‘Bidenomics’ Is Driving The Trucking Industry Off The Road, Economists Say

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Will Kessler Contributor
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The trucking industry is hurting following union deals and bankruptcies, due in part to the Biden administration’s economic policies and rhetoric, according to economists who spoke to the Daily Caller News Foundation.

In July, major union the International Brotherhood of Teamsters and the United Parcel Service narrowly avoided the end of the UPS drivers’ contract by reaching a deal on increased worker offerings, and the bankruptcy of shipping company Yellow saw the closure of the third largest provider of less-than-truckload carriers, shipping services that do not require a whole truck to be filled. Economists point to pro-union rhetoric and policies from the Biden administration driving up operating costs and poor fiscal and regulatory policy for high diesel prices. (RELATED: Experts See Red Flags Even As Biden Takes Victory Lap On Economic Growth)

“When you get these administrations that are overtly pro-big labor, it emboldens those labor unions to get more concessions than they otherwise would, which does increase pay for members,” E.J. Antoni, research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “It tends to reduce the number of people working. It also tends to increase the pay of union leadership and increase union dues, which in turn increases Democrat Party donations from those dues.”

President Joe Biden’s rhetoric has been consistently pro-union, going as far as to make the pledge the night before the 2020 presidential election to “be the most pro-union president you’ve ever seen.” The president has also pushed legislation like the Protecting the Right to Organize (PRO) Act, which was criticized by Republicans as forcing unionization on workers by seeking to force non-union members pay to dues.

“The UPS Teamsters deal is likely to be viewed, especially at very large companies that are working with the Teamsters and in the trucking industry, as a sort of bellwether for how negotiations may go,” Ryan Yonk, senior research faculty at the American Institute for Economic Research, told the DCNF. “That agreement comes about in large part because UPS felt there was a credible threat potentially from the Teamsters not showing up and having a work stoppage, and so ultimately, they came to the table, and I think the positions of both sides are affected by the administration’s rhetoric and views on how labor and management negotiations should go.”

Shipping giant Yellow, which employed about 30,000 people and operated more than 12,000 trucks around the U.S., ceased operations on Sunday, intending to file for bankruptcy, marking the biggest collapse for the U.S. trucking industry in history. At the time of the failure, Yellow held $1.5 billion in debt and was in a heated exchange with the Teamsters, culminating in a strike threat in July, according to The Wall Street Journal.

“Any bankruptcy is highly likely to be related to how the company has arrived and primary the underlying market conditions,” Yonk told the DCNF on the bankruptcy of Yellow. “But on the margins, things like the prices of diesel, the regulatory compliance as well as the potential for increased labor unrest all feed into that.”

“If you look at, for example, how fast diesel prices have gone up and compare that to trucking rates, trucking companies have very clearly been absorbing higher costs and not passing the full freight on their shoulders,” Antoni told the DCNF. “Both the regulations for the actions and the words of this administration have really throttled production and refining of oil and oil products in this country.”

The price of diesel, a key input into the cost of operation for the trucking industry, has come down in recent months but reached record highs for the U.S. in April 2022, jumping to $5.75 per gallon, up from $2.68 a gallon when Biden took office, according to data from Statista. The price has since fallen but remains elevated at $3.88 per gallon for the month of July.

“There has been relatively strong pushback from the Biden administration on allowing either greater extraction or increasing refining capacity in a meaningful way in the United States, primarily due to environmental concerns and climate change issues,” Yonk told the DCNF.

The Biden administration has pushed for actions that hinder oil drilling, such as a new 20-year ban in June on new oil and gas drilling leases within 10 miles of the Chaco Culture National Historical Park in New Mexico. It follows Biden’s goal to conserve at least 30% of federal lands and waters by 2030.

“When [the government] spends way too much money and you create inflation, that’s going to cause interest rates to rise,” Antoni told the DCNF. “They have to go up potentially, and they have, and now you’re seeing companies like Yellow unable to roll over or refinance debt. It’s going to become a real killer.”

The White House did not immediately respond to a request to comment from the DCNF.

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