A government-directed study looking into the impacts of truck driver pay on safety and driver retention ended up being a dud, but it did manage to eviscerate the idea of a driver shortage.
On Tuesday, Oct. 15, the National Academies of Science 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 to be: 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.”
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 propriety 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 an opposing 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 1980s deregulation. Lucrative to the carrier, not the driver, to be clear.
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, i.e. 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 is virtually nonexistent.
What about driver turnover rates, which can be more than 100% at large carriers? Wouldn’t hourly pay keep drivers in seats? Probably, but carriers have found it is cheaper to deal with the costs of high turnover than adjusting truck driver pay. In an industry that is driven by cost competition, any deviation from the piece rate model will be fatal.
Driver shortage myth debunked … again
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 Intro to Economics 101 course. It was also thoroughly debunked by researchers in the truck driver pay study.
According to the 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. Below is a chart showing spot and contract rates in the last 10 years.
As you can see, 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?
“The application of traditional economic principles, therefore, does not support assertions of persistent shortages of drivers in the long-distance (truckload) sector,” the study states.
It’s time to end this conversation. No one outside of ATA and its members believes in the driver shortage propaganda.
Word on the street highway
While carriers were unwilling to give up data crucial for the study, truckers offered their two cents on truck driver pay.
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 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 know, you’re chasing miles, you know and you got to consider traffic all get running together. I think that’s one big cause of an accident, the following distance, you know just 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
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