Op-Ed: Southern California’s huge logistics industry faces a backlash over wages and pollution

By Dan Walters | CalMatters Commentary

A half-century ago, Southern California’s financial, political and civic leaders made a fateful decision that the region’s economic future could be assured by expanding its nascent logistics industry, centered on the twin ports of Los Angeles and Long Beach.

Countless billions of public and private dollars went into expanding the ports’ cargo-handling capacity, improving transportation corridors and erecting thousands of warehouses in San Bernardino and Riverside counties to receive, store and distribute the torrent of goods from rapidly expanding Asian economies, particularly China.

The explosion of TDL (transportation-distribution-logistics) created hundreds of thousands of jobs, helping the region absorb an influx of immigrants from other countries during the 1980s and 1990s and weather collapse of its aerospace industry after the end of the Cold War.

Most of those TDL jobs, however, were of the relatively low-skill, low-pay variety, unlike the high-technology boom that was happening concurrently in the San Francisco Bay Area and generating a surge of high-income employment.

There are some indications that SoCal’s TDL sector may have peaked because it is connected to global trends that are evolving, including an erosion of free trade in favor of protectionism, changes in consumer tastes and transportation bottlenecks, such as attacks on Suez Canal-bound container ships in the Red Sea.

For the moment, however, the Inland Empire of San Bernardino and Riverside counties has a billion square feet of warehouse space, more is being proposed and its roadways are packed with trucks. Not surprisingly, its concentration has sparked a backlash in recent years, or rather two backlashes.

One is the increasing complaints of low-salaried workers that their incomes are not keeping pace with relentless increases in living costs, particularly for housing, while the other is growing criticism of the industry’s environmental impacts, particularly emissions from thousands of diesel-powered trucks.

Both of those backlashes are encapsulated in a newly released study by UC Riverside’s Inland Empire Labor and Community Center and a coalition of labor union advocates.

The study determined that TDL is now the region’s second largest employment sector. Its jobs increased by nearly 90% between 2016 and 2021, but its average monthly wage of $4,372 is markedly below averages in the rest of Southern California and the state as a whole.

“The expansion of warehouses and consequent pollution of the IE (Inland Empire) is an environmental justice concern that is exacerbating existing social, economic, and health inequities in the region,” the report declares. “As of 2023, the IE has 1 billion square feet of warehouse space and is awaiting the approval of an additional 170 million square feet, which will increase the production of emissions in the region by 10%.”

The study appears to concentrate its criticism on Amazon, the colossus of logistics, citing its creation of an air freight hub at San Bernardino’s airport as an example of industry running roughshod. Ironically, the study was released just days before Amazon’s founder, Jeff Bezos, was declared the world’s richest man with a $200 billion fortune, edging past electric car tycoon Elon Musk.

Among potential remedies, the study suggests tighter controls over warehouse expansion, adoption of non-polluting machinery, such as battery-powered trucks, and unionization of workers to offset TDL’s negative impacts.

That said, the study’s proposals would have to contend with the cutthroat competition of global logistics. SoCal’s logistics sector provides jobs for the region’s very large population of low-skill workers. Imposing substantial new costs to curb emissions and significantly increase wages could reduce shipping volume or spark more automation of transportation and warehouse operations to remain competitive.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to Commentary.