Opinion: Defending the American Dream

By Michael Card

Chairman

American Trucking Associations

This Opinion piece appears in the March. 4 print edition of Transport Topics. Click here to subscribe today.

What happens when you have state budgets that are straining to come in balance and union representation that continues its long-trending downward slope as measured by percentage of workers covered? Unfortunately, the answer is an attempt to radically transform the trucking industry and an assault on the American dream.

If you have not guessed what I am referring to, I am talking about the numerous legislative, regulatory and legal battles to eliminate the existence of independent contractors in the trucking industry. Although a favorite target, the trucking industry is just one of many industries that drive our economic prosperity that will suffer as a result of these repeated attacks on individual entrepreneurs pursuing their business dreams.

Independent contractors — or owner-operators as they are frequently called in our industry — have been an important part of the trucking industry since the 1930s. As many as 500,000 of the nation’s approximately 3.5 million truck drivers are owner-operators.

Owner-operators help carriers save capital costs and provide flexibility to meet fluctuations in demand. They are highly motivated and possess customer satisfaction and profit motives that align with carriers. Some of the largest trucking companies in the nation — Werner Enterprises, C.R. England and Schneider National, to name a few — started as one-truck owner-operators.

Why, then, do we see a continuous stream of efforts to eliminate or dissuade use of owner-operators? In some instances, states harbor the false notion that using owner-operators is an elaborate tax-avoidance scheme. They believe that forcing employee status on these enterprising entrepreneurs will help solve state budget problems. Yet, according to a 2011 University of Arkansas survey of owner-operators, 93% of owner-operators used a paid tax preparer and a majority filed quarterly estimated taxes. According to the survey, the average owner-operator paid more than $6,300 in federal taxes per year.

A broader study of independent contractors across a number of industries by Navigant Economics reported that 99% of W-2 income is reported by employees while a nearly similar 96% to 97% of 1099 income is reported by independent contractors.

Since tax avoidance is not legitimate grounds for eliminating owner-operators, perhaps it is the all-too-familiar paternalistic notion that government knows best? Proponents of this theory believe owner-operators are forced into independent contractor status, ignoring the possibility of the entrepreneurial spirit.

The same University of Arkansas survey found that roughly 65% of respondents said it would be “very easy” to get hired as an employee driver, while an additional 10% said it would be “easy” to do so. Eighty-five percent of respondents reported having worked as an employee driver in the past.

The logical conclusion is that owner-operators freely choose to operate as independent businesses. When asked why they choose independent status, the most-cited reasons were:

• Freedom/independence

• More control over time and business decisions

• More money long term if you make good business decisions

These reasons embody the uniquely American entrepreneurial spirit that infuses all of us running businesses.

One fact is irrefutable: Labor union membership continues to be in decline. The Bureau of Labor Statistics reported that union membership fell by 400,000 in 2012, reducing the percentage of workers in unions to 11.3%. According to two economists at Rutgers University, that is the lowest level since 1916.

As the trucking industry has witnessed, organized labor’s response has been to lobby state legislatures to enact laws to presume an employee relationship or, worse, abolish the use of owner-operators outright.

Organized labor has lobbied regulatory agencies to adopt interpretations and enforcement policies aimed at classifying more workers as employees — contrary to those workers’ wishes.

Organized labor has gone so far as to team with municipalities running critical instruments of commerce to eliminate market choices and mandate employee drivers, as the Port of Los Angeles tried and failed to do.

American Trucking Associations, on behalf of the trucking industry and in conjunction with other affected industries, is leading the fight against organized labor’s efforts to solve its broader, more systemic problems by disrupting the freely chosen ordering of the American economy simply to have more employees to attempt to organize.

ATA is working with its state trucking association partners and its federation affiliates to fight these battles at the federal and state level to preserve the right to “make it big.” ATA has provided educational and financial resources in this effort. ATA has led the fight in the courts, whether it is the victory in the litigation against the Port of Los Angeles or briefs in cases intended to educate judges on what factors are appropriate to consider with respect to the trucking industry.

My predecessor, Dan England, rightly highlighted the importance of preserving the independent-contractor model in the trucking industry. The fight is far from over, and ATA will remain engaged during my chairmanship. The ability of individual entrepreneurs to pursue the American dream is all that is at stake.

The author is also president of Combined Transport Inc., Central Point, Ore. Founded in 1980, the company operates in the 48 contiguous states and parts of Canada as a specialized and heavy-haul carrier and logistics company.