Goldman Sachs: Impoverishing Truck Drivers

Much attention was paid when, in March, a derivatives trading executive at Goldman Sachs accused the investment bank of abandoning its proper mission: serving clients first. When he went to work at the firm twelve years ago, Greg Smith maintained, Goldman?s culture ?revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.? But now, he said, the company sustains a ?toxic and destructive? environment. For its part, the company had commissioned a Business Principles and Standards Report that recommended ?a constant focus on the reputational consequences of every action we take. In particular, our approach must be: not just ?can we? undertake a given business activity, but ?should we.? ?

Goldman Sachs is an investment bank, of course, but it is also an owner of enterprises. As its website proudly declares, ?Goldman Sachs is one of the largest infrastructure fund managers globally, having raised more than $10 billion of capital since the inception of the business in 2006.? Goldman Sachs Infrastructure Partners owns 51 percent of a company called SSA Marine, which, with its affiliates, operates more container shipping terminals than any other company in the world.

In this capacity, Goldman Sachs is not just an employer of bankers but an employer of truck drivers who drive unloaded goods out of the ports. Except that, in a ruse to avoid paying benefits to these drivers (and taxes to state and federal governments), they are not classified as employees at all?rather, as ?independent contractors.? More of the nation?s 110,000 port truck drivers work for SSA Marine than for any other firm.

Since trucking deregulation began under President Jimmy Carter, trucking rates are no longer set by the federal government. They are set by companies like SSA Marine, which are not unionized and which relentlessly cut costs. One way to do so is to avoid paying benefits. This is neatly done if one?s truckers are not classified as employees.

I spoke recently with an SSA Marine driver, Leonardo Mejia, who has been driving cargo out of the port of Long Beach, California, since 2001. Mejia was one of a group who supported Occupy Oakland?s port shutdown on December 12 even as most longshoremen opposed it, which they were bound to do if they were not to forego a day?s wages.

He told me:

?When all the port drivers used to own our own trucks, the situation wasn?t so bad. It changed in 2008. At that point, most of the port drivers were making twenty-eight to forty thousand dollars a year before taxes. The ports created a plan to avoid pollution. They forced us to sell our trucks and buy new trucks, and the state paid the ports to buy new trucks, thinking that the truck drivers would be recognized as employees. But only fifteen out of 850 companies in Los Angeles have recognized the drivers.? Goldman Sachs?s SSA Marine is not one of them.

?If I want to keep working at the port,? Mejia said, ?I have to drive a new truck. Now most of the companies force drivers to lease the truck if they can?t buy it. You have to pay all the insurance, the diesel, the maintenance?you have to pay everything. So in the past year, I made eighteen thousand dollars. I have to pay three thousand dollars in taxes to the IRS. I work between nine and eleven hours per day, six days a week, or as many as the dispatcher says. I have no control. If I want to go to work for somebody else, I can?t do that. I must work only for that company. They say that we?re independent contractors but in reality we?re employees.?

Employees without benefits, that is.

Explaining their support for Occupy Oakland, Mejia and other drivers declared: ?The companies we work for call us independent contractors, as if we were our own bosses, but they boss us around. We receive Third World wages and drive sweatshops on wheels. We cannot negotiate our rates. (Usually we are not allowed to even see them.) We are paid by the load, not by the hour. So when we sit in those long lines at the terminals, or if we are stuck in traffic, we become volunteers who basically donate our time to the trucking and shipping companies. That?s the nice way to put it.?

The corporate practice of labeling controlled employees ?independent contractors? flies in the face of IRS regulations that technically distinguish between the two. As Andrew Leonard reported in Salon, the Obama administration last year asked for $46 million to pay for inspectors to enforce these regulations, but the GOP-controlled House did not take kindly to funding such enforcement. In October, however, California Governor Jerry Brown signed into law a ?Wage Theft Prevention Act of 2011,? which ought to help rectify the power imbalance between employers and ?contractors.?

Who benefits from such deceptions? An executive of SSA Marine told Bloomberg that Goldman Sachs Infrastructure Partners ?is primarily made up of pension plans of workers in the United States and Australia, and those groups hire money managers to manage their pension funds.? In his eyes, ?We are a union operation; we support union workers, family-wage projects and make investments to increase those job opportunities.?

SSA Marine maintains, in effect, that it impoverishes the truckers in order to benefit more fortunate workers who?thanks to decades of union victories now under pressure?enjoy pensions. In the view from Goldman Sachs, the pensions of the unionized are to be sustained by the ill-treatment of those denied union protection. This makes it ?a union operation.?

The claim is Orwellian, and it belongs on the same page with the claim so frequently heard these days that America?s one-percenters deserve to be paid so extravagantly because of their ?hard work.? Those who defend the tens of millions of dollars paid America?s wealthiest executives on the ground that they earn their ?compensation? because they work hard might like to tell the world in what way they work harder than Leonardo Mejia.

Todd Gitlin is a professor of journalism and sociology at Columbia University and author of the new e-book Occupy Nation: The Roots, the Spirit, and the Promise of Occupy Wall Street, also to be published in an expanded edition, in paperback, this August (HarperCollins).

Article cross-posted with OpenDemocracy. Photo: Occupy Oakland port shutdown in December (by nereocystis via Flickr creative commons)