Who Killed The American Dream? -- The Dismantling Of The Middle Class -- Grim Reality Of Deregulation

(Fourth in a five-part series)

Since deregulation of the trucking industry in 1980, more than 100 once-thriving trucking companies have gone out of business. More than 150,000 workers at those companies lost their jobs.

Since deregulation of the airlines in 1978, a dozen airlines have merged or gone out of business. More than 50,000 of their employees lost their jobs.

Since deregulation of the savings-and-loan industry in 1982, about 650 S&Ls have folded, and at least 400 more are in serious trouble. The S&L bailout will leave taxpayers with a half-trillion-dollar tab.

Now comes banking reform sought by President Bush who this week convinced the House to abandon a plan that did not match his desire to unleash the banking industry.

"Our banking reform proposals," Bush said Feb. 5, "address the reality of the modern financial marketplace by creating a U.S. financial system that protects taxpayers, serves consumers and strengthens our economy."

Sound familiar? It should.

The arguments for deregulating banks are much the same as those made in the 1970s and '80s for the other industries:

Removing government restrictions on the private sector would let open competition rule the marketplace. Getting rid of regulations would spur the growth of new companies. Companies would become more efficient or perish. Competition would create jobs, reduce prices and benefit consumers and businesses.

That's the theory. The reality, as imposed on the daily lives of the men and women most directly affected, is different.

For Leslie Wagner of Flower Mound, Texas, deregulation meant seven years of relentlessly shrinking paychecks and, ultimately, no paycheck.

At 23, she went to work as a flight attendant for Braniff International Airlines. That was in 1969, when the Dallas-based carrier was the nation's eighth-largest airline. By 1982, her base salary was $19,300 a year. That year Braniff asked workers to accept wage cuts and other concessions.

Even after employees agreed to cuts, Braniff still could not pay its bills, and the airline sought bankruptcy protection in May 1982. The action grounded Braniff and put 9,000 employees, including Wagner, out of work.

Two years later, a scaled-down Braniff Inc., under new owners, resumed service. Former employees were offered jobs, but at reduced pay. When Wagner returned to work in 1985, her new base pay was $15,600 a year, 19 percent less than she had earned in 1982.

By 1989, with Braniff still in financial trouble, employees were asked to take another pay cut. Wagner's base pay went down again - to $14,400.

On Sept. 28, 1989, Braniff was forced into Bankruptcy Court for the second time in seven years. Its assets were auctioned off to pay creditors, and the remaining 4,800 employees were let go.

After absorbing a pay cut of 25 percent while the cost of living rose 28 percent, Wagner was out of work.

The company resumed limited service in July 1991, but Wagner was not recalled. It didn't matter. Braniff was back in Bankruptcy Court a month later.

For the taxpayer and consumer, deregulation has meant fewer airlines and higher fares, more unsafe trucks on the highways, and tax money diverted to pay for the S&L debacle.

For this, you can thank the people in Washington who rewrote the rules.

Deregulation has meant lost jobs or pay cuts for employees in the airline and trucking industries and, ultimately, higher taxes for everyone to rescue the savings and loan industry.

Backers, to be sure, predicted a rosy future for airlines and trucking when those industries were deregulated. Few of those benefits have come about.

Advocates of airline deregulation claimed that it would stimulate competition, reduce fares and open up air travel to more Americans.

Instead, air fares went up. Competition became destructive, not productive. The increase in the number of air travelers was lower in the decade after deregulation than in the decade before it. Cities once served by multiple carriers are now served by one or none. And the airline industry is in shambles.

But the people in Washington have a different view. Transportation Secretary Samuel Skinner said in January:

"Airline deregulation . . . ushered in a decade of competition and consumer savings unsurpassed in the history of the industry. With deregulation having accomplished so much throughout the 1980s, we must stay the course in the coming decade as the industry continues to restructure. Every credible analysis of airline competition in the 1980s has declared deregulation a success."

Judge for yourself.

Last year was the worst financial year in the history of American aviation; airline losses soared to $3.9 billion.

Pan American, the flagship of U.S. carriers, founded in 1927, is in Bankruptcy Court. Eastern Air Lines, founded in 1927, is in Bankruptcy Court and is being liquidated. Braniff, founded in 1934, is in Bankruptcy Court for the third time. Continental Air Lines, founded in 1937, is in Bankruptcy Court. Midway Airlines, founded in 1979, is in Bankruptcy Court. Trans World Airlines, founded in 1928, can't pay its bills and is on the edge of bankruptcy.

If all the news from the skies appears bleak, the authors of government regulations have another solution:

They already have invited foreign airlines to invest in the remaining U.S. carriers. And they are thinking about opening the U.S. domestic market to foreign carriers.

In trucking, it is a similar story. Rather than making the industry stronger, as congressional backers predicted, deregulation triggered price wars and cutthroat discounting that have destroyed many of the largest companies and weakened others.

More trucking companies failed in the 1980s than in the 45 previous years that the Interstate Commerce Commission (ICC) regulated the industry.

Part of the reason, of course, was that there were now many more companies, all scrambling for business.

In 1979, the year before deregulation, 186 companies went out of business. Eleven years later, in 1990, the number soared to 1,581, the most trucking failures ever recorded in a single year. For the decade, a total of 11,496 companies failed.

Of the 30 largest motor carriers of 1979, only nine are still in business. The others went bankrupt or were broken up and their pieces acquired by one of the surviving companies.

A decade into deregulation, trucking appears to be following a variation on the airline-industry pattern.

Nevertheless, advocates of trucking deregulation, like their airline counterparts, call it an unqualified success.

"The trucking industry has saved billions of dollars through more efficient operations allowed and stimulated by deregulation. . . . The benefits to consumers from deregulation exceeded our fondest dreams," Darius Gaskins, former chairman of the ICC, told a House committee in 1989.

A 1990 study by the Brookings Institution, a Washington, D.C., think tank, echoed this view: "Surface freight deregulation (trucking and rail) has been extremely beneficial to shippers and to their customers. Total annual benefits from rate and service changes amount to $20 billion."

While companies that hire truckers have profited from lower rates, there is no evidence that the cost savings have been passed on to consumers.

Neither have workers in the industry benefited; in fact, gains by shippers have come at workers' expense.

Indeed, what has happened to those workers provides a glimpse into the future for employees in other industries where restructuring and downsizing are leading to pay cuts, layoffs and elimination of benefits.

For truckers, the 1980s were a dismal time, even though government statistics suggest that all is well.

According to the Bureau of Labor Statistics, employment and wages in the trucking industry are up since 1980. Between 1980 and 1990, the number of employees increased 248,000 to 1.490 million. Average yearly earnings went from $18,400 to $23,400.

What those figures fail to disclose: During the years when total employment rose, more than 100 of the big, established trucking companies folded. With them went more than 150,000 jobs.

These were the higher-paying trucking jobs - drivers with seniority and company-paid benefits, such as health insurance and pensions. Many of those truckers earned solid, middle-class wages - $30,000 or more in recent years.

Deregulation brought an influx of one-owner shoestring trucking operations, which cut into the business of those established companies. Jobs at these small operations paid less.

So deregulation eliminated two jobs that paid, say, $30,000, and created three jobs that paid $20,000 or less.

Just as misleading are the earnings reported by the government.

In 1990, trucking-industry workers earned, on average, $23,400 a year, the Bureau of Labor Statistics says.

But the government excludes one category of truckers from its figures - self-employed drivers. Their earnings generally are lower than those for drivers employed by major companies.

The Owner-Operators Independent Drivers Association, the largest trade group representing individual drivers, estimates there are 350,000 to 400,000 owner-operators.

Based on surveys by its magazine, Landline, the association estimates the annual income, after expenses, of owner-operators at $20,000 a year, or $385 a week, according to Sandi Laxson of the drivers' group.

"Deregulation has been a nightmare for our people," he said. "I remember my uncle was a truck driver 20 years ago, and, wow, he made a lot of money. He was on the road all the time. But his wife drove a nice car, and they had a nice house.

"Now, drivers are struggling to survive."

-------------------------------------------------- MOST OF THE TOP 30 TRUCKING FIRMS OF 1979 ARE GONE --------------------------------------------------

O Operating M Merged F Folded

1. Roadway Express O . 2. Consolidated Freightways O . 3. Yellow Freight System O . 4. Ryder Truck Lines F . 5. McLean Trucking F . 6. Pacific Intermountain Express F . 7. Spector Freight System F . 8. Smith's Transfer F . 9. Transcon Lines F . 10. ETMF Freight System M . 11. Interstate Freight System F . 12. Overnite Transportation O . 13. Arkansas-Best Freight Sys. O . 14. American Freight System F . 15. Carolina Freight Carriers O . 16. Halls Motor Transit F . 17. Mason & Dixon Lines F . 18. Lee Way Motor Freight F . 19. TIME-DC F . 20. Wilson Freight F . 21. Preston Trucking O . 22. IML Freight F . 23. Associated Truck Lines F . 24. Central Freight Lines O . 25. Jones Motor Co. F . 26. Gateway Transportation F . 27. Bowman Transportation F . 28. Schneider Transport O . 29. Delta Lines Inc. F . 30. Garrett Freightlines M .

SOURCES: Commercial Carrier Journal, Philadelphia Inquirer, Knight-Ridder Newspapers.

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