I urge you to look at the attached, points at hand, and hope your interests are aroused to call for emergency hearings to determine the cause of these disastrous conditions pervading the trucking industry. There are many members and industry leaders who will provide their testimony to the many problems throughout this industry.

Sincerely,

TEAMSTERS UNION LOCAL NO. 695

Robert Kittlan

Robert Rutland
Secretary-Treasurer

RR:bj

Enclosure

Under the 1980 law, the Interstate Commerce Commission is supposed to promote safe, adequate, economical and efficient transportation. Congress also directed the Commission, in carrying out the Motor Carrier Act of 1980, to minimize disruption within the industry. Nevertheless, Commission actions and failures to act are seriously aggravating conditions in the industry which result in unnecessary layoffs. Congressional hearings focusing on the Commission's administration of the Act are a necessity. The following areas are among those which I feel should be questioned:

1.

2.

3.

4.

Some large and financially strong carriers, having taken advantage of
deregulation to obtain extensive additional operating rights from the
ICC, thereafter discount their rates by as much as 50 percent to obtain
traffic in their new areas. With the current level of operating costs,
it is readily apparent that such rates will not cover the cost of ser-
vice. At least one major carrier (Spector-Red Ball) attributes its
bankruptcy directly to the below-cost wars raging in the industry and
to deregulation. Although the National Transportation Policy condemns
unfair or destructive competitive practices (49 U.S.C. S10101 (a) (4),
the Commission has ignored complaints against such tactics. Also, it
has failed to take a stand against prohibited volume discounts which
discriminate between shippers. Congress should determine why the
Commission permits destructive rate cutting.

The common carrier service obligation is at the very foundation of this nation's transportation system. The Commission has been extremely liberal in granting new authority, but is not enforcing the common carrier obligation to serve the area covered by the trucker's certificate. This allows carriers to engage in selective and often destructive competition for traffic they deem to be attractive, while disregarding service needs involving less desirable traffic. Congress should inquire why the Commission has failed to require carriers to fulfill their obligation to the public.

Carriers using the services of owner-operators pass the major burden of
cutthroat ratemaking on to the independents who have no way to protect
themselves. Owner-operators must bear virtually all of the operating
costs in providing essential service. As their share of revenue has
become inadequate to cover those costs, large scale losses by owner-
operators have caused many to leave the industry. Congress should de-
cide whether carriers utilizing owner-operators should be required to
show that their rates will at least cover the operating costs which
must be met by the owner-operator.

The Department of Agriculture has determined that 37 percent of inde-
pendent owner-operators are spending 16 hours per day on the highways.
Such long hours clearly constitute a safety hazard that jeopardizes
all who use the nation's highways. At the same time, independents are
complaining of the growing amount of extortion by exempt brokers. In
addition to determining the reasons for these conditions, Congress
should find out why the Commission has failed to require contracts of
haul for agricultural products, as required by Section 16 of the Motor
Carrier Act.

Mr. ANDERSON. Our first witnesses are from the Department of Labor Malcolm Lovell, Jr., is the Under Secretary, and he is accompanied by Richard Gilliland, Administrator, U.S. Employment Service, and Chip Aubry, Special Assistant to the Assistant Secretary for Policy Evaluation and Research.

We are pleased to have you here and welcome you. I am sure that my colleague, Mr. Shuster, on my left, would also like to welcome you.

Mr. SHUSTER. Thank you very much, Mr. Chairman. I think this is the only time in my life that I would be on your left.

Mr. ANDERSON. That is why I wanted to point that out.

Mr. SHUSTER. I want to welcome the witnesses today to this very important hearing which we are conducting. Mr ANDERSON. Please proceed.

TESTIMONY OF MALCOLM R. LOVELL, JR., UNDER SECRETARY, DEPARTMENT OF LABOR, ACCOMPANIED BY RICHARD GILLILAND, ADMINISTRATOR, U.S. EMPLOYMENT SERVICE; AND CHIP AUBRY, SPECIAL ASSISTANT TO ASSISTANT SECRETARY FOR POLICY EVALUATION AND RESEARCH

Mr. LOVELL. Thank you, Mr. Chairman. I am pleased to appear before you today to discuss our experience in carrying out certain of the provisions of the Motor Carrier Act of 1980. Following my brief statement, I will be happy to answer any questions you may wish to ask.

Section 35 of the Motor Carrier Act of 1980 gives certain responsibilities to the Department of Labor. It states that the Department shall "... publish a comprehensive list of jobs available with motor carriers ..." and "... assist a person previously employed by any such carrier in finding other employment."

In order to best describe how we approached these responsibilities, it is necessary to explain, briefly, how the U.S. Employment Service system works. The various State employment services have, collectively, over 2,000 local offices which cover all areas of the country. Each local office, either through an automated job bank or other system, maintains listings of available job openings received by the Employment Service and applicants who are registered and available for work. To the extent possible, all openings are filled and applicants placed within the local labor market area. When openings cannot be filled or applicants cannot be placed locally, they are entered into a statewide clearance system. Through this system, then, applicants and openings receive the maximum exposure necessary. We have found this system to be the most economical and efficient method of achieving our purpose.

Since the act calls for listing the job openings of, and serving persons previously employed by, the motor carriers, we have included those openings and applicants among those served by our system. We informed the State employment services of their responsibilities under the act by issuing a directive describing those responsibilities. The States were instructed that affected applicants were to be provided the full range of ES services in finding suitable employment and that staff should take steps to identify job openings received from motor carriers to insure that they are processed ac

cording to established interstate clearance procedures if the openings cannot be filled locally.

It was anticipated that the volume of job openings and applicants might result in a significant increase in the volume of interstate clearance activity. We discovered rather quickly, however, that this was not the case. The actual volume of motor carrier job orders received for interstate clearance was quite low, as were the numbers of applicants. Spot checks of selected local offices indicated that motor carrier job openings could be filled from local applicant supplies within a few hours of receipt and distribution. There was, therefore, no need to extend motor carrier job orders into statewide or interstate clearances when they could be filled locally.

We experimented with a separate listing within the interstate clearance system that identified job openings and applicants from the motor carrier industry. This listing was provided to the committee last year. Production of these separate listings was very difficult and time consuming. For instance, the interstate clearance system does not-as the job banks also do not-identify job openings or applicants who are from certified carriers.

The Employment Service, as you know, receives job openings which are voluntarily submitted by employers. This is true of motor carriers as well as other employers. The General Accounting Office, in a study of motor carrier deregulation, estimated that the State employment services received only 150,000 openings from an industry that makes 1 million new hires each year.

This comes as no surprise to us since the industry itself is highly unionized, and we know that most of the hiring is done through the union hiring halls. In addition, compounding the difficulty in providing service to this industry and its workers, we cannot reasonably differentiate the certified from all other carriers in dealing with openings and applicants.

Section 35 of the act also empowers the Secretary of Labor to "require regulated motor carriers of property to file reports, data, and other information." We interpreted this requirement in light of current policy with respect to reducing the regulatory and reporting burden on the private sector, and we feel that our current approach is realistic in terms of the nature of the trucking industry and that it is compatible with the intent of Congress and the administration.

We do have, through present reporting systems and ongoing surveys, generalized information regarding overall industry employment, unemployment, and wages. This is sufficient information to insure that we can identify significant problems that the motor carriers or unemployed workers may be experiencing.

In summary, we feel that experience has demonstrated that the normal labor exchange function of local job service offices is sufficient to handle job order and applicant workloads created by the act, and we do not favor imposing additional regulatory or reporting requirements on those certificated motor carriers subject to the act.

This concludes the prepared portion of my testimony, Mr. Chairman. I am now prepared to answer any questions the subcommittee may have concerning the Department's involvement with the Motor Carrier Act.

16-604 0 - 83 - 2

Mr. ANDERSON. Thank you, Mr. Secretary.

I understand that implementation of section 35 of the act is extremely difficult and that accumulation of the data is difficult and costly at best. Does the Department have any suggestions on an approach that would work better?

Mr. LOVELL. I think the main thing, Mr. Chairman, is that whenever a carrier has an opening in the industry, it is being filled and it is being filled very quickly.

Now, if that were not so, then we would need some additional systems, but there are no jobs that are going begging and there are no jobs that are going waiting. So any system which complicates the process will not place any individual one day sooner.

Mr. ANDERSON. Do you have the most current unemployment rate for the trucking industry?

Mr. LOVELL. The most current rate we have is for the first calendar quarter of 1982, which is 11.1 percent for the trucking industry. Mr. ANDERSON. 11.1 percent unemployment for the trucking industry for the first quarter?

Mr. LOVELL. For the first quarter of 1982.

Mr. ANDERSON. Is the rate increasing or decreasing?

Mr. LOVELL. It is increasing-let me read you some figures. The rate for the third quarter of 1980 was 9.2. The rate for the third quarter of 1981 dropped to 6.6. The rate for the fourth quarter of 1981 was 8. Finally the rate for the first quarter of 1982 was 11.1 percent.

Interestingly enough, we have compared this to the recessionary period in 1974-75, and we find that the trucking industry unemployment rate in the first quarter of 1975, which we think is basically comparable, was 11.5.

So the unemployment rate today in the trucking industry is slightly lower than it was in a comparable period in the last major recession.

Mr. ANDERSON. How does the rate compare to other major industries?

Mr. LOVELL. Well let's take manufacturing, because the manufacturing industries basically produce what the trucking industry will haul. The rate for all manufacturing in the first quarter of 1982 was 11.2 percent, almost identical. The rate for construction, of course, which is extremely high now, was 20.4. As you know, the total unemployment rate for the Nation is 9.5. The truckdrivers' rate is higher. It is 13.6.

Now, as you know, that is not just in the carrier industry; it is for all people who are driving trucks for various companies. Mr. ANDERSON. Truckdrivers unemployment rate is 13.6?

Mr. LOVELL. 13.6.

Mr. ANDERSON. 13.6. Would you explain the hiring mechanisms that prevail in the industry and how those mechanisms either help or hinder implementation of section 35 of the act?

Mr. LOVELL. In the industry, as I pointed out in my testimony, about 15 percent of the hiring takes place through the employment service. This is not too different from the percentage that the employment service generally services.

In this industry, there has been a history of hiring through union hiring halls, which is the institutionalized way that hiring