If L.A.’s new trash hauling system is more efficient, why does it cost so much more? After all, a more efficient system is supposed to lower prices. Instead, now that the new trash pickup system has gone into effect, businesses and owners of multifamily complexes throughout the Los Angeles portion of the San Fernando Valley are seeing big pops in their bills – as in two or three or even four times what they used to pay. For example, a $450 monthly expense now is $1,100, according to one unhappy business owner. (See “Trash Talk Heads to Courthouse” on page 1 of this issue.) When the new trash pickup system was approved by the City Council three and a half years ago, it was more or less sold on the notion that it would be more efficient. Under the old system, more than 100 trash companies made individual deals with businesses, regardless of their location. Under the new system, seven trash companies got franchise territories from the city. That way, each truck could make all its pickups in one neighborhood rather than run all over town. (The new system affects commercial establishments and larger multifamily complexes, not single-family homes.) On the surface, that seems logical. One underlying argument was that this new efficiency would reduce costs or at least tether them from rising quickly. (Businesses, however, predicted the new system would result in higher costs. One chamber exec at the time warned that prices could increase 40 percent. He was only off by one zero.) So why are costs exploding? Because the city has created seven monopolies. The seven trash companies can pretty much charge what they want. Go ahead, try complaining. There are already reports that the trash companies are unresponsive. Big surprise, no? I mean, name a monopolist that’s sensitive to customer complaints. The cable company maybe? Besides, why should a monopolist bother with you? His real customer is the city. So who are the big winners in the new system? Certainly the city councilmembers. With the franchise system, trash companies must schmooze them and do what they want if the haulers want to get or keep their valuable franchise. And the city itself is a big winner since franchise fees will be a new cash source. The seven trash companies are winners. They have new monopolies and, as noted, can charge much more and all but ignore those persnickety businesses that complain every little time their fetid trash goes uncollected for a few weeks. The unions will come out way ahead eventually because the seven big trash companies now are ripe for unionizing; after all, they’re now larger companies that make good money. In fact, the franchise system was enacted after an intense lobbying effort by the Los Angeles Alliance for a New Economy, or LAANE, which is a union-supported group. And some of the workers stand to benefit – at least those who manage to catch on with the seven companies – because they are now required to be paid the higher living wage. And the losers? Certainly the workers who were not lucky enough to work for the seven companies. They may well have lost their jobs. The hundred or more trash companies that were not awarded a franchise are huge losers. They were disrupted at best and put out of business at worst. And, finally, the customers, as in you, the business operator and multifamily complex owner. Customers always lose in monopolies. You are now stuck with poorer service, unresponsive companies and shockingly higher charges. But boy, we’ve sure got that cool, efficient system. • • • Finally! California did not rank dead last in a survey of business friendliness. According to a report released last week by the U.S. Chamber Institute for Legal Reform, California came in No. 47 in what was described as its “lawsuit climate.” Now you might not think No. 47 is all that great, but it seems to me that the Golden State consistently, depressingly, comes in at a tarnished No. 50 on surveys that purport to measure business-friendliness and its legal climate. I mean, 47 represents progress. We’re moving on up. But alas, I read on, and the report said this: “California ranked dead last for its overall treatment of tort and contract litigation, 49th for the quality of its appeals process and 48th for its treatment of class action lawsuits and the fairness of its juries. California is also home to one of the worst lawsuit jurisdictions in the nation: Los Angeles, which ranked second among the cities or counties with the worst legal environments.” Well, OK, so that’s not exactly a celebrity endorsement, but I’m a glass-half-full kind of guy, so I appreciate the fact that we’re not last. And again, California as a whole is even better. No. 47! For once, we can look down on other states. In this case, Illinois, Missouri and Louisiana – the states that ranked 48, 49 and 50, respectively. I don’t know about you, but this feels pretty good. So I’m going to say it: We’re not Louisiana. Charles Crumpley is editor and publisher of the Business Journal. He can be reached at [email protected].
