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On today's episode, Sarah and Steve sit down with Scott Lincicome, senior fellow at the Cato Institute and author of The Dispatch newsletter Capitolism, to discuss the details of our global supply-chain issues. Plus, Lincicome answers questions about inflation, wages, and problems with our labor force participation.
Show Notes:
-Make sure you get Capitolism in your inbox
-Lincicome’s latest Capitolism tackles our supply-chain woes
Sarah's defense of Harris was the best part of the episode, partially for the "oh my gosh" and other exclamations from the others. Sarah, thank you so much for being the (almost literally in this case) devil's advocate! It makes things very lively and I learn more.
Excellent discussion. I'd like to add some color commentary on the trucking situation. Our family operated a truckload carrier for 70 years that grew to 2,000 trucks, so have some experience there.
There's three big changes to safety regs that have hurt driver supply and flexibility in the last decade. The first was the work hours change Scott mentioned on the pod during the Obama admin, that put drivers on a "continuous" work clock. Once they start working, the clock starts and they can drive up to 11 hours and work 14. That sounds like a lot, but really isn't because those hours include waiting at the dock, between loads, fueling, eating, etc. This made the industry safer, but took all flexibility away from a driver and made it a worse job.
A couple years ago an electronic hours monitoring system was mandated across the industry to ensure drivers were complying with those hours. Most large fleets already had them in place and wanted everyone else to have them as well so there wasn't an advantage given to companies without those controls and broke the rules. Again, this definitely improved safety as well, but given the independent nature of drivers, this drove more out of the profession and took away any flexibility.
This year, a federal drug and alcohol clearinghouse was implemented. The industry has a good history of eliminating drug and alcohol use in these safety sensitive positions. However, in the most inane system ever, when doing the mandated background check to see if a driver had been previously fired for drug or alcohol use, the previous employer didn't always comply to give you an answer, as well as extremely high turnover in small trucking companies. It was entirely self regulated. Now, results have to be reported to a clearinghouse and you check the records against that. Again, very good for safety, and rightfully took some drivers off the road who shouldn't have been driving due to past drug use/testing failures.
These three things have really squeezed driver capacity, mostly for good ends with improved safety. But given the notoriously inefficient operations at the ports, larger companies with lots of customer options avoid them like the plague. Probably only about 10% of truckers will subject themselves to the quasi-abusive treatment there, so we're talking about a small industry subset of an already constrained driver pool.
Anyway, hope this is informative for any supply chain geeks like myself.