STATEMENT OF DR. MICHAEL BELZER, PH.D.
Mr. Belzer. Thank you very much. On June 1, 2011, a discount
intercity bus carrying 59 people to New York's Chinatown crashed,
killing four people and injuring more than 50 others. The carrier had
a long history of violations and crashes and a safety rating far worse
than the rest of the intercity bus industry. A driver fatigue rating
of 86 on a scale of 1 to 100 meant that before the crash Federal officials
had rated it among the most unsafe bus carriers. Its driver fitness
rating of 99.7 meant that it ranked in the bottom 1 percent. Sky
Express should not have been on the road. And after the crash, the
FMCSA banned it from interstate service. Although the ban was too late
for the victims, under U.S. regulations it still does not prevent the
company from continuing to operate intrastate.
Safety advocates' call to require seat belts, stronger rules, and
more driver training do not address the problems that led to the crash
and would not prevent future crashes. Intense competition created by
deregulation created the safety problem. We do not have to repeal
deregulation to solve it, but we have to address the problems this
competition creates. If insanity is doing the same thing over and over
and expecting a different result, we are all crazy. Preventible
crashes like this will happen again for the same reasons regardless
of how many times we rework the algorithms of CSA or replace the entire
program altogether. In short, CSA tries to address safety problems.
We cannot remedy them until we begin to address trucking's systemic
I have examined the link between CMV driver compensation work
pressure and driver safety. Research establishes a pay-safety link
that is important for policy because it shows that the economic force
that is inherent in transport competition tends to produce unintended
safety and health consequences for drivers and passengers. My full
report on the economics of safety, which I submitted to the committee,
applies to both truck and bus. Transport deregulation brought lower
consumer prices, but this bus crash showed the dark side. Deregulation
has increased competition among carriers in all modes, hauling both
passengers and freight, and has reduced compensation. CSA in its
current form places pressure on drivers without addressing underlying
causes. In the trucking industry, poor compensation for drivers
causes a misperception of a driver shortage that isn't there and causes
carriers to look for cheaper labor, such as that found in Mexico.
Everyone who has passed introductory economics knows that more drivers
will be attracted to trucking by a better job package, including
compensation. Opening the border to Mexican truck drivers would bring
worse pay, as Mexican drivers compete with American small business
drivers and employees at a quarter of the cost. No regulation can
overcome the effect of markets that drive down price.
This creates an economic sustainability problem. The CMV
driver's workplace is the public highway, and unsafe drivers become
a public hazard; what we in economics call a negative externality.
While people buy transport services for an apparent market price, it
does not include safety and health costs. Economic efficiency
requires that price incorporate all costs and benefits associated with
commercial movement and failure to incorporate the full safety and
environmental costs sends incorrect signals to the market, creating
an implicit public subsidy of unsafe operators.
If the insurance market worked perfectly, the risks associated
with low-paying carriers would show up in higher cost insurance. This
market does not work well because insurance companies cannot rate motor
carriers and charge accordingly. These crashes are low
probability/high impact events that insurance companies just don't
These findings are consistent with economic theory because we
expect that carriers pay drivers their market value determined by their
personal employment history, driving record, training and education,
experience, driving skills, temperament, and other factors. These
factors explain the differences in safety outcomes. For every
1 percent in pay, we have found 1 to 4 percent better safety,
controlling for the factors that we can. Higher pay produces better
carrier and driver safety. We don't yet know whether safety pays, but
clearly higher driver pay causes safety. Since price should include
all costs in an efficient market, the environmental and safety costs
associated with cheap labor and cutthroat competition create
unsustainable supply chains that make everyone less well off.
Three solutions would go a long way to resolve this problem:
Number one, get government regulators out of their silos. FMCSA and
the Department of Labor should cooperate with industry and with each
other to talk about how to promote economic conditions that improve
highway safety. The DOL has the authority to regulate compensation,
and perhaps it is time to reconsider certain exemptions for the trucking
industry under the Fair Labor Standards Act.
Number two, implement chain of responsibility and safe pay rules,
like those enacted by the Australian Parliament this year, to create
a level playing field in a deregulated environment. The
owner-operator model is valuable and we need to preserve small business
in the trucking industry. Other nations like Australia maintain a
competitive industry that supports small business truckers and doesn't
compromise safety. One way to do this is to address underlying
systemic problems such as the failure to pay truckers for loading and
Number three, tighten regulations on subcontracting balances the
power between contractors and trucking companies, as Australians have
done. This would give owner-drivers a fair shake. In short, help
level the playing field by giving small businesses more negotiating
power to keep costs low and safety benefits high.
Thank you very much.
[The statement of Mr. Belzer follows:]
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didn't come and talk to any of the people who really are affected by
this. They are changing my life. They are changing the way I feed
my family without talking to us at all. And I will tell you and I will
assure you that it is bringing economical impact to my family and to
the families that I help support daily in great numbers. And they are
not caring about anything we say. And we have called and asked
questions, even how this thing works. And they won't answer the
Mr. West. Then this is my follow-up to that because I believe
that in place of something that you don't agree works very well, what
would you all seek to try to implement or institute? Because we have
to have safety on our highway system. So what are some of your
recommendations? Since we do have the guy back there from the
regulation and compliance section, what were some of the things that
you would present to him that he can take back right now today?
Mr. Belzer. Can I throw something out?
Mr. West. Sure, Doctor.
Mr. Belzer. This is Dr. Belzer.
Mr. West. I know.
Mr. Belzer. Well, I know there is a record here of some kind.
So I have spoken with them and met with them many times. I have
served on some panels and different things like that. In fact, Anne
Ferro asked me to come down and speak to the MCSAC a couple of years
ago about the economics of safety question. I actually applied for
a position on MCSAC when there were some openings but I didn't get the
job or the opportunity to serve. However, I have actually done a lot
of studies for them over the years, different times and most recently,
actually, one on using the large truck crash causation study.
Mr. West. I only have 1 minute and 38 seconds.
Mr. Belzer. Very quickly. I proposed to them some years ago a
benchmarking program which I developed which is in many ways a lot like
CSA but allows immediate feedback to the carriers on how to improve
their operations. And it was developed based on sound science relative
to the causes of truck crashes and started from that perspective and
worked back to come up with a rating.
So I would recommend that they take a look at that again. And
we would be glad to be helpful with that.
Mr. West. Now is that something that the gentlemen here could
be in agreement on?
Mr. Tucker. I think I have something much quicker and faster that
would improve safety immediately. And we have asked this in writing
and in various meetings. We asked -- the FMCSA is required to identify
high-risk carriers. We have asked them to identify them in a list,
give them to us, update that daily to the industry. We will stop using
those carriers overnight. It is a small percentage, very small. We
asked for daily changes in the safety ratings. When a safety rating
goes from satisfactory to unsatisfactory sometimes it will take 5 to
6 weeks for us to find that out. We asked them to issue that in a daily
file. And then thirdly, we have asked, when they place a carrier out
a service for a lot of different reasons, they are not able to pull
comments if you would care for me to comment on the UMTRI report.
Ms. Velazquez. Okay.
Dr. Belzer, some trucking firms have increased driver pay and
found that it increased the overall safety record of the company.
However, current market forces prevented them from continuing to pay
the elevated rate. What can we do to strike the right balance between
regulations and pay to create a safer highway system?
Mr. Belzer. Well, I think probably the most important thing we
can do is start with the perspective that the economic competition is
driving these outcomes and try to think about what we can do to change
the economic balance. We don't want to encourage cutthroat behavior.
We don't want to encourage a race to the bottom, as some people call
it. And I think the way the deregulation in competition transport
works, it tends to drive that process.
I now teach transportation economics to graduate students. And
as I do that, it is more clear to me that it is the competition itself
that is causing the problem. So we have to address ways of kind of
putting boundaries around it. And one of them could be, for example,
paying drivers for the nondriving labor. Once you do that, they will
Ms. Velazquez. Dr. Belzer, I was shocked to find that FMCSA has
very little power to remove unsafe trucks and buses from the roadways.
And I found that because this accident impacted some of my constituents,
the one in the Bronx. Do you think that the new disciplinary measures
of the CSA program are enough to address the safety concerns posed by
the curbside bus industry?
Mr. Belzer. So I don't know the details of the CSA. But I don't
believe that it is dealing with the economic competition that is driving
this process. This is like the little Dutch boy and his finger in the
dike and the water keeps flowing. And the difficulty that we have when
we have this kind of cutthroat competition, which was what was involved
in that particular crash, that is not the kind of thing that is going
to get fixed by a regulation that makes it more difficult for people
to operate. It is going to be probably a proactive effort to make sure
that the people who are doing the work are getting paid for it. So
I think that is really what it comes down to.
Ms. Velazquez. Okay. Thank you.
Chairman Graves. Mr. Hanna.
Mr. Hanna. Doctor, the way it is set up now, it is sort of like
a bell curve. Everybody is scored. And some people have to get a bad
score. Some people have to get a good score. Mr. Tucker thinks that
is ridiculous. It doesn't make any sense to me either. What do you
think of it?
Mr. Belzer. It sort of reminds me of the curve in the classroom,
right, so I can get in trouble on that one.
But I think that it is very difficult. When I set up the trucking
industry benchmarking program, I actually partnered with the
California Trucking Association. What we were going to try to do was
to implement this association-wide in California. Ultimately, I
couldn't, on a voluntary basis, get enough carriers to participate in
it to --
Mr. Hanna. It doesn't make any sense. If a trucker scores well
and the bulk of truckers, 99 percent of them score well, why shouldn't
they all have a good score? And conversely, why should everybody be
penalized because somehow the bell curve idea is being used? You know,
along with the pay idea, I understand that and I agree with it. I wonder
also, part of the problem is that the scoring, the way trucking
companies are penalized runs with the company, not necessarily the
driver. And one of my complaints about OSHA, having been in business
for so many years, is not that they penalize people as a company, but
that there is no accountability on the part of the driver. They are
almost treated as if they were a piece of equipment in terms of their
accountability. It sounds as though it is the same here.
Mr. Belzer. There is more accountability in trucking than there
would be in your standard business, I think. And the reason is
everybody who drives a commercial motor vehicle has to have that
license, and that license personally travels with them throughout their
career. So the reason why this pay thing works -- and some of my best
supporters are nonunion companies, like J.B. Hunt and companies like
Schneider, companies like that, they want to know if the driver has
got a safety problem. That safety problem goes to that driver, that
driver's record right along. And that is different from what happens
if somebody climbs a ladder and falls off. It very difficult to track
that kind of stuff back. This is pretty trackable.
Mr. Hanna. Mr. Tucker, I watched you as you were listening to
trade association recently, one of the largest carriers in the country
said, I have got something like 68 brand-new tractors and trailers he
can't fill with drivers. And he is giving away signing bonuses to fill
So I have a hard time trying to mess with a market that has its
ups and downs but works, in my opinion.
Mr. Hanna. Thank you, chairman. I yield back.
Chairman Graves. Mr. Landry.
Mr. Landry. Real quick, it just occurred to me, do any of y'all
know how many people, how many lives are lost on our highways due to
poor roads and bridges and poor infrastructure? Dr. Belzer?
I heard that 4,000 are caused by it.
Mr. Belzer. Well, there are 4,000-some that are killed every
year in truck-related crashes and some 49,000 are killed --
Mr. Landry. Such things as roadways, any idea? I am just
curious because that is our job to make sure that the roads are safe.
I don't know. Mr. Miranda, do you believe that our roadways,
especially the Federal roadways are in A-plus shape?
Mr. Miranda. My answer to that is, no, sir.
Mr. Landry. That is absurd. And then the fact that we can't even
do our job but yet now we want to regulate your business as well and
tell you how you have to drive safer, but we can't provide a
transportation system that is at least of A or B quality.
Mr. Miranda. I would tend to agree with you, Mr. Landry. As a
matter of fact, I would comment that of those 4,000, nobody is taking