Tag Archives: GM

The Biggest Strike in America Is About How Much Bosses Can Gut Your Healthcare

Originally published in VICE on September 18, 2019.
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When about 48,000 workers went on strike Monday against General Motors, they launched the largest American labor stoppage against any business since the financial crisis. The striking union—the United Auto Workers—is confronting vicious headwinds in the form of always-cheaper foreign labor, reduced car sales, and pressure to invest in electric and self-driving vehicles at a time of impending climate catastrophe.

On top of all that, workers formed picket lines because GM is trying to effectively cut their hard-fought healthcare benefits. According to the Center for Automotive Research, a Michigan-based think tank that receives some funding from auto companies, the average UAW worker pays about 3 percent of their health care tab, compared to 28 percent paid by the average American worker. Crain’s Detroit Business reported on Monday that GM’s initial contract offer asked workers to start paying 15 percent of their healthcare costs.

While such a move by an employer may seem fairly ordinary by contemporary standards, it wasn’t that long ago that Americans would have viewed this request as a huge scandal. In fact, experts said, that a once-mighty labor union is fighting tooth and nail to save generous health plans speaks to the economic precarity most Americans have grown to numbly accept.

“Having to pay large amounts of your health-care, that is still a fairly recent phenomenon,” said Erik Loomis, a labor historian at the University of Rhode Island and author of A History of America in Ten Strikes.

Loomis pointed to a 1983 labor stoppage where thousands of copper miners and mill workers went on strike for almost three years against the Arizona-based Phelps Dodge Corporation. “One of the key issues of that strike was that workers were so outraged by the request that they pay part of their health care,” he explained. “It was unprecedented, and yet today it’s become so normalized. Everyone complains about it, but employers just slowly force more and more of their costs onto their workers.”

Rather than ask why UAW workers pay so little in healthcare costs relative to others, Loomis said, the conversation should be framed around “workers defending what they have, and not letting companies cede more and more of their responsibility.”

Employer-based health insurance was actually something of a historical accident in the United States, led partly by labor unions that were barred from negotiating over wages during World War II. That led unions to begin focusing on other types of permissible fringe benefits, including employer-sponsored insurance. Many non-union companies followed suit, facing pressure to compete with unionized firms. Subsequent changes to the federal tax code made offering health insurance even more attractive for employers, so much so that 70 percent of the population was covered by private health insurance in the 1960s, up from nine percent in 1940.

Today, of course, when “job hopping” is common and the so-called gig economy means many workers are not full-time employees, it’s become painfully evident that tying health insurance to work is less than ideal.

Shaun Richman, who directs a labor studies center at SUNY Empire State College, said there is a strong case for “getting the boss out of the doctor’s office” altogether. Employer-based health insurance, he argued, “is plainly outmoded and is absolutely killing unions.” His thinking is partly strategic: Every time a union starts a round of contract negotiations, they almost invariably begin by fighting back against proposed healthcare cuts. “There’s simply no round of bargaining that employers won’t put healthcare on the table, and it’s been devastating,” Richman said.

Indeed, the fight over healthcare benefits is central to understanding the last few decades of labor disputes in the United States.

“The major issue we saw during labor walkouts in the 1990s and 2000s had to do with the restructuring of healthcare plans,” said Jake Rosenfeld, a sociologist at Washington University in St. Louis and author of What Unions No Longer Do. “Wages were really the secondary concern.”

Whether the auto workers can make their fight for affordable healthcare resonate with the broader public may be key to the UAW sustaining support for the strike in general. Alexander Hertel-Fernandez, a political scientist at Columbia’s School of International and Public Affairs, said auto workers might struggle to engender the same level of enthusiasm that striking teachers have across the country beginning last year. In fact, they might not even reach the same level of support as workers at other recent service-sector strikes like those at Stop & Shop grocery stores and Marriott hotels.

“My research and the work of others suggests that it may be easier for workers to build solidarity with their broader communities when they have daily interactions and are in the same social networks as the public,” Hertel-Fernandez said.

Still, as Rosenfeld pointed out, one thing working in the UAW’s favor is the clear profit margins enjoyed recently by U.S. auto companies. “GM is highly profitable now, and was bleeding money during the last 2007 walkout,” he said.

While the last UAW strike in 2007 ended after just two days, at least one union leader suggested Monday this labor stoppage could go on for much longer. On Tuesday, the White House reportedly began trying to broker a deal to end the strike, but GM also announced that it would be cutting off its share of strikers’ health benefits, shifting the burden to unions and telling workers they could apply for COBRA. On top of this financial blow, the average full-time UAW will be paid just $250-per-week while the strike stretches on—assuming the union’s strike fund holds up.

“They’re in a war for their lives, and the company is basically putting a gun to the unions’ head,” said Richman. “They’re saying we’ll reopen one of these factories if you agree to all these other concessions. I don’t think the UAW has much choice but to stand and fight, but this is not public education—schools can’t be shipped overseas. These jobs very much can be shipped overseas and have been. That threat is very real.”

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Are Uber and Lyft Driving Recalled Cars?

Originally published in The American Prospect on July 8, 2015.
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Uber and Lyft—two popular ride-sharing companies sweeping cities worldwide—work hard to market their transportation services as safe and secure. On Lyft’s website, the company boasts, “As pioneers in transportation, we’re changing the industry with safety front of mind.” Touting their mandatory inspection requirements, like driver criminal background checks, the company declares: “We designed safety into every part of Lyft.” Uber’s rhetoric is quite similar. “From the moment you request a ride to the moment you arrive, the Uber experience has been designed from the ground up with your safety in mind,” their website states. Phillip Cardenas, the Head of Global Safety at Uber says that while his company is committed to continually improving its policies, he believes Uber has “built the safest transportation option in 260 cities around the world.”

Over the past year I’ve spent a lot of time looking into the growing number of recalled but unrepaired vehicles on the road. Auto manufacturers and the National Highway Traffic Safety Administration (NHTSA) issue safety recalls when they determine that a vehicle or particular piece of motor vehicle equipment creates an unreasonable safety risk or fails to meet minimum safety standards. But while manufacturers must repair recalled vehicles for free, consumers are not actually required to fix their cars—and many don’t. At the end of 2014, Carfax estimated 46 million cars were on the road with unfixed safety recalls.

Reformers have been working to close many of the regulatory loopholes in American auto recall policy. For example, while it’s long been illegal under federal law to sell recalled new cars, no such law exists for used cars, and more than 35 million used vehicles are sold annually. Advocates have been pushing Congress to ban this practice, though most car dealerships remain staunchly opposed. In the rental car world, under federal law, companies can still legally rent cars with unfixed safety recalls, however Hertz, Avis, and Enterprise—which account for more than 90 percent of the rental car market—pledged in 2012 to stop doing so.The companies also support federal legislation that would ban renting recalled cars, but the bill is stalled in Congress. While no such legislative effort exists for ride-sharing companies, I started to wonder, well what about Uber and Lyft? Where do they stand on auto recall reform?

Uber and Lyft’s Weak Defenses

It turns out that despite Uber and Lyft’s public rhetoric about safety, consumers that use these services may be riding in vehicles with unfixed safety recalls. Neither company requires its drivers to repair recalled cars; in fact, the mandatory safety inspections do not even involve checking to see if a car has been recalled. (To check, one would enter a vehicle’s 17-digit VIN number online.)

I reached out to Uber and Lyft to ask whether they allow drivers to work for them with unfixed safety recalls, and what steps the companies take to keep track of recalled cars in their fleets. It’s possible, for example, that a manufacturer could issue a recall for an Uber driver’s car a year or two after the driver has already been working for the company. How does Uber keep track of this? Do they keep track?

An Uber spokesman responded: “Manufacturers notify vehicle owners of recalls. Uber doesn’t own vehicles, we provide a technology platform to help connect drivers—who are independent contractors—with riders. It’s important to note that drivers on the Uber Platform are expected to meet and maintain all vehicle safety standards.”

Chelsea Wilson, a spokesperson for Lyft, told me: “Lyft drivers use their personal vehicles to drive on the platform—the same car they use in their daily lives, driving their kids to school or friends around town. Drivers have a strong personal incentive to make sure their car is in a safe operating condition. In addition to the safety inspection conducted by Lyft, drivers make a continuous representation that their vehicle meets the industry safety standards and all applicable state department of motor vehicle requirements of its kind.”

So Uber says that their car inspections do not include checking for safety recalls because manufacturers will notify vehicle owners if there’s a problem. But what if an Uber driver owns a used car? One of the biggest issues with auto recalls in the U.S. is that manufacturers cannot send secondary car owners mail notices because driver privacy protection laws shield their contact information. Ideally the state would pick up this responsibility, but for now this has meant that many used car owners never learn their car has been recalled. Unless Uber required all their drivers to operate new cars—which it doesn’t—then claiming manufacturer notifications will be sufficient is incorrect.

Moreover, as we’ve seen, even if drivers are aware that their car has an open safety recall, many do not feel compelled to take their car in to be fixed. If Uber wants to ensure that all their cars are actually safe, then presumably they would require each car inspection to include checking for safety recalls, and make the repair of any outstanding recall a requirement for passing the company’s safety inspection.

Lyft suggests that because their drivers use their own cars, there are strong “personal incentives” to ensure that recalled vehicles will be fixed, even if Lyft doesn’t mandate it. But the reason that millions of cars aren’t getting repaired isn’t because they aren’t personal vehicles—most of them are—it’s because owners don’t know they have a recall, or because owners don’t have the time, resources, or will to get their cars fixed.

Legal Liability

Ignoring safety recalls may also put ride-sharing services in murky legal territory in the event of an accident. What happens for instance if a passenger is injured in an Uber or Lyft car that has an unfixed safety recall? Who could be held liable?

I asked Taras Rudnitsky these questions, a former car safety engineer who now works as a consumer justice attorney for victims in auto accidents. According to Rudnitsky, even though the drivers are classified as independent contractors, both the driver and the ride-sharing company could be liable for damages if a passenger was hurt in a recalled car.

In the case of the driver, Rudnitsky explains, a jury would determine whether the driver’s actions fell below the standard of care a reasonable person would take in the same circumstances. “If you’re going to be making money off of your car rides, shouldn’t you make sure your car is in good shape?” he asks. Even if Uber or Lyft didn’t require the driver to check for safety recalls, given that the individual sought to profit from rides that consumers believed to be safe—a driver could certainly be found guilty of negligence in the event of a preventable auto recall accident.

In other words, the fact that Uber and Lyft aggressively market themselves as safe companies reinforces the need for them to prohibit unfixed recalled vehicles from operating within their ride-sharing fleets.
The next question is whether a victim could reasonably go after Uber or Lyft, too. For this, Rudnitsky believes a victim could probably make a strong case that the ride-sharing companies were negligent and fraudulent. “This isn’t just something where an inadvertent accident happened. [These companies] are affirmatively making a case about the safety of these rides with the intention of getting people to call them for business,” he says. In other words, the fact that Uber and Lyft aggressively market themselves as safe companies reinforces the need for them to prohibit unfixed recalled vehicles from operating within their ride-sharing fleets.

“I had never thought about it before, but there’s an awful lot of culpability,” muses Rudnitsky.

Ways To Change Their Policies And Keep Roads Safe

The good news? This is an easy policy fix for Uber, Lyft, and other ride-sharing services to make. In order to ensure that all their cars are safe not only for consumers, but also for other riders on the road, Uber and Lyft should formally prohibit their drivers from using ride-sharing technology until they have repaired any outstanding safety recalls.

Beyond that, Uber and Lyft should instate procedures to ensure that they know exactly which cars in their fleets have unfixed safety recalls at all times, even beyond the initial safety inspection. Since new recalls are announced often, the companies could hire staff to regularly check the VINs in their fleets with NHTSA’s data. Alternatively they could rely on vehicle history reporting services that send regular updates on new auto safety recalls. Another option is AutoAp—a tech company that automatically sends alerts when new safety recalls are announced that match specific VIN numbers you wish to track.

Moreover, Uber and Lyft could follow the example set by the big rental car companies and press for legislation that would formally ban ride-sharing drivers from taking passengers around in unsafe recalled vehicles.

All of these changes would improve auto safety, and none would be too difficult to implement. Why wait?

Our Auto Recall System is Broken. Here’s How Not to Fix It

Originally published in The American Prospect on May 28th, 2015.
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In October 2004, 24-year-old Raechel Houck rented a Chrysler PT Cruiser from Enterprise Rent-A-Car in Capitola, California, 75 miles south of San Francisco. Driving north along Highway 101 later that same day, Raechel and her sister Jacqueline were killed when the car hit an 18-wheeler and burst into flames. Unbeknownst to Raechel or her sister, 435,000 PT Cruisers, including the one they had just rented, had been recalled the previous month. The recall notice cited a leaky power steering hose, which could cause a fire.

A year later their parents, Cally and Charles Houck filed a wrongful death lawsuit against Enterprise Rent-A-Car of San Francisco. After a long legal battle, a jury awarded the Houcks $15 million in 2010 and got the nation’s largest rental car company to admit that their negligence “was the sole proximate cause of the fatal injuries.” Since then the Houcks have joined other safety advocates to push for federal legislation that would more tightly regulate the safety recall process. But with federal efforts stalled, a pair of state-level bills in California and New Jersey could actually make it harder for victims to hold manufacturers and dealers accountable for cars that have been recalled but not repaired.

The nation’s safety recall system is broken. Nearly 64 million vehicles were recalled in 2014—a new record—and Carfax, a company that provides vehicle history reports, estimated that 46 million cars with unfixed safety recalls were still on the road. While it has long been against federal law for new cars to be sold with safety recalls, there is no similar legislation to protect individuals who drive used or rental cars. Reformers want to change this, and make it illegal to sell or lease all recalled vehicles until they have been repaired.

However, despite some promising bills introduced in Congress, and despite the Obama administration coming out in support of recall reformers’ efforts—an unprecedented move from any White House administration—the federal legislation, opposed by auto dealers, has failed to gain traction. In the meantime, auto dealers have shifted their attention to state legislatures, where lawmakers in California and New Jersey are now considering bills that would require car dealers to disclose whether a used car has an open safety recall at the time of purchase. While car dealers insist this would mark a positive step forward, consumer groups, civil rights groups, and labor groups, are all fighting back—arguing that these bills would not only deter more substantial reforms in the future, but actually rollback existing consumer protections.

Testifying in Sacramento this past spring, Cally Houck said, “If this bill before you today had been in effect in 2004, it would not have saved my daughters.” She insisted that her girls, 20 and 24 years old, “with no engineering or mechanical experience, skills or knowledge, and no awareness of other fatalities associated with that defect” would not have been able to appropriately assess the risks involved. She called on elected officials to oppose the “terrible” legislation that serves the interest of car dealers, not consumers.

Better Than Nothing, or is it Actually Worse?

After the extraordinarily high number of recalls issued in 2014, many more people are recognizing the urgent need to get recalled cars off the road. Currently, no law requires that recalled vehicles must get repaired—a key challenge which I explore in the fall issue of The American Prospect.  Given this reality, would California and New Jersey’s recall disclosure bills actually be a productive step towards fixing unsafe cars? Or would they just shift the legal liability onto consumers who may not understand the risks?

Rosemary Shahan, president of Consumers for Auto Reliability and Safety (CARS), does not believe the state-level bills will help keep the most dangerous recalled cars off the road. California’s disclosure bill, for instance, would only bar dealers from selling recalled vehicles when manufacturers issue “Do Not Drive” warnings or when a recalled used car is the same make as the new car dealer’s franchise. According to Auto Alliance data submitted to the National Highway Traffic Safety Administration (NHTSA), between 2000 and 2013, auto manufacturers issued “Do Not Drive” warnings for a mere 1 percent of all safety recalls, and those were not even for the most unsafe defects. The Chrysler PT Cruiser that killed the Houck sisters, for instance, had not been issued a “Do Not Drive” warning. 

Other consumer advocates worry that the New Jersey and California bills will make it harder to pass more serious reforms later on. “Our feeling is that a half-measure is worse than nothing,” Elisa Odabashian, the West Coast director of Consumers Union, the advocacy arm of Consumer Reports, told Automotive News. “It means you can’t go back and try to get a bill that tries to actually protect people. The legislators would say: ‘We already did that. We fixed it.'”

Even though it’s been difficult to pass legislation in Congress, Shahan says they’re still committed to sticking with a Congressional approach, because having clear and consistent federal regulations, like those that exist for new cars, is better than a patchwork of state laws that could leave some consumers at great risk.

On the other hand, Brian Maas, president of the California New Car Dealers Association (CNCDA), believes the disclosure bill would be better than the status quo. (CNCDA is sponsoring California’s bill). “I think everyone would prefer to see more recalled cars repaired; the question is understanding where the law is [now],” Maas told me. “There is no regulation of recalled used cars today, there’s no obligation to tell consumers about anything, so how do we incrementally make it better tomorrow than it is today?”

When I asked Maas how he feels about the fact that all other consumer advocates working on recalls oppose his bill, he noted that the federal government is unlikely to move forward on this issue in the near future. And since CNCDA thinks it’s unreasonable to ground all recalled vehicles until they’re repaired, Maas said they’re trying to “forge a path in the middle. Stop some of the most serious recalls, and use disclosures for everything else.”

Though Maas says no laws currently exist to protect consumers who buy recalled used vehicles, some attorneys and activists emphatically dispute this fact.

Bernard Brown, a founding member of the National Association of Consumer Advocates, a consumer attorney organization that opposes New Jersey and California’s bills, feels it is misleading to argue that these disclosure bills are better than the status quo. “The reason for these bills is to effectively make it legal to sell recalled cars,” Brown said. While there may not be a specific statute around the sale of recalled used vehicles, Brown continued, there is anti-fraud, misrepresentation, negligence, or other laws in every state that consumers can sue under if a dealer knowingly sells a car with an undisclosed and unperformed safety recall defect that causes injury or death. “These [disclosure] bills would greatly undermine existing protections. On its face it may seem like they’re better, but they’re not,” said Brown. “They’re decidedly worse.”

“These laws are effectively ‘Get Out of Jail Free’ cars for dealers,” concurred Taras Rudnitsky, a former car safety engineer who now works as a lawyer for victims of vehicle defects. Under current negligence law, dealers have to demonstrate that they have acted in a reasonable and prudent way—which victims can argue includes selling safe vehicles to consumers. Introducing disclosure notices, Rudnitsky believes, could become the new legal burden a prudent dealer must meet in court.

Had Enterprise Rent-A-Car of San Francisco issued Raechel and Jacqueline a disclosure form, Cally and Charles Houck might not have been able to get Enterprise to admit they were negligent. I asked Brian Maas how the Houck parents could have received $15 million in damages if there were no existing laws to protect consumers. He responded:

I haven’t read the lawsuit, but my understanding is that the Houck family was able to prevail because Enterprise knew it had a recalled vehicle, it owned the car, had the opportunity to repair it, and put it in commerce. They got a civil recovery for engaging in behavior the jury felt was inappropriate, that doesn’t mean it’s illegal.

“Brian Maas may as well have said it’s ‘not illegal’ for a pilot to fly his passenger-carrying airliner into a mountain,” Brown said in an email, about Maas’ explanation. “Well, in a very stretched sense he could squirm around and disingenuously say it’s ‘not illegal’ because there presumably isn’t any statute specifically saying a pilot can’t fly his plane into a mountain. But you can rest assured it’s very ‘illegal’, as in violation of a number of more general laws and legally-enforceable duties.”

Business Concerns and Real Information Gaps

Aside from liability questions in the courtroom, the recall disclosure bills would certainly help car dealers and rental car companies stay in business in the event of unexpected recall announcements. Assemblyman Paul D. Moriarty, a primary sponsor of New Jersey’s disclosure bill, told The Record that he had originally planned to prohibit the sale of used cars with open recalls, but he changed his mind after realizing that used car dealers could lose a lot of money. “Theoretically, you could wake up one morning and have half of your inventory unsalable,” he said. “If they’ve got 100 cars that need to be fixed by Honda, how fast do you think the Honda dealer is going to take care of those cars when [Honda has its] own customers to take care of?”

“What good is a used car if you can’t sell it?” Alex Fitzgerald, the founder of Fitzgerald Auto Malls, which sells used and new cars at nine locations, asked me.

Brown acknowledges that banning the sale of recalled cars could be economically catastrophic for some businesses. “I hope that as more and more information comes out, at some point we’ll get to a place where manufacturers will have far fewer recalls, and society will have much better legal provisions,” Brown says. “But right now there is a great big transitional problem with massive consequences.”

For Fitzgerald, focusing on car dealerships ignores the larger problems related to manufacturer malpractice. And he’s right when he says that reforming manufacturer behavior is a necessary component in any comprehensive plan to address our recalled-but-not-repaired crisis. That means figuring out how to force manufacturers to come clean about safety defects far earlier than they do now.

Under federal law, a manufacturer must pay the full recall repair cost for vehicles that are less than ten years old on the date the defect is determined. (Reformers are trying to get rid of this 10-year limit, which they deem arbitrary, especially since the average car is on the road for 11.4 years.) Research has shown that the newer a vehicle is when a recall is announced, the more likely a driver is to take it in to get repaired. This system can incentivize a manufacturer to put off making recall announcements for years, in order to keep down repair costs.

The government has recently started to crack down on manufacturers that wait around to announce recalls. In March 2014, the Department of Justice fined Toyota $1.2 billion for hiding known safety defects from the public—the largest criminal penalty ever imposed on a carmaker. In January 2015, NHTSA fined Honda $70 million for failing to report death and injury data in a timely way—the largest civil penalty ever levied against an carmaker—and the Justice Department may also launch a criminal investigation into Honda’s behavior. And just last week, the New York Times reported that the Justice Department has identified criminal wrongdoing in General Motors’ failure to disclose information about its failed ignition switch and will impose a penalty that is expected to be even higher than the $1.2 billion Toyota paid. This comes on top of billions of dollars already paid by GM related to their recall scandal. Whether these hefty penalties will impact manufacturers’ future behavior remains to be seen.

“It’s a disgrace,” said Fitzgerald, in reference to manufacturers not promptly reporting safety issues to NHTSA. “I really believed they were taking care of the issues, but in reality, they weren’t doing that at all.”

It will be several months before the outcome of either New Jersey or California’s recall disclosure bill is final. “We’re in full battle mode,” Shahan told me. Needless to say, if the legislation passes, other states are likely to follow suit and introduce similar bills. “Pretty soon you could have millions and millions of consumers with little defense against negligent dealers,” Rudnitsky warned. And as these fights rage on, the federal bills remain stuck in Congress, without a vote.

 

Reckoning with the New Auto Recall Bill

Originally published in The American Prospect on March 19th, 2015.
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Some 46 million vehicles nationwide—nearly one in five on the road today—have a recalled, but unrepaired, safety issue. That’s because drivers, along with auto dealers and rental companies, have no legal obligation to fix safety recalls—a gaping regulatory loophole that puts millions at risk. For years lawmakers have more or less ignored the issue, until earlier this month, when Democratic Senators Richard Blumenthal and Edward Markey introduced the Repairing Every Car to Avoid Lost Lives (RECALL) Act. The bill would require car owners to comply with all pending safety recalls in order to reregister their vehicles with the DMV, a commonsense approach that would make roads safer. Yet while the new bill represents a critical step forward towards addressing our recall problem, it also raises troubling questions about how recalls are conducted and what the responsibility of manufacturers is to repair safety defects.

Undoubtedly the bill comes at a critical time. More vehicles were recalled in 2014 than ever before, 63.95 million in total. This more than doubled the previous record of 30.8 million vehicles, thanks to General Motors’ faulty ignition switches and Honda’s defective Takata airbags. Under current law, most of these cars are unlikely to be fixed; in 2011, the Government Accountability Office (GAO) found the annual recall compliance rate in the United States averages 65 percent.

In the Fall 2014 issue of The American Prospect, my article “Road Hazard: Recalled but Not Repaired” explored the politics behind this growing public health issue, and I suggested that policymakers consider making registration renewals contingent on repairing outstanding safety recalls. This is how it’s handled in Germany, and as a result their recall compliance rate stands at 100 percent. At the time of publication, no legislator indicated interest in tying auto recall repairs to annual vehicle registration. The vast majority of political energy was spent on trying to increase manufacturer penalties and improve consumer notification systems.

Six months later, two senators introduced a bill that would do just what I had suggested. Honda even came out in support, saying that this “initiative will help us all achieve the critical goal of completing 100 percent of every automotive recall campaign in America.”

Keith Crain, the editor-in-chief of Automotive News, wrote an editorial in support of the bill, praising it for its simplicity. “It should be enacted by Congress and implemented by all 50 states as quickly as possible,” Crain said. “It just makes good sense.”

However, upon a closer inspection, it’s clear that there are several issues with the RECALL Act, perhaps precisely because of its simplicity. It’s encouraging that legislators are starting to see consumer responsibility as part of the solution to our recall crisis, yet as it’s currently written, the proposed bill may lead to a whole new set of problems.

If this bill were enacted millions of people would have to get their cars repaired, or else they would be put in the position of driving their cars illegally. It’s the right idea in principle, but we’d need to ensure that people actually have the supports necessary to meet these new standards. As of now, the bill’s three listed exceptions to getting your car repaired are too vague. You may be exempt if you weren’t notified of the recall when the registration renewal came out, if the manufacturer lacks the parts or labor to complete the recall, or if you’ve demonstrated that you had no reasonable opportunity to fulfill the recall. If you fall under one of these categories, the DMV could grant you a temporary registration of up to 60 days.

But these conditions raise more questions than answers. How could you prove that the parts were not available? How often do you have to call the dealer to check in? Every day? Do you need to check in with every dealer in your state? Within a certain radius? What constitutes a “reasonable opportunity”? Will manufacturers provide consumers with loaner vehicles? What if you need longer than 60 days? Given that there were many reports of consumers waiting for months for new GM ignition switches to arrive at their local dealerships, these details matter—especially when the consequence would mean losing the ability to drive your car lawfully.

Questions about how manufacturers may use this bill to shirk legal liability in the event of auto accidents should certainly be reckoned with sooner rather than later.

Moreover, the bill also raises troubling legal questions. An auto safety advocate, whom I spoke with on background, laughed when I asked them for their thoughts on the bill. “Of course Honda supports it! It totally shifts liability away from the manufacturer and onto the consumer,” they said. Questions about how manufacturers may use this bill to shirk legal liability in the event of auto accidents should certainly be reckoned with sooner rather than later.

Newer cars are more likely than older cars to have safety recalls repaired. One of the primary reasons for this is that the car manufacturers lack the ability to mail notices to anyone who purchases their car on the used car market. (There are approximately 30 million consumers who purchase used cars each year.) Under the Driver Privacy Protection Act, auto manufacturers are barred from learning the personal information of secondary owners, so therefore when recall notices go out, most people with older cars do not hear about it. Consequently, the only real way to notify used car owners by mail would be for the state to step up and take on this responsibility. In that respect, the Blumenthal-Markey bill represents a very good step towards fixing our recall notification problem, and experts think it could substantially reduce the number of unrepaired vehicles on the road.

But while the bill would require significant changes to the DMV registration process, it comes with no additional state funding to implement them. In effect, it’s an unfunded mandate. Many state DMVs rely on outdated computer systems, and building the capacity to process millions of auto recalls alongside their registration process—though it’s a smart and feasible idea in theory—requires resources. The bill also threatens to reduce states’ federal highway funding by 5 percent if they do not comply. If we’re going to ask the states to take this on, then we need to ensure they have the capacity to do so.

Many groups like the Center for Auto Safety and the National Salvage Vehicle Reporting Program are working closely with the federal government to figure out how we can improve this recall process and thereby make the roads safer. Despite the great political pressure facing legislators to take bold action quickly, it would be much better to proceed judiciously, hash out the details, and avoid chaos later.

Recalled But Not Repaired: Why we have millions of cars with unfixed safety recalls — and Germany has none.

Originally published in the Fall 2014 issue of The American Prospect.
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On May 30, Angela Davidson, her husband Clarence, and their twelve-year-old daughter Kira drove a 2010 Dodge Ram down Highway 15 in California, when they heard a loud knock, followed by a popping sound. Seconds later, their truck came to a screeching halt. After seeing smoke rolling into the truck, Angela opened the door to jump out, though one of her legs was quickly burned. Clarence barely had time to get Kira out before the entire truck became engulfed in flames. The truck kept rolling backwards, causing a brush fire that burned more than three acres before the firefighters could put it out. Highway 15 was closed for almost four hours.

Eleven days earlier, the Davidsons had purchased the Dodge Ram from a CarMax dealer in Irvine; CarMax is the nation’s largest retailer of used cars and trucks. Angela says her family went to CarMax specifically because they advertise that all their vehicles are thoroughly examined, with expert technicians stamping a “Certified Quality Inspection” on each one.

When the Davidsons signed a contract on May 19 and drove their truck off the lot, they believed they had just purchased a safe vehicle for their family. A few days later, they contacted Dodge customer service with a question, and the representative informed them that, oh, by the way, there appears to be a July 2013 safety recall issued for the pinion in your truck’s rear axle, and it’s very important to get it fixed right away.

“When I found out it was under recall I was furious,” said Angela. “I just felt like, this is so wrong, why would you guys sell us a car with an open recall like that? I thought of course CarMax would apologize and take the truck back.”

But CarMax—both the Irvine dealer and corporate headquarters—refused to take responsibility and told the Davidsons that it was up to them to repair their truck. Although the Davidsons then took the car to a local Dodge dealer, which may hold some responsibility for the ultimate explosion, CarMax apparently sold the Davidsons an unsafe vehicle. “How did they know that we wouldn’t be killed the same day we bought it?” Angela wrote in a draft testimony of the experience. “The answer is, they didn’t know. They just left it up to chance that we would even find out about the safety recall.”

Stories about vehicles like the Davidsons’ take on added significance in light of this year’s General Motors scandal, in which the automaker finally recalled nearly 2.6 million cars for an ignition switch defect known to company officials for more than a decade and linked to at least 54 crashes and 13 deaths. But six months after the recall, Automotive News reported that roughly 1 million car owners had yet to contact a dealership to fix their flawed ignition switches, and GM was struggling to track down contact information for many of those people.

In the United States, about one in every six cars on the road, or 37 million vehicles, has an unfixed safety recall. These are not minor problems; in safety recalls, the manufacturer or the National Highway Traffic Safety Administration (NHTSA) has determined that a car or piece of motor vehicle equipment poses an unreasonable risk to safety or fails to meet minimum safety standards. When a recall is in effect, manufacturers are legally obligated to do the repairs for free. Consumers, however, are not required to fix their car, regardless of the defect’s severity. In 2011, the Government Accountability Office (GAO) found the annual recall compliance rate in the United States averages 65 percent.

The latest GM episode is not the first major auto recall crisis to prompt public concern about unrepaired safety hazards. In August 2000, Ford Motor Company and Bridgestone/Firestone jointly announced a recall of 6.5 million tires after they linked them to more than 200 deaths and at least 700 injuries. Six years after the recall announcement, however, experts estimated that more than 200,000 faulty tires had yet to be replaced. An investigative reporter in Georgia even found some of the recalled tires still for sale in 2013.

In direct response to the tire recall, Congress passed the Transportation Recall Enhancement Accountability and Documentation Act (TREAD). TREAD established a new early warning reporting system, which requires manufacturers and their suppliers to regularly submit information about possible safety issues to NHTSA. “The TREAD Act represents an important first step towards strengthening our nation’s motor vehicle laws,” President Bill Clinton declared when he signed the bill in 2000. “And its vigorous and quick implementation will help save lives and prevent injuries.”

But recalls haven’t fallen. In fact, the number hit a new record this past July, with the most vehicles—39.85 million—ever recalled in a single year. “The problem is only growing,” said Chris Basso, a spokesman for Carfax, a web-based service that tracks the history of every vehicle based on its Vehicle Identification Number (VIN). “We have a recall [compliance] rate that leaves 35 percent of cars unrepaired and that number is likely to go up.”

“I want every vehicle fixed, and I’ve been clear about that all along,” GM chief executive Mary Barra said on CNBC, adding, however, that “ultimately it’s the consumer who makes that choice.”

But why are the repairs on safety recalls optional? The risk, after all, is not just to the car owners but also to those who ride with them and others on the road. In light of the public safety hazard, some countries have decided that it makes little sense for consumers to choose whether or not to repair defects on recalled cars. Germany, for example, makes those repairs mandatory. The German Federal Motor Transport Authority enforces that rule by refusing to renew the vehicle registrations of owners who fail to fix their cars. In 2010, Germany revoked owners’ registration due to outstanding safety recalls more than one thousand times. Consequently, the German annual recall compliance rate is 100 percent. Moreover, although German manufacturers aren’t legally required to bear the cost of the repair as they are in the United States, they do so nearly 100 percent of the time.

This combination of full compliance by the customer and full cost paid by the manufacturer creates an economic incentive for German car companies to build better cars the first time around. “There is a popular saying in Germany: Quality is if the customer comes back—not the product,” said Stephan Immen, a spokesman for the German agency. “The one responsible for the product knows what it means and acts corresponding to that.”

The United States could follow Germany’s example and make car registration renewal contingent on auto recall completion. Such a policy would be easy to carry out because DMVs can check each car’s VIN at the time of registration. Some states are already doing this successfully for energy emission standards. In California, if a vehicle owner fails to respond to an energy emission recall notice or the car fails to meet the state standard, the owner’s registration renewal will be denied until the repair is complete. Organizations like the Center for Auto Safety favor applying this same concept to auto safety recalls.

While taking time out of one’s busy life to get a car repaired isn’t something people are excited to do, states typically give owners 30 to 60 days to get it done, and in these cases, the owners have to pay for the cost of the emissions repair themselves. In contrast, if a similar system were applied to auto safety recalls, the repairs would be done at the manufacturer’s expense. Of course, giving up one’s car, even for just a few hours, may cause frustration and anxiety—often to the point where not fixing the car feels like the more sensible option. But manufacturers already sometimes provide free rental or loaner vehicles to individuals while their car is being repaired. GM recently offered this option to consumers who need to fix their car’s defective ignition switch.

Some auto safety reformers hope that small policy changes—like using particularly urgent language in the mailed notice letters—will motivate more owners to fix their cars. “Some manufacturers send pablum [recall notices], so people don’t really think they’re that important,” said Joan Claybrook, a veteran auto safety advocate who headed NHTSA from 1977 to 1981. “NHTSA has the authority to review those letters before they go and make sure they say ‘Alert! Alert!’”

Others have tried to raise the recall compliance rate by hiking penalties for irresponsible manufacturers. One bill introduced in Congress would require key management officials to disclose serious dangers with their products or face a fine and up to five years in prison. Another would require manufacturers to submit accident reports to federal regulators, who would need to make those documents immediately available to the public. And a third would eliminate the cap on civil fines—now $35 million—that the Department of Transportation can levy on automakers for failing to report known defects.

The sponsors of these measures hope that a combination of harsher manufacturer penalties and heightened efforts to disseminate information to the public will lead, eventually, to safer roads. But they have shied away from the most direct approach: making registration renewal dependent on getting the safety defects repaired. The battle over two more limited measures—requiring recall repairs in used cars and rental cars—suggests where the political problems lie.

Rental cars present what might seem to be an easy case for auto recall reform. After all, the rental car companies should be concerned about protecting their reputation for quality and the value of their fleets. But until recently, rental car companies could and would lease cars that were subject to safety recalls. In 2004, sisters Raechel and Jacqueline Houck, 24 and 20 respectively, rented a Chrysler PT Cruiser from an Enterprise Rent-A-Car dealer. This model had been recalled a month earlier after experts realized that the steering hose could leak and cause a fire. But the women were unaware because rental companies aren’t legally required to disclose safety recall information to customers. Driving down Highway 101 in northern California, the Houck sisters’ rental car caught fire and hit an oncoming semi-tractor trailer; they died instantly. After the accident, Enterprise tried to settle the scandal quietly, with a $3 million offer in exchange for the family’s confidentiality. The Houcks rejected the proposal and have been leading consumer safety efforts since.

Rental companies at first adamantly opposed changing their lenient recall policies, but activists and legislators continued to apply pressure. As a result, the four largest companies—accounting for 93 percent of the rental car market—now pledge not to rent vehicles that are subject to a safety recall.

But consumer groups insist that without a law requiring recall repairs, individuals are forced to just trust rental companies to abide by their public commitments. Thus reformers are fighting for the passage of a Senate bill, the Raechel and Jacqueline Houck Safe Rental Car Act, which would bar rental car companies from renting recalled vehicles to consumers. Even the American Car Rental Association, the policy voice representing the rental car industry, now supports the legislation.

But some powerful groups have worked hard to prevent the bill from becoming law. The Alliance of Automobile Manufacturers, the auto industry’s trade association, has refused to support the bill on the grounds that “it would give rise to a myriad of anti–consumer impacts” like increased rental costs for consumers. The real reason, though, is a concern that such a law would expose them to lawsuits.

“If Avis or Hertz has to take a car out of service for a week to get it fixed, particularly if it’s subject to a recall and the repair is not available, the rental companies may be looking at a car being out of service for three months,” said Clarence Ditlow, executive director of the Center for Auto Safety. “The auto companies are fearful that if this bill goes through they will be sued by the rental companies for the loss of use.”

The powerful National Automobile Dealers Association (NADA), representing sixteen thousand new car and truck dealerships with about thirty-two thousand domestic and international franchises, also opposes requiring rental companies to get defective cars fixed, arguing that the bill fails to differentiate one recall from another. (NHTSA does not distinguish recalls.) NADA says rental companies should only agree not to lease or sell defective vehicles if manufacturers issue “Do Not Drive” letters for recalls they deem to be the most serious. Rosemary Shahan, executive director of Consumers for Auto Reliability and Safety (CARS), says this is a cheap rhetorical trick because it is “extremely rare” for a manufacturer to voluntarily issue “Do Not Drive” letters—getting a company to issue a recall notice is hard enough as it is.

NADA’s political power also helps explain why Congress hasn’t passed a used car safety bill—a version of the Safe Rental Car Act, but for used cars. In California, a bill—S.B. 686—was introduced in 2013 that would have prohibited auto dealers from selling recalled used vehicles to consumers. Statewide polling revealed that 88 percent of Californians backed this policy. Angela Davidson testified about her CarMax experience at an S.B. 686 hearing in June. But the California New Car Dealers Association, CarMax, and others managed to kill the bill. Activists are now considering a 2016 California ballot initiative, but gathering enough signatures to qualify could cost nearly $1.5 million.

NADA insists publicly that increasing financial penalties for manufacturers who delay recall notices, rather than barring dealers from selling unsafe vehicles, would “better result in consumer safety.” But dealers, like manufacturers, are no doubt worried that new legislation would hurt their ability to sell cars, and consequently cut into their profit margin.

The recall problem is compounded by the growing shortage of qualified mechanics and technicians able to diagnose issues and make the necessary repairs. According to the Auto Care Association, demand for auto technicians has outstripped supply since 2010, and the nation is short about ninety thousand mechanics given what is needed. One of the reasons Germany has done so well in retaining its manufacturing base is its investment in vocational educational programs. Germany’s ability to produce high-quality cars—and to fix them when problems arise—is undoubtedly linked to its strong commitment to train people to build, maintain, and repair them.

Withholding car registrations makes the most sense as a way to raise compliance with safety recalls, but other alternatives have also surfaced to fix the unfixed-vehicle problem.

Shahan says, “First, we’ve got to focus on things that don’t penalize the consumer who didn’t make the defective product.” CARS supports legislation requiring DMVs to issue recall warnings when vehicle registration notices get sent in the mail. Car insurance companies could also help by sending reminder notices to customers when they see evidence of an outstanding safety recall. “What we’ve found is that the reason a lot of the unfinished recalls are not done is because the consumer doesn’t know about it,” said Ditlow. Research shows that newer cars are repaired in higher numbers than older cars, so the sooner a recall is announced and the sooner the owner learns about it, the greater chance there is that it will actually be repaired.

This past February, NHTSA announced that it would institute a new mandatory label to help owners clearly identify recall mailings. But relying on the mail is proving increasingly difficult, as owners change addresses or hand off their cars, and the DMV often lacks reliable, updated records.

In light of these challenges, NHTSA and manufacturers are exploring new ways to reach vehicle owners through such means as text messaging, mobile apps, and emails. But some auto safety advocates worry about the growing digital divide. “Not everyone has access [to the Internet],” said Shahan, who also says that government agencies need to do more to reach people who speak languages other than English.

Despite the political hurdles, momentum is building for more substantial auto recall reform. In April, the Obama administration recommended that Congress ban the sale and rental of unfixed recalled vehicles. Then this summer, New York City became the first city to prohibit the sale of recalled used cars. Jay Rockefeller, the outgoing chairman of the Senate Commerce Committee, also recently introduced legislation that would give NHTSA new authority to order unsafe vehicles off the road, rather than merely suggesting they get repaired. His bill, the Motor Vehicle Safety Act of 2014, would also bar the sale of unrepaired used cars.

In the public policy world, there are a lot of intractable problems for legislators, activists, and reformers to tackle. Unfixed auto safety recalls are not one of them. This is a problem we can solve. It is not a fantasy to imagine a decent system that helps vehicle owners expediently take care of their safety problem with as little inconvenience as possible, so millions of unsafe cars are no longer on the road. It may take several steps; perhaps dealing with rental cars first, then used cars, and then all cars. But eventually, we could see an improvement in public safety and perhaps even higher-quality automotive manufacturing.

Auto safety reform has produced some of the most important public health advances in the last half-century; the advent of seatbelts, airbags, and drunk-driving legislation has saved hundreds of thousands of lives. Each time the government took steps to tighten safety regulation, the auto industry argued that the proposed changes were too costly, unfair, or futile. But the changes have been accepted, and hardly anyone wants to go back. The poll showing 88 percent of Californians favoring the Safe Rental Car Act ought to encourage politicians to tap into the public support for reform. As Shahan says, “These days, there isn’t much that polls at 88 percent.”