Labor as Factor of Production

Ad posted in the Journal of Commerce by the Port of Seattle in August 2009:


Course description at the University of Washington for GTTL 501 Global Logistics Management:


The gist of this scenario is that the Port of Seattle is subsidizing it's costs to reduce container fees to nothing to compete more strongly against Los Angeles/Long Beach and Oakland. Both of these ports chose to adopt or were about to adopt a plan requiring that port trucking companies hire their drivers on as employees, thus enabling their ability to unionize and thus inevitably driving up container fees.

To make themselves (ourselves?) more competitive, the Port of Seattle is choosing to sacrifice its short-haul drivers. We will offer a limited subsidy to encourage them to purchase newer, cleaner-burning trucks (ScRAPs), but the cost of the new truck will still mostly fall on the individual driver. I mentioned their salary and benefits scenario in past blog entries, so it's fair to assume that this plan is more for show than effect.

How do we choose where to make cost cuts along the supply chain? I think the simple answer is that elites do it where they can, where it will be least visible to the public (in the event that it might be controversial), and least piss off other people with power or influence. So where do they end up? In sectors populated by low-wage immigrant brown-skinned people, where possible. Where resistance is unlikely to be coordinated, where resources for resisting are slim, where individuals can be kept in competition with one another.

The only possible ethical response to this would be to assert that such jobs are only jobs that people pass through. That people will only spend limited time in them and them move on, upwardly mobile. Some may do this. The truth is that being a short-haul truck driver doesn't set a very good foundation for upward mobility - there's no place up to go in the industry itself, and it's unskilled labor, so no marketable skills are acquired. Many drivers take at least English classes, and some attend community college, so there is potential there. But for many it is their full-time job, the best or only one they have been able to get in America, and they have families to support.

Short-haul driving is a crucial part of the infrastructure, and short-haul drivers a crucial "factor of production." As such, I believe they should be treated that way - their jobs cared for, their infrastructure cared for. If we insist on labeling them a factor of production, then let's at least take care of the investment.

Drayage blues

The cycle in which port truck drivers are stuck:

Costs are externalized from the shipping industry onto port truck drivers and the state. The drivers earn very little income, and, as independent contractors, have very little bargaining power and no health insurance. To compete for business, they reduce their costs by whatever means possible, generally running very old, dirty trucks. The surrounding communities bear the brunt of the pollution from these trucks. The surrounding communities are, of course, low-income communities. It goes without saying that the greater metropolitan area (and ultimately the atmosphere of our planet) suffer for the pollution, as well.

The port - charged with the responsibility of being an economic engine for Washington state - fears losing business to other, cheaper, west coast ports if the cost of shipping goes up as a result of increased driver wages and/or truck regulation. Their proposed solution is to use public money to subsidize a clean trucks program that will be only marginally effective, at best, rather than put the costs on the international shippers via fees at the port terminals. So, WalMart (for example) doesn't pay the real costs of shipping, and continues to use its profits to expand its own business, making it that more capable of out-competing its competitors as well as its own labor.

Moreover, the argument that WalMart is creating jobs is a fallacy. They are edging out smaller stores and replacing those jobs with their jobs. Their full-time employees earn on average under $20,000/year and must spend 20% of that income on health care before their insurance kicks in. It is clear that their incomes and their jobs are not doing much for the dynamism of our economy. The GDP grows, but so does inequality. The power and the resources accumulate at the top.

Thoughts on this?