The banker bailouts of the 2008/09 period changed my life forever. I was working on Wall Street at the time, and the way in which the government rallied around the financial institutions that torched the world and left its victims in the dust threw my entire delusional worldview into disarray. Prior to that, I had bought into the absurd assumption that I was financially successful at a young age primarily because I was hard-working and talented. The ensuing bailouts and the government’s emphasis on obsessively rescuing some of the most degenerate people in our society made me realize once and for all how completely rigged and sleazy the U.S. economy really is. As you might expect, it only got worse under Obama’s oligarch-coddling policies and will surely continue to deteriorate under Trump (Goldman Sachs is not your friend).
Ever since I left my cushy financial services job to do the challenging and often draining work of chronicling our ongoing crime scene, I’ve spent the vast majority of my free time trying to further educate myself on exactly how this system works. What I’ve discovered over and over again is that it is far more abusive than even I imagined.
Today’s post highlights two important articles that came to my attention over the past couple of days. Both are extremely disturbing, and both should be seen as completely unacceptable in a remotely ethical civilization (which we are not).
First, here’s a short excerpt from a recent Bloomberg article highlighting GE’s pension shortfall, and how it’s gotten worse as executives focused on share-buybacks as opposed to funding the pension.
It’s a problem that Jeffrey Immelt largely ignored as he tried to appease General Electric Co.’s most vocal shareholders.
But it might end up being one of the costliest for John Flannery, GE’s newly anointed CEO, to fix.
At $31 billion, GE’s pension shortfall is the biggest among S&P 500 companies and 50 percent greater than any other corporation in the U.S. It’s a deficit that has swelled in recent years as Immelt spent more than $45 billion on share buybacks to win over Wall Street and pacify activists like Nelson Peltz.
Part of it has to do with the paltry returns that have plagued pensions across corporate America as ultralow interest rates prevailed in the aftermath of the financial crisis. But perhaps more importantly, GE’s dilemma underscores deeper concerns about modern capitalism’s all-consuming focus on immediate results, which some suggest is short-sighted and could ultimately leave everyone — including shareholders themselves — worse off.
Before you think GE is about to reverse course, take a look at the following depraved quote from the new CEO.
During a conference call to discuss the CEO transition and his priorities, Flannery said that “it is important that we’re always mindful of the impact on all of our stakeholders.”
“So, obviously, our customers, our employees,” he explained before adding, “but I’d say, especially our shareholders.”
This is precisely how most corporate executives see their employees. They’re basically an afterthought — and these are the lucky ones who have a job at a major company like GE. Poor workers are even worse off, and in some cases have simply become indentured servants.
What am I talking about you ask? I’m referring to the highly disturbing, yet extremely powerful article published by USA Today describing the Southern California port trucking industry titled, RIGGED: Forced Into Debt. Worked Past Exhaustion. Left with Nothing.
Below are some key excerpts, but you should really read the entire piece and share it.
A yearlong investigation by the USA TODAY Network found that port trucking companies in southern California have spent the past decade forcing drivers to finance their own trucks by taking on debt they could not afford. Companies then used that debt as leverage to extract forced labor and trap drivers in jobs that left them destitute.
If a driver quit, the company seized his truck and kept everything he had paid towards owning it.
If drivers missed payments, or if they got sick or became too exhausted to go on, their companies fired them and kept everything. Then they turned around and leased the trucks to someone else.
Drivers who manage to hang on to their jobs sometimes end up owing money to their employers – essentially working for free. Reporters identified seven different companies that have told their employees they owe money at week’s end.
The USA TODAY Network pieced together accounts from more than 300 drivers, listened to hundreds of hours of sworn labor dispute testimony and reviewed contracts that have never been seen by the public.
Using the contracts, submitted as evidence in labor complaints, and shipping manifests, reporters matched the trucking companies with the most labor violations to dozens of retail brands, including Target, Hewlett-Packard, Home Depot, Hasbro, J.Crew, UPS, Goodyear, Costco, Ralph Lauren and more.
Among the findings:
- Trucking companies force drivers to work against their will – up to 20 hours a day – by threatening to take their trucks and keep the money they paid toward buying them. Bosses create a culture of fear by firing drivers, suspending them without pay or reassigning them the lowest-paying routes.
- To keep drivers working, managers at a few companies have physically barred them from going home. More than once, Marvin Figueroa returned from a full day’s work to find the gate to the parking lot locked and a manager ordering drivers back to work. “That was how they forced me to continue working,” he testified in a 2015 labor case. Truckers at two other companies have made similar claims.
- Employers charge not just for truck leases but for a host of other expenses, including hundreds of dollars a month for insurance and diesel fuel. Some charge truckers a parking fee to use the company lot. One company, Fargo Trucking, charged $2 per week for the office toilet paper and other supplies.
- Drivers at many companies say they had no choice but to break federal safety laws that limit truckers to 11 hours on the road each day. Drivers at Pacific 9 Transportation testified that their managers dispatched truckers up to 20 hours a day, then wouldn’t pay them until drivers falsified inspection reports that track hours. Hundreds of California port truckers have gotten into accidents, leading to more than 20 fatalities from 2013 to 2015, according to the USA TODAY Network’s analysis of federal crash and port trade data.
- Many drivers thought they were paying into their truck like a mortgage. Instead, when they lost their job, they discovered they also lost their truck, along with everything they’d paid toward it. Eddy Gonzalez took seven days off to care for his dying mother and then bury her. When he came back, his company fired him and kept the truck. For two years, Ho Lee was charged more than $1,600 a month for a truck lease. When he got ill and missed a week of work, he lost the truck and everything he’d paid.
- Retailers could refuse to allow companies with labor violations to truck their goods. Instead they’ve let shipping and logistics contractors hire the lowest bidder, while lobbying on behalf of trucking companies in Sacramento and Washington D.C. Walmart, Target and dozens of other Fortune 500 companies have paid lobbyists up to $12.6 million to fight bills that would have held companies liable or given drivers a minimum wage and other protections that most U.S. workers already enjoy.
But allegations like those have been made in sworn testimony in hundreds of the cases, virtually all of which ended with trucking companies ordered to repay drivers for truck expenses and lost wages. The USA TODAY Network found that at least 140 trucking companies have been accused by at least one driver of shorting them of fair pay or using threats to squeeze them to work longer hours.
Prominent civil rights leader Julian Bond once called California port truckers the new black tenant farmers of the post-Civil War South. Sharecroppers from that era rented farmland to make their living and regularly fell into debt to their landlords. Widespread predatory practices made it nearly impossible for the farmers to climb out.
Through lease contracts, California’s port truckers face the same kinds of challenges in ways that experts say rarely happen in the U.S. today.
“I don’t know of anything even remotely like this,” said Stanford Law School Professor William Gould, former chairman of the National Labor Relations Board and one of the nation’s top labor experts.
“You’re working to get yourself out of the debt. You just don’t see anything like that.”
Apparently you do.
California’s port truckers make it possible for the Walmarts and Amazons of the world to function. Even so, most of the two dozen retail companies contacted by the USA TODAY Network declined to comment, some saying they had never heard of the rash of labor violations at their primary ports of entry.
Only Goodyear said it took immediate action. Spokesperson Keith Price said in a statement that the tire giant dropped Pacific 9 in 2015, “within two weeks” of California labor commission decisions in favor of dozens of drivers.
The few others that issued statements said it was not their responsibility to police the shipping industry. Retailers don’t directly hire the truckers who move their goods at the pier. They generally hire large shipping or logistics firms that line up trucking companies through a maze of subcontractors.
“We’re not trying to wash our hands of this issue,” said John Taylor, a spokesman for LG Electronics, “but it’s frankly far afield” and “really very disconnected from LG Electronics.”
When asked about labor violations by trucking companies in Target’s supply chain, spokeswoman Erika Winkels wrote: “Target doesn’t have anything to share here.”
The contracts work like sub-leases. Knowing drivers could not qualify for their own loans or leases, trucking companies arranged to finance their fleets. Then they had drivers sign up for individual trucks.
Drivers gave their old trucks – many of which they owned outright – to their company as a down payment. And just like that they were up to $100,000 in debt to their own employer. The same guys would have had a tough time qualifying for a Hyundai days earlier.
As far back as August 2008, a trucking finance firm warned Port of Long Beach board members that 40% of drivers were likely to default on truck leases. But no one stopped the deals, which place almost all of the financial risk onto the workers.
Drivers’ names were not on the truck titles. And many contracts effectively barred drivers from using their truck to work for other companies.
The companies also retained the power to decide how much work to give their drivers. They decide who gets the easiest and most lucrative routes — and who gets to work at all.
That leaves drivers in constant fear of upsetting managers, who can fire them for any reason, or simply stop sending them business, a process some call “starving” them out of the truck.
On a five-year lease, drivers could pay in for four years and 11 months. If they got sick, fell behind on the lease or were fired in the last month, they could lose everything – as if they had never paid a dime.
“There are no rules,” one driver recalled La Rosa saying when he took the trucks. “No law or politicians will help you.”
Understandable, after all, inventing new Russia conspiracy theories every day is a real time suck.
After emigrating from Nicaragua in 1992, Samuel Talavera Jr. drove a truck at the Los Angeles harbor and made an honest living. Since 9/11, all truckers working at ports of entry must be legal residents.
Talavera bought his wife, Reyna, a house and took his daughters to Disneyland.
But everything changed in late 2010, when he went into the QTS warehouse and his boss told him he needed to trade in his truck and sign a lease-purchase contract.
For the next four years, he worked mind-numbing hours to pay the bills.
To save commuting time, he slept in his truck at work. To avoid bathroom breaks, he kept an empty two-liter bottle by his side. He became a ghost to his family.
Still, he had to drain his savings to survive.
A stack of weekly paychecks he keeps in a drawer at home shows his worst weeks. He grossed $1,970 on June 3, 2011, but it all went back to QTS. After the lease and other truck expenses, he took home $33.
On February 10, 2012, he took home $112 after expenses.
The next week, he made 67 cents.
Here’s what that looks like:
Drivers could quit and find new work. But many, like Flores, say they’ve stayed on hoping things would improve. Then they realized if they quit, they would lose thousands paid toward their truck. “They’re captive,” Teamsters’ international vice president Fred Potter said.
James Kang, former president of the now-defunct QTS, declined to comment and then hung up on a reporter…
Arcadio Amaya said he refused to work 15 hours straight one night at Pacgran Inc. and was fired the next day. He lost $26,400 he had paid toward a truck.
Armando Logamo, a former driver at RPM Harbor Services, said he saw other drivers bribing dispatchers for better-paying assignments, so he told his supervisor. The next week, Logamo was fired. He lost the truck, along with all the payments he had put into it.
“They fired me because I was one of the ones that was speaking up,” he said. “It was pretty devastating because I was with them for two plus years.”
Eddy Gonzalez once missed a day when he was called to court to testify as a witness. As punishment, he said his boss at Seacon Logix didn’t let him work the next day.
Then, a few months later, he missed a week to bury his dead mother. When Gonzalez came back, he said, his boss cleaned out his truck and fired him on the spot while he pleaded to keep his job.
“He just took the keys and left,” Gonzalez testified in court.
From 2013 through 2016, trucks passed through the gates 23 million times, leaving a trail of which truck was on the road, when and where. The USA TODAY Network identified hundreds of thousands of instances where a truck was in operation for at least 14 hours without the required 10-hour break.
Not all of these instances are violations because two drivers might divide time behind the wheel of a single truck. But many companies ban that practice.
Pacific 9 is one of them. At least 7,500 times over three years, Pacific 9 trucks were on the clock for more than the 14 hour maximum, the port data shows. Almost all of the company’s 160 trucks exceeded the time limit at least once.
One Pacific 9 truck regularly operated through the night, more than 100 hours a week. Another went 35 hours without the proper break almost once a week for three years, according to the data.
When reporters shared the data with Ta, the executive said he couldn’t explain those circumstances and stopped responding to interview requests.
Using records from court hearings and labor cases and shipping log data provided by the trade research firm Panjiva, the USA TODAY Network identified the brands whose goods were moved by trucking companies with multiple violations. It’s not clear if the companies hired them directly. But retailers often don’t, relying instead on shipping and logistics companies to arrange trucking services from U.S. ports.
Hewlett-Packard, Costco and Hasbro have moved containers through Pacific 9. Fargo Trucking, with 45 violations, has moved Bissell vacuum cleaners, UPS packages and Nautica apparel.
Steve Madden shoes and Neiman Marcus have used Imperial CFS, which has lost seven labor cases to date.
None of those retailers would comment for this story.
JCPenney spokesperson Daphne Avila said in an email that the company “relies on its third-party transportation vendors to comply with all applicable laws and regulations.”
JCPenney, which once hailed the lease purchase program as “innovative and cost-effective” in a press release, has moved shipments through Pacer Cartage, part of a family of XPO Logistics companies accused by at least 140 drivers of labor violations in both civil court and the California labor commission.
John Taylor, a spokesman for LG Electronics, said the company hires steamship lines that provide “door-to-door” shipping services, so it is not involved in hiring or managing trucking companies. LG believes “our responsibility starts when the goods arrive in our own warehouses,” Taylor said in an email.
Driver contracts and shipping records show that Total Transportation Services and QTS, two of the most heavily cited companies in the harbor, have moved containers with LG goods.
Public pressure and new laws in recent years have forced retailers to monitor their international supply chains.
Target, for instance, takes a strong stance against forced labor in the cotton factories of Uzbekistan. It says it sends auditors to screen the companies that turn cotton into t-shirts sold in its stores.
The retailer promises to drop any vendor found exploiting workers with debt, according to its corporate responsibility policy. It won’t use companies that punish workers “physically or mentally.” It orders a 60-hour maximum on work weeks, with fair wages and benefits.
But Target has ignored the labor commission rulings in California and continued to allow companies found to have violated workers’ rights to move its goods. Company spokesperson Erika Winkles declined to comment.
Put another way: “Nobody cares about us,” said trucker Gustavo Villa, “because we are living in the dark.”
The story above is gut-wrenching and can lead to even the most optimistic amongst us to lose faith in our fellow human beings. It is at times like these that it’s important for those of us who are relatively privileged to look inward and think about the much bigger picture.
I’ve spent years thinking about the decrepit state of our union, and the only thing I can think of that can possibly move us forward on a sustainable long-term basis is a widespread expansion of consciousness. Higher states of consciousness will result in deeper overall understanding, a greater feeling of connectedness with our fellow living creatures and better conduct throughout society at large. Ethics, something sorely lacking in society today, will improve as overall consciousness expands.
As I mentioned on Twitter earlier today.
The real revolution we need in America is a revolution of ethics.
It’s the only one that can succeed and make things better.
— Michael Krieger (@LibertyBlitz) June 21, 2017
We have no ethical framework in this country at all. The dominant zeitgeist is grab whatever you can. The results are all around you.
— Michael Krieger (@LibertyBlitz) June 21, 2017
Imagine how the world would change if everyone acted just a little bit better.
— Michael Krieger (@LibertyBlitz) June 21, 2017