A Moving Experience

Moving household goods isn't as simple as it sounds. Thanks to state regulations that stifle competition, protect inefficiency, and encourage movers to "call the cops" on each other, the moving experience in Michigan is one for Ripley's Believe It Or Not.

Under Michigan law, movers must secure the state's permission to engage in the business. Specifically, they must obtain a certificate of "authority" from the Michigan Public Service Commission (PSC). The applicant has to prove that his service will fill a "required public purpose," which is defined to mean providing "adequate, economic, safe, effective, competitive, and equitable motor carrier service to satisfy a demonstrated public necessity, without creating excess service." (emphasis mine)

Existing movers are able to keep newcomers out by protesting their applications on the grounds that there is no "necessity" for them to be in the business and that allowing them in would create "excess service." The delays and legal costs imposed by these protests keep many would-be movers from ever seeking authority in the first place.

Once a mover has been granted authority, it must charge prices (called "tariffs" in the industry) approved by the PSC. For any particular job, many movers simply charge the tariff filed by the Michigan Movers and Warehousemen's Association (MMWA). This amounts to government-mandated price-fixing, but the practice has been declared legally immune from antitrust laws.

Movers who wish to file different tariffs may do so, but the PSC has decreed a "Minimum Rate Order" (MRO), which forbids any tariff less than 82 percent of the MMWA's rate. (To its credit, the PSC attempted to rescind the MRO in 1993 but was blocked in court by the MMWA). The MMWA applies periodically for state approval of rate increases, underscoring the central problem here: movers must negotiate prices with state bureaucrats and not with their own customers. Current regulations, furthermore, even deny movers the right to charge customers by the hour.

Fortunately, there is a loophole in state law. Movers without PSC authority can operate as long as they stay within "exempt zones." This permits them to do business within a city plus no further than eight miles from any point along that city's limit, making Michigan cities islands of competition in a sea of regulation. Within these exempt zones, unregulated movers can charge by the hour, and whatever the market will bear.

What a difference competition makes! Suppose that you are moving 6,000 pounds of goods from an average-size household ten miles within the Lansing exempt zone. There are numerous local movers who would charge between $35 and $60 per hour to do the work. That would cost you between $300 and $500.

Suppose, however, that you are moving the same distance (ten miles), but to a location that took you outside the exempt zone. At the MMWA tariff rate, you would pay about $800--a substantial difference for precisely the same work.

Naturally, the regulated movers do not want unregulated movers encroaching on "their" territory and sometimes even try to trap an unregulated mover in an illegal move. That happened recently in Livingston County when one firm set up another for what was thought to be a move that went beyond an exempt zone. The Michigan State Police, tipped off by the firm that staged the set-up, showed up just as the mover was finished unloading. It turned out that the move did not cross the exempt zone barrier, but that's beside the point. Why should the police be sicked on someone for a victimless crime, in which consenting adults are engaged in a perfectly-harmless, mutually-beneficial transaction?

Another tactic employed by the regulated movers has been to send letters to prospective customers of their competitors designed to scare them out of dealing with unregulated movers. Such a letter sent out by the MMWA warned ominously, "Michigan law provides that any mover who knowingly breaks the law is guilty of a misdemeanor and subject to fines . . . and/or 60 days in jail. In addition, any person who procures, aids or abets a motor carrier in such a violation is also guilty of a misdemeanor and subject to the same penalties (this includes customers)."

When this came to the attention of the PSC, it wrote to the MMWA, stating that it did not "endorse or support in any way the distribution of this letter," and castigated it as "excessively threatening to moving customers." The agency took no other action.

Michigan's regulation of the moving industry is absurd. It stifles competition and wastes resources in attempts to enforce the meaningless and arbitrary eight-mile limit. Why not make the entire state an "exempt zone" and let consumers benefit from competition no matter where they move?