Wage increases, guaranteed pay, improved communications have positive effect on driver shortage

Sign-on bonuses and guaranteed pay have worked to attract truck drivers to the industry, but the shortage remains, said Gordon Klemp, founder and CEO of National Transportation Institute.

In a recent webinar, Klemp explained the most effective ways to combat the shortage have been increased pay, which reduces turnover; guaranteed pay, which removes pay variances; and improved communications with drivers to develop a connection with the company.

A recent report from the U.S. Census Bureau downplayed the shortage, but Klemp said those in the industry know the shortage exists. And, the driver shortage has continued even as Walmart has started to offer an average of $87,500 for drivers in their first year.

Driver pay rose over the past year, but it probably hasn’t risen enough, with driver turnover stuck at 100%, he said. The turnover rate for drivers of large carriers on truckload and irregular routes has ranged between 80% and 100%. The pool of drivers has been stagnant and unemployment has been at a 50-year low. Klemp has tracked driver wages over the past 23 years and he’s not seen driver pay rise when freight volumes don’t increase. With demand and capacity in balance, Klemp doesn’t anticipate driver income to increase. But qualified drivers remain in short supply and he expects low freight rates to be non-existent.

The younger generations are smaller than the Baby Boomer generation, which added a lot of labor to the market. Also, the younger generations have more people with college degrees and less interest in blue collar jobs. The perception of a blue collar job is low pay, Klemp said.

An issue with truck driver pay has been variances in pay from week to week, or “lumpy pay,” he said. Some issues with the truck driver position have been inconsistent home time and regulations, such as drivers feeling like they are being watched, or big brother being in the truck with them, said Klemp, noting that he doesn’t expect regulations to decline.

Some drivers have been driving because they have more freedom, but they are starting to leave the industry. Another issue includes inefficiencies with unloading and loading trucks and not receiving pay then. Drug use has risen and has led to a decline in the number of available workers, he said.

The driver workforce is getting older and looking to retire and 30% of drivers are between 45 and 54 years old, he said. The pool of drivers is shrinking and a resolution is uncertain. A possible retooling of the job is necessary to make it more attractive, he said.

With the low unemployment rate, employers will need to attract new workers from other locations, Klemp said. The unemployment rate in Arkansas is 3.7%.

According to a recent report from the Bureau of Labor Statistics, transportation and material moving occupations accounted for 7.1% of the U.S. workforce in May 2018. Of the 10.2 million people employed in the occupations, 1.8 million were heavy and tractor-trailer truck drivers.

The average wage across all transportation and material moving occupations was $38,290 annually, compared to the U.S. average wage of $51,960.

When comparing wage growth for truck drivers, Klemp explained a driver hauling steel in 1978 was earning the equivalent of $104,000 annually in pay today. One benefit for truck drivers and carriers has been the improvements in technology to become more efficient as congestion and wait times have been issues. Freight rates will need to rise before driver pay reaches the point it should be at, he said.

Looking at the competitiveness of driver pay, Klemp said pay of a for-hire, over-the-road driver is 86.8% of average wages for a blue collar job. The pay is greater for drivers of private fleets, such as Walmart, and it still cannot hire enough drivers, he said.

Between 2007 and 2018, the pay of a for-hire, over-the-road driver has risen 18.2%, while the consumer price index has increased 21.8%. Minimum wage has risen 47.1% and pay for McDonald’s workers has increased 113.6%. Wages for private fleets have kept pace with the inflation rate, while for-hire carriers haven’t, he said. Driver wages of for-hire carriers declined about 13% between 2007 and 2009. The pay rose 9.58% in 2018, nearly half of the increase over the past decade. States, including Arkansas, have increased the minimum wage, and on average, it has increased 4.7% to $10.09 per hour. Increasing pay reduces turnover, he said.

An untapped segment of the workforce includes women, who comprise 7.9% of the carrier workforce, said Klemp, adding that women are safer drivers, crash less and are more loyal. But the irregularities in the job make it difficult for women, and the industry has yet to resolve the issue, he said.