Since Congress passed the Motor Carrier Exemption (MCE) to the Fair Labor Standards Act (FLSA) in 1966 that ended the requirement for overtime pay differentials for all hours worked beyond 40 hours per work week, we have effectively subsidized transportation costs at the sole detriment of truck drivers’ earnings.
Some 56 years ago, carriers had no means of tracking its trucks. Instead of today’s electronic logging devices (ELDs), drivers logged their duty status on paper log “swindle sheets.” ELDs have replaced paper logs and created an automatic means to provide change of duty statuses that can also serve as an accurate pay-clock, thereby making the pay-by-mile business model technically obsolete.
Prior to cell phones, drivers had to stand in line to use a pay phone. Cell phones provide instant communication capability. Today we enjoy satellite-based GPS devices with trucks equipped with telemetry devices to provide pinpoint location and speed data to the dispatcher. None of that existed when the MCE was enacted.
In order to address the safety aspect associated with overtime pay without tracking capability, the carriers successfully lobbied Congress for the MCE. The conditions precedent to the MCE’s enactment have all been addressed making its continued existence not only unnecessary, but also compounding the supply chain bottleneck and creating a national security vulnerability.
Undervalued inland transportation costs allow offshore manufacturers to leverage their lower labor costs to be competitive with our higher domestic manufacturing labor costs with lower (shorter distance) transportation cost: 𝐹𝑜𝑟𝑒𝑖𝑔𝑛 𝑀𝑓𝑔 + 𝐼𝑛𝑙𝑎𝑛𝑑 𝑇𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡 < 𝐷𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑀𝑓𝑔 + 𝑅𝑒𝑔𝑖𝑜𝑛𝑎𝑙 𝑇𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡
This under-valuation of inland transportation cost allows a foreign-made products’ all-in delivered cost to be less expensive than a domestically-produced product, which undermines our domestic manufacturing competitiveness with economically devastating consequences to our local cities and towns, which only compounds our supply chain woes.
On the surface, this sounds great for the end-consumer – right up until that domestic end-consumer loses his/her job to offshore manufacturing. Now, without a job that end-consumer cannot even afford the foreign-made good. Just ask a Midwest auto plant assembly worker or parts supplier how his exported job is putting food on the table and the necessary material goods that his family needs for the home. Not so great anymore, is it?
