Truck Driver Shortage: Is it Self-Inflicted?

June 14, 2016 by Michelle Rafter, @MichelleRafter

Ann Curry exemplifies how low pay, long hours and other labor issues are strangling the trucking industry.

When Curry retired last year after working for three decades in the criminal justice system, she thought trucking sounded like a good second career. The 53-year-old got her Class A commercial driver’s license, or CDL, took a job with a long-haul trucking company and completed a 7,000-mile training run accident-free.

Health issues, meager pay and time away from her Knoxville, Tenn., home quickly changed her mind.

“I did three weeks and said this is not the lifestyle for me,” Curry told Trucks.com.

Unfortunately for the industry, it has become a common refrain. Trucking companies are carrying near-record freight loads resulting from a steady economy, lower fuel prices and the public’s seemingly insatiable appetite for online shopping. The trends are sending trucking industry employment demand through the roof, causing widespread shortages, turnover and churn.

Critics, however, claim that carriers have brought the problem on themselves. They maintain that truck driver jobs aren’t what they once were. The lack of higher pay in an era of nearly full employment is leading drivers to quit, particularly long-haul drivers. Age restrictions are prompting millennials to bypass the industry in favor of jobs that are better paid and not as heavily regulated or physically demanding.

It’s fair to ask whether driving a truck is still an attractive job, says Norita Taylor, spokeswoman for the Owner-Operator Independent Drivers Association, which represents 157,000 drivers.

Her solution: “Pay more.”

What Deregulation Hath Wrought

If only it were so simple. Labor shortages have plagued the industry since the 1980s, when deregulation sparked a jump in the number of trucking companies. That pushed demand for drivers. The Federal Motor Carrier Safety Administration counted 5.7 million commercial motor vehicle drivers in the country in 2014, including 3.9 million with commercial driver’s licenses needed to operate tractor-trailers or other heavy-duty trucks.

Despite those numbers, the industry has about 48,000 fewer drivers than available driver jobs, according to a 2015 American Trucking Associations report. The ATA estimates that the industry will need 890,000 new drivers through 2025 to meet rising demand.

The rapidly aging driver population makes finding new drivers urgent.

A “trucking generation” of 45-to-54-year-olds who started in the business 20 years ago represents the industry’s largest employee group, according to a 2014 study by the American Transportation Research Institute. Older workers have pushed truck transportation employees’ median age to 46.5, compared with 42.4 for the total U.S. workforce.

Although millennials have overtaken other age groups as the largest segment in the U.S. labor force overall, the number of 25-to-34-year-olds in the trucking industry has dropped by 50 percent, the ATRI said.

Shortages and Average Pay

There’s more to driver shortage numbers than meets the eye.

State motor vehicle departments issue hundreds of thousands of new commercial driver’s licenses, a year, but it’s not enough to keep entry-level drivers from dropping out at an alarming rate.

In 2014, 38 states issued nearly 395,000 CDLs, up 10 percent from 2013, according to a 2015 General Accounting Office report. At the same time, industry research shows that nearly a third of new drivers have the same reaction Curry did and quit in 90 days. Half leave within the first six months.

According to the ATA, voluntary turnover at large truckload carriers climbed to 102 percent in the fourth quarter of 2015, the latest available data. Churn at small carriers, which the ATA defines as fleets with less than $30 million in annual revenue, was 89 percent during the same period, up from an average of 79 percent in the fourth quarter of 2014.

That turnover could explain the enormous jump in transportation industry job listings on popular job boards, an increase that far exceeds those in other industries. Jobs site Indeed.com listed 789,181 transportation industry job postings in April, up 125 percent from the same month last year. By comparison, job listings in hospitality — the industry with the next highest increase — rose 59 percent over the same period. Indeed.com April listings for transportation industry jobs included 390,245 for “Delivery Driver,” 115,573 for “Driver” and 48,723 for “CDL Class A Driver.”

Critics maintain that too few carriers are doing the biggest thing they could to attract new blood: raising wages.

Nationwide, the median hourly wage for U.S. heavy and tractor-trailer truck drivers is $19.36, or about $40,260 a year, according to the Bureau of Labor Statistics. Average annual pay ranges from a high of $43,660 for drivers who work for general freight carriers, which account for 61 percent of drivers in the country, to $40,060 for specialty trade contractors, according to BLS data.

Those numbers jibe with data that the Owner-Operator Independent Drivers Association collects through member surveys that shows company drivers making an average of $39,000 a year and owner-operators about $41,000, spokeswoman Taylor said.

At those levels, average hourly pay for truck driver jobs falls below the national average for March 2016, which is $21.37 for production and nonsupervisory employees in private, nonfarm jobs, according to the BLS.

Drivers’ relatively low pay doesn’t surprise Michael Belzer, a transportation economist who has studied trucking industry compensation for more than two decades. Over the years, driver pay has declined relative to compensation of similarly situated workers in the labor market, said Belzer, an associate professor at Wayne State University.

He attributes the change in part to the decline of unions, which he estimates once represented about half of U.S. truck drivers. Now it’s closer to 10 percent, he said.

Today, carriers compete with other employers who hire blue-collar workers, “but they’re uncompetitive because the work is hard and people aren’t paid for all their time,” Belzer said, “so there’s a big turnover for new entrants.”

Carriers have good reason to try to limit labor costs. When fuel costs were higher, keeping trucks tanked up was carriers’ biggest operating expense. As fuel costs dropped over the last several years, labor has become relatively more expensive.

Labor costs have risen significantly at individual carriers. At J.B. Hunt Transport Services Inc., for example, employee-related costs — including salaries, wages and benefits — jumped 13.4 percent in 2014 and 8.1 percent in 2015, according to the  carrier’s financial reports.

Higher Pay and Driver Appreciation

Some companies are paying more.

Staffing agency ProDrivers has 2,500 local and regional drivers placed in short- and long-term assignments at private fleets and logistics and trucking companies. The Atlanta company has bumped up wages $2 to $4 an hour, primarily because of increased competition, said ProDrivers Division President Mike Mitchell.

“In the past, you could bill a local driving job for $15 an hour. Today, they’re commanding $17 an hour because other [companies] have upped their pay to attract those quality drivers,” Mitchell said.

The way long-haul truckers are paid — only when their wheels are turning — makes the situation worse, critics said.

Paying by the hour “would be a huge solution,” transportation economist Belzer said. That would appear to be the case based on turnover at less-than-truckload carriers, which typically pay by the hour. In 2015, turnover at those carriers averaged 11 percent, according to the ATA.

Another option for solving the pay problem could be for carriers to change how compensation is structured — for example, guaranteeing drivers a set amount of miles or pay per week so they have a steadier, more reliable income.

Newer compensation structures along with signing bonuses and other enticements (see sidebar) could be one reason so many drivers leave one job for another, adding to the churn that’s the likely cause of so many of those job board listings.

Linking Higher Pay to Improved Safety

If carriers raise wages it could pay off in other areas, including improved safety and less money paid out for work-related crashes. In the late 1990s, J.B. Hunt raised driver pay approximately a third to attract better drivers and improve safety. According to research Belzer and two coauthors conducted on J.B. Hunt’s pay practices at the time, the higher wages led to measurable decreases in crashes and turnover. However, Belzer said, the company eventually ended the higher wages experiment because it proved too costly.

J.B. Hunt declined to talk to Trucks.com about why it reversed course on pay.

The need for more drivers is forcing carriers to look beyond traditional hiring practices. They’re reaching out to people like Curry: career changers or older workers searching for post-retirement jobs. They’re marketing to military veterans and women. They’re using social media, setting up career websites, hosting virtual career fairs, and hiring consultants to polish their employer brands.

What they’re not doing is going after high school graduates, though many wish they could.

Federal regulations bar drivers under 21 from getting Class A commercial driver’s licenses. The restriction is an ongoing source of frustration among carriers that want to recruit 18- or 19-year-olds who aren’t college bound before they settle in other occupations.

But there’s no free lunch. Industry insiders say that insurance rates for 18-to-25-year-old drivers could be so high that only carriers that self-insure would be able to afford them.

Her Dream Job Turned Sour

Going after older career changers might be more fruitful if carriers could address the obstacles Curry encountered.

Curry enrolled in a local community college commercial driver’s license training program shortly after retiring from a 30-year career as a probation and parole officer and administrator. Her brother had been a long-haul truck driver, and she pictured herself following in his footsteps.

Reality didn’t live up to those dreams. The long-haul trucking company that hired her couldn’t find an experienced female driver to act as her mentor during its mandatory 7,000-mile training run. Rather than wait, Curry volunteered to drive with a male trainer, an experienced long-haul driver. Sharing a box was uncomfortable. Her trainer didn’t like stopping to go to the bathroom, so he would go behind the curtain that separated the cab from the sleeping bunks and urinate into a bottle while she was driving. Eventually she learned to live it with, along with sleeping in close quarters.

As a trainee, Curry said, she was paid 24 cents to 27 cents a mile, equal to about $560 a week. When she and her partner made deliveries, they spent a lot of time on docks waiting to unload, which she resented.

“It’s a bunch of crap that you don’t get paid for sitting and waiting,” she said. “The companies you’re delivering to don’t care. I was amazed at the unfriendliness and hostility from the people.”

There were other problems. Curry stopped drinking fluids to stretch out bathroom breaks as long as possible. It made her legs swell. Schedules were erratic, making it impossible to find time to exercise.

“We would get there at night and I wouldn’t walk around a truck stop at night,” she said.

By the time Curry finished the training and returned home, she decided to quit.

“If I had a partner or someone I could stand to spend time with living in a box, I may have pursued it more,” she said. “The lifestyle was too much for me. The hours were all varied. There was no set schedule, no way to put your body in some sort of rhythm.”

Today, she works part time at Home Depot and does volunteer work.

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