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August 2008, Vol. 131, No. 8

Book reviews

The deregulation transformation

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The deregulation transformation

Transportation Labor Issues and Regulatory Reform. Edited by James Peoples and Wayne K. Talley, San Diego, CA, Elsevier, 2004, 234 pp., $97.95 /hardback.

Deregulation’s effect on compensation and working conditions is still a subject of debate, largely because of difficulties in data analysis. Beyond simply increasing competition, the industry deregulation that began in the late 1970s would have an impact on transportation employees for the next 30 years. In Transportation Labor Issues and Regulatory Reform, James Peoples and Wayne Talley present nine studies that try to evaluate the impact of deregulation in the face of technological advances and structural change.

In the first study, a researcher examines BLS workplace injury data in the railroad, trucking, and commercial aviation industries. Noting limitations inherent in the available data, the author also cites a major obstacle caused by SIC coding changes: "The haphazard growth of the courier business over the past 30 years, with some major firms developing from an aviation base and some from a trucking base, led to a major continuity break in 1996." Beyond an analysis of published BLS numbers, this study examines alternative measures of safety conditions, such as injuries per unit of output. These measures are viewed against various determinations of productivity. Among the findings are that the railroad rate of injuries per ton mile was less in the 1990s than in the 1970s. And, when the other transportation industries are compared with manufacturing, the data suggest that "safety outcomes have not worsened." The author concludes, "Only in railroads does there appear to be any linkage between deregulation and workplace safety." The safety picture in that industry had already started deteriorating in the 1960s, explains the author. Deregulation led to a "financial renaissance" of sorts, improving productivity and working conditions to an extent.

"Determinants of driver safety are not limited to driver compensation, driver attributes and occupational demands of drivers," claim the authors of the second study in this collection. They add another factor—financial performance of trucking firms. In addition to BLS data, this study uses data from the Signpost National Survey of Driver Wages, the Department of Transportation (DOT) Motor Carrier Management Information System, and Motor Carrier Financial and Operating Statistics (MCFOS). Although they found no systematic differences in crash rates based on financial performance, the authors did find a relationship between safety and small-firm liquidity.

In determining the impact of technology in the motor freight industry, the authors of the third study describe the work life of an over-the-road driver. The authors use data from the Sloan Foundation Trucking Industry Program (TIP) Driver Survey: "We investigate these possibilities by examining the relationship between these factors and effective mileage rates, annual miles, and apropos of work intensification, hours worked per week and violations of the hours of service regulations." Included in this analysis is information about variation in wages, work hours, fatigue, turnover and quit rates, as well as union affiliation. The overall conclusion of this study is that technology has improved productivity and earnings but intensified and lengthened the workday.

How did airlines try to beat the competition in the face of deregulation? To lower costs, they increased employment of part-time workers, increased workloads, and increased hours, according to a different study in this collection. These moves helped delay significant wage declines until the 1990s—quite a few years after deregulation began in the industry in 1978. This study summarizes key air transportation economic indicators, and it supplies a lengthy list of carrier bankruptcies. With an in-depth analysis of pilots, flight attendants, and mechanics, the study demonstrates that "Deregulation has not affected occupational employment equally." The authors also point out some of the less-obvious effects of deregulation; for example, layoffs led to cockpit crew assignment variation, a factor that can increase pilot error. The authors additionally examine productivity measures, including revenue passenger miles (RPM) per employee (the number of miles flown by revenue generating passengers divided by the number of employees). In discussing working conditions, the study authors note that air transportation has always had "fairly high injury rates relative to manufacturing, but, in recent years, airline rates have risen over time to relatively high levels while manufacturing has been steadily declining." The authors note that increased productivity has come at a price of safety, but the findings leave a number of questions. They conclude: "In many ways, the seas of deregulation still appear as unchartered today as they did 25 years ago."

Did deregulation create a stronger link between compensation and firm performance? In an analysis of the earnings of trucking executives, researchers use MCFOS data to test theoretical models. "The responsiveness of pay to profitability and to firm size remained as it was before deregulation." Nevertheless, the authors note an increase in executives’ earnings alongside a "steady slide in drivers’ earnings." A separate analysis of low- to mid-level managers’ pay finds no significant change in earnings resulting from deregulation. The authors of that study hypothesize that managerial quality has increased. Though the data also suggest the improvement of some quality measures, such as education and experience, this reviewer was left asking, what about other measures, such as employee turnover or staff sentiment?