Think you’re done raising driver pay? Think again, expert says

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poll on higher ages attraction new driversUnless GDP growth stalls or declines, “we’re going to continue to see pressure on driver pay and rates into 2019,” says Gordon Klemp, president of the National Transportation Institute. Ongoing pay increases would follow a year of multiple wage jumps that Klemp projects will culminate with driver pay increasing 11 to 11.5 percent overall by the end of this year, making 2018 the highest year for pay increases on record.

“We’re going to see payment movement which we wouldn’t normally see after this strong of a period,” Klemp says. That’s because for-hire driver pay still lags what private fleet drivers earned in 2008 and is 2.46 percent behind the 10-year inflation rate, he says.

“We’re seeing more carriers with top drivers in the $70s and $80s,” he says. “But the average overall is not there,” to attract new drivers into the industry. According to a recent NTI survey of 519 private and for-hire fleets spanning all types of operations, only 6 percent said pay increases were bringing in new driver candidates. A whopping 85 percent said pay increases hadn’t attracted new drivers and 9 percent didn’t know. In fact, one of NTI’s TopPayCarriers (meaning they already had an elite pay and benefits package) increased driver pay twice in 2018, totaling 18.5 percent, and they reported seated truck count down nearly 3 percent coming out of the third quarter, Klemp says.

Surveyed fleets agreed that raising pay was still critical to maintaining their existing driver count, with 98.7 percent saying that improving their pay relative to competitors was critical to retaining drivers and attracting existing drivers looking for new opportunities.

Beyond pay, there are many factors working against trucking when it comes to attracting new talent, Klemp says. Pay is not only low compared to other blue-collar jobs, it’s also variable and affected by factors – weather, congestion, breakdowns – outside a driver’s control. And the hours are long: The average full-time worker works 42.8 hours per week, according to the Bureau of Labor Statistics, compared to more than 65 hours per week for drivers. That, along with lack of respect, inadequate home time and poor equipment leads to low job satisfaction among drivers. Competition from other industries also hurts trucking, Klemp says, citing job openings in even small towns offering comparable or higher wages than trucking without the long hours and nomadic lifestyle.

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Then there’s the hit trucking will continue to take on the regulatory front. Recent legislation allows fleets to use hair testing instead of the less accurate urinalysis to test drivers for banned substances such as opioids. NTI surveyed carriers who have been using hair testing for two years or more and, based on their experiences, Klemp expects 8 to 11 percent of drivers to fail these tests. That same legislation directs the creation of a National Drug and Alcohol Clearinghouse that will prevent drivers who fail the hair testing to get jobs with carriers still using the more easily gamed urinalysis tests.

Into 2019, Klemp predicts an average pay increase of just over seven percent nationally, depending on gdp, with pay continuing to regionalize. Other trends he sees in the coming year:

  • Guaranteed pay – More carriers will offer a minimum weekly pay. Packages currently being offered vary widely from $700 to $1,200 per week depending on region of the country, equipment, endorsements and nature of the freight.
  • Transition pay – Carriers seek to ease new drivers into their system without them being hurt financially by offering increased cents per-mile or a defined payment for a certain period.
  • High engagement activities – Carriers are trying to find driver “touch points” to build and maintain stronger bonds with their drivers, Klemp says. This includes but is not limited to carrier apps, improved communications and special activities for drivers.
  • Increased carrier and shipper collaboration to eliminate inefficiencies – Driver wait time remains the single largest inefficiency in the supply chain, Klemp says. Cutting wasted time at the docks would increase driver productivity and thus maximize the limited supply of drivers.

“The thing we’re going to have to confront as an industry is we have a driver supply that’s inelastic,” Klemp says. Raising pay is necessary, but it will take years, not months, “until we get to a wage number that starts to draw people in who wouldn’t have considered driving in the past,” he says.