Paved with Good Intentions
How short-sighted reforms destroyed America’s once stable trucking industry.
By Jacob Turner
The political winds that ushered in deregulation grew from widespread frustration. The country was reeling from a seemingly endless stream of political scandals, war, and social unrest. The countercultural movement of the free-wheeling hippies symbolized the times, but the shift was not just cultural. It was economic. Policymakers began abandoning the muscular regulatory approach that had guided the country since the New Deal era in favor of the markets and deregulation.
By the 1970s, the Interstate Commerce Commission (ICC) had already begun unilaterally loosening the rules that had ensured stability for a generation of truckers. Most trucks on the road were operated by established carriers, with a high barrier to entry for independent drivers. The few independent drivers who did exist typically operated as private carriers, exempt from the ICC’s regulatory authority.
Drivers could qualify as independent by meeting specific requirements, such as serving specialized clientele like farms. This arrangement worked out well for the farmers who avoided the cost of owning equipment while the drivers negotiated their own rates without ICC oversight.
But in the 1960s and ’70s, as the ICC developed a more relaxed philosophy, a new model emerged: lease operators.
These are independent drivers who lease their services to an existing carrier. The driver and carrier split the revenue from the freight, and the driver operates within the authority of that carrier as a contractor. This model existed as early as the 1950s to reduce deadhead miles, but it grew rapidly in the 1970s as carriers sought to cut costs.
Because lease operators are classified as contractors, they do not receive the benefits afforded to company drivers. As the number of independent drivers rose, so did the volume of freight and competition on the highways.
Meanwhile, the government struggled to adapt to rapid cultural and economic changes. The oil embargo triggered soaring inflation, high unemployment, and low growth. This infuriated the public and left elected officials desperate to pacify the outcry.
Frantically searching for scapegoats, both political parties in Washington agreed that the problem was regulation. A bipartisan consensus began systematically removing the legal barriers in sector after sector that had protected workers and consumers for decades — even beyond what agencies like the ICC had already relaxed.
After deregulating the airline industry, President Jimmy Carter turned his attention to trucking. He signed the Motor Carrier Act of 1980 into law with sweeping bipartisan support, including from future President Joe Biden and presidential nominees Barry Goldwater and Bob Dole. When Carter signed the bill, he made just one reference to the workers most affected: “Labor will benefit, because we’ll have new jobs.”
The 1980 law rested on two main pillars. The first eliminated barriers to entry by shifting the burden of proof in the application process from new entrants to existing carriers. Previously, new carriers had to demonstrate public need to secure operating authority from the ICC. After 1980, existing carriers had to prove a new entrant would cause harm for the ICC to deny an application. By 1985, the ICC was approving 98 percent of applications, oversaturating the market.
The second pillar expanded operating authority. Carriers once restricted to specific routes, commodities, and geographic markets were suddenly granted nationwide authority.
The result was that anyone with a commercial driver’s license and enough money for a truck could haul nearly anything, anywhere. Protections against predatory rates eroded, and the market grew increasingly volatile.
It is difficult to overstate how disastrous this was for the Teamsters. The union lost one million members in the decade that followed. Members were forced to compete in a cutthroat industry that increasingly resembled the chaotic era before federal trucking regulation began in 1935.
What began as an effort to lower prices and increase competition ultimately reshaped trucking into a fragmented industry defined by instability, lower wages, and shrinking standards for drivers. Deregulation did not eliminate costs — it shifted them onto workers, small operators, and communities forced to absorb the consequences of an increasingly volatile freight system.
This is the second in a three-part series on the state of trucking. Stay tuned to Just Cause on Monday for Part Three.