Biden Union Agenda Support Jeopardizes Supply Chain, Economy

Sol. Gen. rec would upend trucking industry, drive inflation

Over two years into the COVID-19 pandemic, and the U.S. and global supply chains are still in a state of disruption. Inflation, energy prices, China’s COVID containment, port congestion, market fluctuations and worker shortages are all fueling economic uncertainty. And now the U.S. Solicitor General has recommended the U.S. Supreme Court toss aside an appeal by the California Trucking Association (CTA) that California’s AB5 not apply to California truckers. If the Solicitor General’s recommendation is accepted, it will be a win for union labor leaders, but a huge step backwards for all who are working tirelessly to untangle the nation’s supply chain.
At the same time the Solicitor General filed his unfortunate recommendation, the International Longshore and Warehouse Union (ILWU) suspended talks with the Pacific Maritime Association (PMA) over new contract terms. The master contract, which officially expires on July 1, covers approximately 22,000 workers at 29 ports up and down the West Coast, accounting for about 44% of U.S. container freight traffic.
RILA has implored the President and the administration to ensure the talks move forward and are completed quickly. The fact the ILWU leaders have stepped away from the table is worrisome—there has never been a worse time for this to happen. Meanwhile, the dockworkers who have kept the ports operating throughout the pandemic are left in limbo with uncertainty about what their future may hold.
The head on collision of these two issues– administration support for California’s AB5 and a lack of urgency on the port talks – will create further bottlenecks by further disrupting the system. AB5 in particular will chain workers to an outdated and inflexible workforce model that fails to meet the actual desire of workers to work more flexible schedules and be their own boss.
California’s AB5 restructured the classification of independent contractors by applying the strict “ABC test” to determine who is classified as an independent contractor versus an employee. AB5 was primarily targeted at the fast-growing “gig work” sector, but California lawmakers expanded the definition of workers and captured the trucking industry. Its potential negative impact on this vital link in the overall supply chain cannot be overstated. If allowed to go into effect, it will add to the inflationary pressures hammering American businesses and households. And while some elements of the current inflationary cycle were initially out of the President Biden’s control, this decision and its impact will be part of his economic report card. 
What the administration has neglected to consider is the fact that independent owner-operators are the bedrock of trucking in the United States. California alone has over 70,000 of these individual businesspeople, who have chosen to work on contract for the flexibility of choosing what companies, schedules, compensation, and freight they want to work for and with. Upending the independent owner-operator model would be a crushing blow to the industry and its drivers, and it would strip away the freedom of tens of thousands of Americans who made a personal choice to be their own boss.
Ending the independent owner-operator model and taking even more driver capacity out of the system—when critical supply chains are already disrupted—is a reckless plan that puts a political agenda ahead of the nation’s interests. The U.S. economy can ill afford further shocks and disruption in the ports and on the highways. The administration must use its political capital to encourage negotiators to reach a swift resolution to contract talks, while quietly pulling their brief from the Supreme Court supporting AB5. If the administration is serious about fixing the supply chain and beating back inflation, this is the time to prove it.
  • Supply Chain
  • Transportation and Infrastructure
  • Public Policy
  • Workforce

Stay in the know

Subscribe to our newsletter