Pay to play

Congress wanted to know how truck driver pay impacts safety and driver retention. Although the research lawmakers directed did not answer that question, it should silence anyone who still believes in a driver shortage.

In October, the National Academies of Sciences released a study titled “Pay and Working Conditions in the Long-Distance Truck and Bus Industries.” Directed by Congress in the Infrastructure Investment and Jobs Act, the study looks into the impacts of driver compensation on safety and driver retention, including hourly pay, detention time pay and other payment methods.

Commissioned by the Federal Motor Carrier Safety Administration, this study was supposed to help address a question to which most stakeholders intuitively know the answer: Will paying truck drivers for all of their time mitigate several problems plaguing the industry?

Here’s the conclusion researchers reached in the truck driver pay study: “The available data and empirical research are insufficient to determine whether driver working conditions and compensation methods (and their implications for pay levels and regularity) affect the driving behavior and safety performance of drivers in the long-distance (truckload) sector.”

In other words, “We don’t know.”

Top secret information?

Don’t blame the researchers. Rather, blame the carriers.

According to the report, the study committee’s work was “hampered” by a lack of data. Specifically, “the proprietary nature of carrier compensation schemes and records was problematic for obtaining the data needed to relate pay methods to safety-related outcomes, such as carrier crash and violation rates.”

A good way to compel a certain outcome is to suppress data that could lead to a contradictory outcome. In this case, supplying carrier compensation data may have shown that certain pay structures, perhaps even truck driver pay rates, yield better results in terms of safety and driver retention.

Of course, carriers wouldn’t want anyone to know that paying drivers more is good for highway safety. That could disrupt the lucrative, albeit exploitative, truck driver pay structure that has been the status quo since deregulation in the 1980s. Lucrative to the carrier, not the driver, to be clear.

Different carrier, same working conditions

Speaking of the status quo, the second problem researchers ran into is the uniformity of trucker driver pay methods and working conditions across the long-haul trucking sector.

Nearly every carrier uses a piece-rate model (per-mile or per-load pay) rather than hourly rates. Also, trucker working conditions are pretty much the same everywhere in that irregular schedules, varied routing and time away from home are the norm. Consequently, researchers could not compare per-mile or per-load pay structures to hourly pay structures, because the latter are virtually nonexistent.

What about driver turnover rates, which can be more than 100% at large carriers? Wouldn’t hourly pay keep drivers around?

Probably, but carriers have found it is cheaper to deal with the costs of high turnover than to adjust truck driver pay. In an industry that is driven by cost competition, any deviation from the piece-rate model would be fatal.

Driver shortage ‘debate’ laid to rest

Although the truck driver pay study didn’t shed more light on the issue, it did drive another nail in the “driver shortage” coffin.

For about two decades, the American Trucking Associations and its members, mostly larger carriers, have been crying about a so-called driver shortage. However, that claim defies all logic that can be explained in an introductory Economics 101 course. It was also thoroughly debunked by researchers in the truck driver pay study.

According to that study, “when demand for workers in an occupation increases, the normal response is to increase wages.” But that’s not happening.

Just look at the spot rate market versus the contract rate market. Whenever spot rates fall below contract rates, there are likely too many truck drivers. In the past 10 years, spot rates have dipped below contract rates a few times before rising above them.

Simply put, indications of a driver shortage are short-lived before the market corrects itself. Any evidence of a sustained, systemic driver shortage is not supported by spot and contract rate data. Data showing average hourly earnings of truck drivers since 2006 also does not indicate any changes that are typical of a labor shortage.

Yet, large carriers still believe in a driver shortage. Why? Researchers think it’s because they are constantly replacing drivers due to high turnover rates.

Increasing truck driver pay could solve the retention problem, but convincing the public and lawmakers there is a driver shortage takes them off that hook.

ATA’s data proving a driver shortage exists is similar to the truck driver pay data of carriers: They are both shrouded in secrecy because they are proprietary.

“Because the ATA’s studies have been conducted using proprietary techniques and assumptions that are not publicly defined, it is not possible to evaluate the validity of their claims of driver shortages,” the report states. “However, those claims are subject to, as a general matter, the basic economic principles of supply and demand.”

And what do basic economic principles say?

According to the report’s 10 researchers, basic economics “does not support assertions of persistent shortages of drivers in the long-distance (truckload) sector.”

It’s time to end this conversation. No one outside of ATA and its members believes in the driver shortage propaganda.

Under-21 drivers and larger trucks should be off the table

Congress nestled this research directive under the same section of the Infrastructure Investment and Jobs Act calling for a pilot program for interstate truck drivers between the ages of 18 and 20.

Section 23022 of the infrastructure bill is all about the under-21 apprenticeship pilot program. However, the very last subsection calls for a seemingly unrelated driver compensation study. What’s the connection?

Some members of Congress were not too excited about an under-21 pilot program in the infrastructure bill. To get that through the door, the compromise was to include a truck driver pay study that could address some concerns. Essentially, Congress wants to know if allowing younger drivers is even necessary.

ATA and large carriers’ pitch for under-21 drivers is based primarily on a driver shortage. If truck driver pay can be directly tied to safety and driver retention, there is no point in moving forward with lowering the CDL age requirement beyond a pilot program.

Congress is hedging its bet on under-21 drivers. Although the federal government is entertaining the idea of younger interstate truck drivers, it’s simultaneously looking into whether there is a better, safer way to address a driver shortage.

By derailing research that would have given Congress answers to questions about truck driver pay, large carriers also prevented quantitative evidence that could end any hopes of under-21 drivers.

Or so they thought.

They never anticipated researchers of a truck driver pay study obliterating their core argument: a driver shortage.

Without a driver shortage, there is no need for younger interstate drivers. With that being said, there is also no need to increase the size and weight limits of tractor-trailers either. That is another policy change large carriers want in the name of a driver shortage.

Truckers weigh in

While carriers were unwilling to give up data crucial for the study, truckers were more than happy to offer their anecdotal evidence.

Researchers interviewed dozens of truck drivers to get a sense of what the men and women behind the wheel feel about truck driver pay. Here are some notable quotes. All drivers were anonymous.

“Well, if you’re hourly, you can focus on safety first. If you’re paid by the mile, your natural instinct is to focus on how much and how quickly you can get it done. Because that’s when you make your money, over safety.”

“A big portion of it is we’re not incentivized to be safe (with) paid-per-mile. So the faster you go, the better you are off money-wise … Somebody that runs 3,000 miles shouldn’t get paid the same as somebody that runs 2, but you know, you’re also lying if you say it doesn’t incentivize people to drive in bad conditions, speed and roadwork.”

“Too much trying to hustle to get miles …  You’re chasing miles, you know, and you got to consider traffic … I think that’s one big cause of an accident, the following distance … You’re chasing miles, you know, this hurry-up-and-wait (nonsense), hurry up and be on time, hurry up, hurry up. We both know only (a) late load is a dead load.”

There may not be enough data to show what effects truck driver pay has on safety and driver retention, but to nearly everyone driving long haul, it’s pretty clear: The current truck driver pay structure is not working. LL