As technology allows shipping companies to digitally peer into the cab of a big rig, some in the industry are starting to ask if it is time to change the way truckers are paid.
Most truckers get paid by the load. Essentially it is a fee per mile. If they get stuck in traffic or weather and it takes an extra day, no matter, the driver gets the agreed upon price. If a trucker has to wait three hours at a loading dock to pick up or deliver goods, it’s the same. There’s no extra compensation unless the carrier pays an activity fee for a trucker’s time spent behind the wheel not driving.
Major carriers such as J.B. Hunt, Swift Transportation and Schneider generally pay drivers per mile. Other companies, including UPS and FedEx, have switched to hourly pay, which analysts say typically provides truckers with higher incomes and covers delays outside of their control.
“Driver pay continues to be a serious problem, but it’s definitely a fixable issue,” Michael Belzer, associate professor of economics at Wayne State University in Detroit, told Trucks.com. “It’s not that complicated – just pay people for all of their time and the problem is solved.”
He said the system of compensating only by mileage is antiquated because some carriers just pay the drivers when the wheels are moving, not for their time when they are filling out paperwork, fueling their trucks or waiting to be loaded or unloaded.
“The economics of it is that carriers and shippers will consume an infinite amount of free labor as long as they can get away with it,” Belzer said.
Overall, compensation levels continue to be stagnant among many of the mega-carriers, according to Belzer, who has studied driver compensation and safety for more than 30 years.
Some truckers are making the same amount of pay per mile or in some cases less than they did before deregulation in the early 1980s, he said.
Paying by the mile is a legacy from when it was difficult to observe drivers, said Steve Viscelli, a University of Pennsylvania sociologist and author of the book The Big Rig: Trucking and the Decline of the American Dream.
But that’s changing with GPS tracking tools, sophisticated telematics and soon-to-be federally mandated electronic logging devices, which track every movement of a big rig and the time a trucker is at the wheel to ensure compliance with driving time regulations. These electronic systems can pinpoint a driver’s exact location and how fast they are driving and other data, which is sent back to a carrier’s home office to provide information about the driver and the progress of the load.
“Now these companies, or the majority of them, can monitor directly by satellite technology so they know where their driver is, they know if they are rolling or not,” Viscelli said.
Major pay reform is needed for professional drivers in the trucking industry, said Allen Smith, who has been in the trucking industry for more than 30 years and maintains a website called Ask the Trucker.
“Their wages have not increased since the 1980s, while the cost of living has at least doubled,” Smith, of Dunnellon, Fla., told Trucks.com.
While he isn’t sure whether hourly pay would solve the industry’s problem, he said drivers “should be paid fairly and for all time” they work.
When drivers do not make enough money, the final outcome can be stressful and unsafe, Smith said.
“The combination of fighting a 14-hour clock, along with hours of unpaid waiting time at shippers and receivers, and stagnant cents-per-mile wages from the 1980s, it is a perfect storm for unsafe highways as drivers race the clock to make up for lost hours and low wage,” he said.
Heavy-duty trucks were involved in 4,050 fatal crashes in 2015, according to the latest data from the Federal Motor Carrier Safety Administration.
However, the way motor carriers pay drivers is changing, according to the American Trucking Associations.
“When ATA last surveyed driver compensation trends in 2014, we found that 77 percent of carriers had more than one type of base pay model — so it is difficult to speculate as to what impact changing the model [to hourly] would have on driver recruitment and retention,” said Sean McNally, spokesman for the trade association.
That survey found that the most frequent approach when using a model of two or more types of base pay utilized both hourly and per mile, “which indicates a significant number of carriers are already doing this,” he told Trucks.com.
Celadon Group offers its drivers — both those employed directly by the company and the owner-operators it contracts with — “a choice in pay,” said Joe Weigel, spokesman for the Indianapolis, Ind.-based motor carrier.
The company has more than 3,000 trucks and approximately 8,700 trailers.
Celadon company drivers can choose from one of three pay packages, including a standard pay package that is mileage-based, a vacation pay package that accrues time off more quickly than the standard pay package, or a mileage-band package that offers a premium mileage bonus for shorter routes.
Weigel said Celadon owner operators, or independent-contractors, are typically offered one of three packages, which include a standard pay package at 94 cents per mile, a percentage pay offering between 67 to 75 percent of gross revenue, or a mileage-band package that offers a premium mileage bonus for shorter routes.
“The only drivers that are paid hourly are our local drivers that are typically driving a dedicated route, although we do pay drivers an hourly detention fee if they are waiting on a load more than a given amount of time,” Weigel told Trucks.com. “Again, providing the driver a choice is a model we like to espouse.”
Walmart drivers are among the highest paid in the industry, according to Ryan Currell, a spokesman for Walmart. He said besides mileage pay, drivers are paid activity pay for extra duties they perform while on the job.
Trucks.com contacted Swift Transportation, Schneider National, J.B. Hunt, C.R. England and Werner Enterprises Inc. to ask about pay practices. All declined to comment for this story.
The best form of compensation is one that pays drivers for all of the time they spend doing their jobs, not just for the time when the wheels are moving, said Sandy Long, of Marceline, Mo., a recently retired truck driver who drove for more than 40 years.
“To get the pay up to where it needs to be, companies are going to have to pay drivers for the actual miles they drive, not just ZIP code to ZIP code, pay them for all pre-trips and post-trip inspections, unloading and loading times, layover pay and detention time,” Long told Trucks.com.
Drivers should be paid for the time spent tarping their loads, chaining up wheels in snowstorms and for supervising the unloading and loading of freight on their trucks, she said.
Pay is likely to become a crucial issue for the industry as freight demand rebounds and carriers face trouble recruiting and retaining drivers.
There are about 3.6 million trucks in the heaviest Class 8 weight segment, according to the ATA. The organization estimates that the trucking industry will need to hire more than 96,000 new drivers annually for the next 10 years to keep up with consumer spending. Trucks hauled nearly 10.5 billion tons of freight in 2015, accounting for 70.1 percent of domestic freight tonnage, according to the trade association.
Some call the idea that there is a shortage of drivers a myth.
“If there was [a driver shortage], driver wages would not be an issue,” Smith said. “The low wages and other things keep the cycle of drivers coming in and out of the industry and the freight keeps being moved as cheap as possible.”
A true shortage would cause wages to rise to fill the gap, he said.
But moving the trucking industry to an hourly pay system would raise the cost of moving raw materials to factories, food to grocery stories, and imported goods and products to retailers. Ultimately consumers would likely bear the burden.
Although Smith isn’t sure if hourly pay or simply bumping up the mileage pay to a “living wage” is the answer, he said shippers only care about how cheaply their freight is being moved, not whether the drivers are being paid fairly.
“There is a simple solution,” he said. “Take care of the drivers and pay them for all the time they work.”