This Christmas, remember Tom Odom and all the others whom government regulators have put out of business. No American will escape the ramifications.
On December 27, 1929, Joseph Stalin declared an entire class of farmers, called “kulaks,” a menace to the Soviet revolution. Mass arrests and the collectivization of farmland followed. So, too, did famine. It turned out that removing successful farmers from the economy plunged the USSR into chaos.
California has carried out its own de-kulakization by eliminating the businesses of the state’s estimated 70,000 independent truck drivers. These entrepreneurs own and operate their own trucks, carrying cargo from California ports and manufacturers to the rest of the U.S. The effects on these business owners have been catastrophic. No American will escape the ramifications.
The destruction of independent truckers began when Governor Gavin Newsom signed Assembly Bill 5 (AB 5) on September 18, 2019. That law compels independent drivers to surrender the companies they’ve built and seek employment in large firms that can hire them.
When he signed the bill, Newsom genuflected to its stated purpose. AB 5, he said, would stop “workers being wrongly classified as ‘independent contractors,’ rather than employees, which erodes basic worker protections like the minimum wage, paid sick days and health insurance benefits.” But in his signing statement, he said the quiet part out loud: “Assembly Bill 5 is an important step. . . . A next step is creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work — all while preserving flexibility and innovation.”
Originally aimed at the Silicon Valley gig economy — at such businesses as Uber, Lyft, and DoorDash — AB 5 was always about enhancing union power. Its author, Lorena Gonzalez, was a San Diego–area Teamsters official when she entered the state assembly in 2013. Upon Newsom’s signing of AB 5, she waxed positively grandiose, declaring that California, “one of the strongest economies in the world, . . . is now setting the global standard for worker protections for other states and countries to follow.”
She resigned in January to take what looked like a payoff for a good and faithful servant: head of the Teamsters-dominated California Federation of Labor.
If herding independent contractors into corporations and concentrating economic power in fewer corporate hands seems inimical to Democrat messaging, consider the real purpose of AB 5: California union leaders use the money from members’ dues to bankroll the campaign of candidates who, like Gonzalez, return the favor by producing laws that grow unions. It is the self-licking ice-cream cone of bureaucracy. That these laws are also killing the California economy is a minor point.
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The story of truck driver Tom Odom is illustrative. Now a 59-year-old with nearly 40 years of driving behind him, Odom was raised in East Los Angeles, then as now a tough neighborhood.
“We were so poor that I recall my parents were occasionally on welfare,” he says. He dropped out of high school at 16, joined the military at 18, and after a short hitch “bounced around from minimum-wage job to minimum-wage job. I had no education, so what was I going to do? Get a big corporate job?”
When his in-laws asked him to join their family trucking business, he did so “driving team” — industry parlance for driving long distances with a partner. While his father-in-law slept, Odom drove their rig hundreds of miles; while Odom slept, his father-in-law took the wheel and drove hundreds more. “We never stopped,” he says, under conditions that might strike some of us as remarkably close to hell.
But Odom loved it. He tried a brief stint as a full-time employee for a firm that required him to join the Teamsters Union. The experience persuaded him that he’d never work as an employee again. In 1996, with money from savings, he put down $10,000 to purchase two trucks and begin his own independent trucking firm. He loved the flexibility, including the power to accept or reject offers to move cargo for any shipper. He plugged into an organization that provided discounts on insurance, tires and fuel, as well as free trailers, safety oversight, and accounting.
“Here I was, an uneducated kid from East Los Angeles, and now I own my business and I’m making $100,000 per year after expenses,” Odom says. “There’s no way that kid is going to make that kind of money in any other business.”
Then came AB 5, and the end of the road for his business.
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Only a few independent truckers are likely to survive AB 5. And other state regulations are likely to finish them off. Regional air-quality boards have declared California’s ports — the largest in the U.S. — off-limits to trucks older than three years. The regulators say that’s necessary to limit emissions from older trucks. It will likely further concentrate market share in large corporations that can afford newer trucks — a remarkable but predictable outcome in a state that protests corporate control of the economy.
Just over the horizon, there was more bad news for truckers. Meeting in October, California’s powerful Air Resources Board said it will pursue a ban on the sale of trucks that run on gasoline or diesel fuel after 2040.
“Obviously we all want cleaner air, but this would be catastrophic to the industry,” Jeff Cox, a veteran truck driver and owner of the Madera-based trucking company Best Drayage, told CalMatters. “We’re operating in an already challenging environment. To add something else that is this drastic would be very harmful.”
Naturally, state regulators see things differently where the word “environment” is concerned.
“California is leading the transition to wide-scale electrification of trucks and buses,” said board chair Liane Randolph. “These actions can show the world how to simultaneously address the climate crisis, improve air quality and alleviate key concerns identified by communities.”
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What California is actually showing the world is how to destroy a nation’s supply chain. Blowing up independent trucking is only part of that lesson.
Two years ago, building toward its contract showdown with regional port authorities in the state, members of the International Longshore and Warehouse Union (ILWU) slowed work on the docks. The results were obvious to anyone with eyeballs: container ships lined up for miles outside the ports of Los Angeles and Long Beach, like entire cities anchored on the sea. As the lineup sprawled, and with nowhere else to put them, port authorities directed the ships to anchor above a vast network of submarine pipelines that move oil to the shore. During a particularly dramatic 2020 storm, one ship snagged its anchor on a pipeline. The line ruptured and spewed oil. The state’s political class knew where to lay the blame — not on themselves, of course, nor on the union leaders to whom it has ceded authority over the ports. No, the real perp was oil itself.
“As California continues to lead the nation in phasing out fossil fuels and combating the climate crisis, this incident serves as a reminder of the enormous cost fossil fuels have on our communities and the environment,” said Governor Newsom.
Not to be left out of the disaster spotlight, federal officials had a different take on the crisis at the ports of Los Angeles and Long Beach. Visiting the traffic snarl off the coast of California, Transportation Secretary Pete Buttigieg said the real problem was “disinvestment” in port facilities. That would suggest the real solution was the Biden administration’s massive infrastructure plan. But key to the ILWU’s demands is this one: No new technology can be allowed to reduce jobs for ILWU members. From the highest ranks of the ILWU to its rank-and-file members, the message has been the same. That talking point was put most simply by dockworker Yvette Bjazevic. “Machines don’t pay taxes. They don’t help our local economy. They don’t help with infrastructure,” she told NPR. “We should all be outraged.”
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California’s ports account for the vast majority of all U.S. imports, and the state’s port workers and independent truckers play a major role in moving cargo into the domestic supply chain. Rail is the other key. But here, too, California’s political class has disrupted the supply chain, though not in a way Silicon Valley would appreciate. In January, thieves preying on those trains so littered the tracks with Amazon, UPS, and FedEx packages that a train derailed and the system closed. Photojournalist John Schreiber tweeted video that revealed the horror show: “As you can see, trains frequently slow or stop in this area as they get worked into the @UnionPacific Intermodal facility near Downtown LA. The thieves use this opportunity to break open containers and take what’s inside. I’d say every 4th or 5th rail car had opened containers.”
Union Pacific politely asked George Gascon, L.A.’s legendarily progressive district attorney, to “reconsider” his practice of dismissing the sorts of misdemeanors involved in the thefts. A Union Pacific spokesperson told Fox News that the thefts are “the reality of what Union Pacific has been facing over the past year, and it’s helping us shine a light on this issue. I think it’s a call to action for a number of stakeholders involved in this issue because . . . there are a number of folks being impacted by this.”
The number of people affected by California’s bungled supply-chain management is likely close to the entire U.S. population. Buttigieg, the former South Bend mayor, seems to understand at least that much, even if he isn’t honest about the causes.
“When there is an issue affecting ports here, you will feel it as far away as my Indiana hometown,” he said while visiting the Port of Los Angeles on January 11, 2022, just weeks after the frenetic holiday shipping season. By that time, he was already declaring victory over the transportation catastrophe. Local officials hailed him as a hero. Stepping up to a microphone set up for press at the port complex, L.A. mayor Eric Garcetti called Buttigieg the “man who saved Christmas.”
This Christmas, maybe remember Tom Odom and the tens of thousands of others whom government regulators have put out of business.
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It’s tempting to play the government-power game and call for a federal takeover of California’s ports, to persuade federal courts to crack down on the state’s destruction of an entire business class. But California’s AB 5 is a model for pending federal regulation, brought to you by the U.S. labor secretary Marty Walsh. It should come as no surprise that Walsh, like AB 5 author Lorena Gonzalez, is a former Teamsters Union official.
Nor have the courts offered real hope of reform. Following a loss in the Ninth Circuit Court of Appeals, the California Trucking Association failed in its appeal to the U.S. Supreme Court for relief from AB 5. Help is not coming from Washington, D.C.
Fortunately, there’s still the relative freedom of markets. Major American corporations are noticing. They’re fleeing California — or working around it. Wall Street Journal reporter Paul Berger recently name-checked such heavy hitters as Sharpie-maker Newell Brands Inc., clothing chain Abercrombie & Fitch, and air-conditioning manufacturer Trane Technologies — just a few of the companies who’ve decided California is a Bermuda Triangle for imports and exports. Now, they’re bending their global supply chains around the Golden State.
“The hierarchy of U.S. ports is getting shaken up,” Berger reported. “Companies across many industries are rethinking how and where they ship goods after years of relying heavily on the western U.S. as an entry point, betting that ports in the East and the South can save them time and money while reducing risk.”
Then, too, there’s the example of Tom Odom, the East L.A. kid who made good, and 70,000 others like him. While we’re on the phone, Odom tells me, his wife is at home in the Central Valley packing for their move to Texas. It will be painful for the Odoms, much as it is for all people who leave home for economic opportunity.
“I live 40 miles from the south gate of Yosemite,” he tells me. “I can be in the snow in the morning, and on the beach to see the sunset. I don’t want to leave California, but I have to because California won’t allow me to work the way I want to work.”