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The Lex Newsletter: Tomb Sweeping inspires trucker vs banker pay parallel

Dear reader,

Loaded with armfuls of flowers, joss papers, fruits and an entire roast suckling pig, my family trekked to New Jersey earlier this month to observe Ching Ming. Known in English as the Tomb Sweeping Festival, it is the day on which Chinese people honour their ancestors and clean family burial sites.

For me, thanks to my Uncle Paul, it was also a day to contemplate the US supply chain crisis and its impact on the incomes of truckers versus junior bankers.

This was our first visit since the pandemic. Family members flew in from as far away as Arizona to help. In between the lighting of incense sticks and the burning of cardboard Louis Vuitton bags — Grandma needs to stay stylish in the immortal realm, my mom says — I caught up with an uncle I haven’t seen in years.

Paul is a retired truck driver. Now in his seventies, his bad back and knees are the result of his life on the road. So naturally, our conversation turned to trucking.

Haulage is a microcosm of the world economy, fraught with supply chain bottlenecks, inflation and labour shortages.

Truck drivers are responsible for moving around 73 per cent of all freight goods in the US. The industry is short of 80,000 drivers, a record number, according to the American Trucking Associations. Federal limits on daily working hours, pandemic-related restrictions and other hurdles have prompted many truck drivers to quit for less stressful jobs.

This in turn is exacerbating the supply chain crisis, pushing up freight costs and prices for consumers. At FedEx, shortfalls of workers, including drivers, cost the logistics group more than $1.1bn in the first nine months of its new fiscal year. In February, Amazon said higher operating costs, including for transportation, contributed to more than $4bn in extra expenses during the fourth quarter.

Companies have been trying to turn on the charm to hire and retain workers. Walmart, for example, is increasing entry-level pay for in-house truck drivers to as much as $110,000 a year. That is on a par with the income of junior bankers at the Wall Street institutions I write about to make a living myself.

Junior bankers should not be offended by the comparison. Their smart colleges taught them all about supply and demand. Higher pay for truckers is partly a function of bad pay in the past. Truckers’ earnings adjusted for inflation are 70 per cent of what they were in the 1970s, according to Reuters calculations based on data from the US Bureau of Labor Statistics.

Journalists, these days predominantly graduates, sometimes characterise high pay for non-graduates as anomalous. That underplays the value of physical skills and may also ignore big differences between gross and net income.

As a self-employed truck driver, Uncle Paul says his pay quickly got eaten up by gas, insurance and maintenance costs. Then there are all the hours he had to wait around, unpaid, for cargo. Still, he took pride in what he did. It put food on the table and allowed him to put two children through college.

A willingness to work with gruelling intensity gives immigrants competitive advantage in the labour market. My parents worked in sweatshops in 1980s New York. These were in the days before the North American Free Trade Agreement spurred the development of low-cost manufacturing in Mexico.

Before they became multimillion-dollar loft apartments, the cast-iron buildings that lined the area around Chinatown and Soho were garment factories in which my parents quietly toiled for a piece of the American dream.

The rise of unionisation efforts at the likes of Amazon and Starbucks reflects a period of temporary advantage for labour over capital. It also channels long-running frustration with widening income inequality and tough working conditions. For companies, raising pay rates will often cost them less than coping with staff shortages.

Society may not assign much worth to the work that Uncle Paul did. But without him, goods would not have been delivered and store shelves would have stayed emptied. Higher pay for drivers now is just the price society pays for that essential service.

Enjoy the rest of the week.

Pan Kwan Yuk
Lex writer

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