will just sell their and retire if AB5 is not overturned.
Supplying a $150,000 truck is not at all a barrier to entry. There is a major shortage of truckers and employers are offering free training, big sign on bonuses, and high starting pay to attract talent. Walmart, which is certainly not known for paying its employees well, pays truckers an average of almost $88,000 per year--and Walmart supplies the truck. The people spending $150,000 on a truck are doing it because they want to, not because they have to. This is not a medallion situation.
As for your "wink wink" comment, ELD's have been mandated since the end of 2017, and even companies that are small enough to not legally be compelled to use one are often forced to comply due to customer contracts. (Shippers want the data the ELD provides to offer better ETAs to their customers.)
In my opinion, the most likely outcome of this law is that some truckers retire and sell their rigs to big corporations, some decide to work for big corporations, and prices go up for everyone who ships goods or buys shipped goods. Unless you're in asset based trucking and looking to expand, the chances are that AB5 is going to hurt you, not help you.
There is no "shortage" of truckers. Never has been and never will be. New truckers can be trained in a few months. Customers and employers just don't want to pay.
Claiming that there is a shortage of workers in a particular field is generally nonsense. Is there a shortage of gold? No, I can buy as much as I want tomorrow ... at the market price.
There is such a thing as elastic demand. If you can't find people to pick strawberries without paying $150 an hour, you are probably going to go out of business. That is usually considered a labor shortage.
No, not necessarily. Correlation is not causation and what not.
If trucking prices go up, companies might opt to move more cargo at the same time (same amount of moved cargo, but less trucks on the road) or they might simply eat the loss (if they're already making massive profits) or any number of alternatives.
If we were to take your argument into absurdity, the best thing to do would be to reduce trucking prices to $0, because then we would fundamentally move a lot more cargo, which would drive down prices across all of the US benefiting a lot more than just the small minority of truckers.
It's an overly simplistic way of looking at things that reminds me of the assumption that raising the minimum wage would cause the prices on everything to hike up by the same amount.
absurdity, the best thing to do would be to reduce trucking prices to $0
What is absurd about that? If we could wave a magic wand and reduce the real transportation cost of goods to 0, it would have massive beneficial effects in the overall economy. In large part we're seeing the benefit of that in the macro due to the (formerly) falling cost of global shipping.
It's magical thinking that an increase in the cost of transport won't have some sort of negative effect on the economy.
This isn't an increase in the cost of transport, this is an increase in the cost of trucking. There's a subtle but very important distinction there because the actual human cost of trucking (ie wages, healthcare etc) is likely much smaller than the costs of fuel, maintenance and many more externalities.
Yes, if you could magically teleport goods from one location to another, that would be fantastic for the economy and terrible for truckers. I think it's more magical thinking however to look at one statistic and assume that it would lead to doom and gloom, as many did when Seattle decided to change the minimum wage to $15.
That said, if we believe that reducing the cost of trucking at all costs is important to the economy: Why not just remove all worker protections? In fact, why not just not pay workers at all? We have plenty of prisoners that could be truck drivers.
We can kick out all of the high earning truck drivers being leeches on the economy by increasing the cost of transport and replace them with something far cheaper until automation comes along. That sounds like a good idea, yeah?
The Fortune 500 made $1.1 trillion in corporate profits last year. The notion that they'll buy less stuff because shipping now costs $5 extra is ludicrous. Their problem is what to do with all that surplus cash now that they've bought down short-term Treasuries to basically 0% interest, a 1-3% increase in shipping costs wouldn't even appear on their "OMG!" radar.
> In my opinion, the most likely outcome of this law is that some truckers retire and sell their rigs to big corporations, some decide to work for big corporations, and prices go up for everyone who ships goods or buys shipped goods. Unless you're in asset based trucking and looking to expand, the chances are that AB5 is going to hurt you, not help you.
So why won't the logistics companies simply swing this to: "A load is a starting point X. The destination is ending point Y at time Z. Bid for it."
The problem is that everybody wants to control the hours, control the price, etc. rather than letting people actually bid for things and control the variables themselves.
And, to be fair, if you want to impose control on the employee variables, well, that's not really a contractor now is it?
To be fair, I would much rather see a law along the lines of "for every 40 hours of contract work--you have to supply the equivalent benefits (healthcare/retirement/vacation) as one full time employee or get fined the equivalent amount of money." That way, the whole "We'll subcontract it because it's cheaper" actually gets whacked for being cheaper for fobbing off the externalities but not if cheaper is simply that subcontractors are more efficient."
They already do. Many logistics companies have a "brokerage" area where try and get trucking companies (or truckers) to bid on loads going from x to y. I used to support software that did this. Not a fan of the software, but the people where blast to work with. In the area I worked with, it could get pretty crazy (lots of yelling across the room and the yelling at people on the phone LOL). They occasionally had less than ethical truckers holding loads hostage for more money....
Less supply of able and willing truck drivers at their current level of compensation means companies will have to increase said compensation to try and keep or attract truck drivers to avoid decreasing capacity. Increased driver compensation means increased costs for the company employing said drivers, which in turn means passing on the costs to whomever wants things shipped. Econ 101 supply and demand curves.
Why would there be less supply? Because the drivers won't have the burden of payroll taxes or workers compensation?
Costs may go up, but they could very well go down--economies of scale in accounting, payroll, etc. Even if they go up, the real question is by how much, and the portion that would be passed on to customers; depending on elasticities of the supply and demand curves, some of it might be borne by the trucking companies themselves.
And then there's the elephant in the room: the presumption that the ABC test would necessarily rope in all independent truckers and completely destroy the business model. There's an outside chance that some segment of "independent" truckers--the kind driving the narrative--with multiple, varied customers and schedules of their choosing will remain as independent contractors, especially if they travel interstate.
More likely they'll have significant latitude in being able to incorporate themselves, so long as their business entity rigorously handles payroll taxes, insurance, etc. Because those things are trivial to automate--and I'd bet there's at least one startup founder on HN providing and bundling these services--the impact might prove minimal in the long haul. Independent contractors are supposed to be managing these things by themselves, anyhow; otherwise we're simply defending scofflaws.
The new test for independent contractors may turn out to be a bad idea, but it's not so obviously bad on its surface that we can make sweeping claims irrespective of context. Remember, UPS has more revenue and better profits than FedEx, even though UPS relies on unionized, employee truckers while FedEx flounders with their independent contractor model.
And the new test originated in court in response to legitimate concerns with the ride-sharing model. If it makes sense there, maybe it's worthwhile to keep an open mind about its salience in the trucking industry. Is independent trucking dead in Massachusetts; did trucking costs rise? Massachusetts has had a similar test since the 1990s and an identical test since 2004. I can't find hard data, just a few court cases (suggesting litigation might be minimal) and hyperbolic reporting by industry, bereft of revenue numbers.
a bicycle ride in the Port of Oakland seeing idling trucks, shows many hundred very sketchy "contractor" truckers who I doubt have seen the kind of large, steady number of dollars you are quickly citing there.. the condition of their vehicle, their health, their English language skills and other superficial indicators would be the evidence
I don't want to stereotype truckers because it is a diverse group. But I will say that in my anecdotal experience, this is a job that tends to attract people who want to be left alone. These are people who value freedom and hard work above everything else and many of them will change careers or retire if they are forced to work for big corporations. The average trucker is 55 years old, and many of them will just sell their and retire if AB5 is not overturned.
Supplying a $150,000 truck is not at all a barrier to entry. There is a major shortage of truckers and employers are offering free training, big sign on bonuses, and high starting pay to attract talent. Walmart, which is certainly not known for paying its employees well, pays truckers an average of almost $88,000 per year--and Walmart supplies the truck. The people spending $150,000 on a truck are doing it because they want to, not because they have to. This is not a medallion situation.
As for your "wink wink" comment, ELD's have been mandated since the end of 2017, and even companies that are small enough to not legally be compelled to use one are often forced to comply due to customer contracts. (Shippers want the data the ELD provides to offer better ETAs to their customers.)
In my opinion, the most likely outcome of this law is that some truckers retire and sell their rigs to big corporations, some decide to work for big corporations, and prices go up for everyone who ships goods or buys shipped goods. Unless you're in asset based trucking and looking to expand, the chances are that AB5 is going to hurt you, not help you.