The last half of 2014 saw the largest number of quarter-to-quarter truck driver pay increases the industry’s seen in a long time. With the cycle of pay increases only accelerating, one must ask where it all ends, and how far it can go.
Last month we took a look at how employee pay and incentives were evolving in light of the current truck driver shortage. This month we’re going to ask the question: how important is driver pay in attracting new talent?
Is Pay The Answer?
The cycle of pay increases that began last year started with Tennessee-based U.S. Xpress bumping their truck driver pay by 13 percent. Before long major carriers such as Barr Nunn, Crete Carrier and Heartland Express were jumping on the pay bandwagon, with some raises coming in as high as 20 percent.
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Recent tracking data shows that the whopping pay increases aren’t just the only thing that’s new in this situation. The pace of pay increases is also accelerating at a historic rate.
A normal cycle of truck driver increases typically run on a 33 month scale. At the current rate of industry pay increases, this current pay cycle may wrap up within approximately 13 to 15 months.
As we’ve reported, the main reason for these extraordinary numbers lies in the ongoing employment squeeze. With the economic recovery beginning to pick up some serious steam, fleets are having a hard time recruiting enough truck drivers to meet the high demand for freight transportation.
According to industry insiders, the big struggle going on now in fleet board rooms is how large these pay increases will need to be. For many, a simple raise from $45,000 to $46,000 won’t suddenly make trucking jobs seem more attractive. A more realistic number being bandied around is somewhere in the range of $65,000 to $70,000.
Is Pay Competitive?
According to a 2013 study by the U.S. Bureau of Labor Statistics, “heavy and tractor-trailer truck drivers” earned an estimated mean annual wage of $40,940. A recent study by the American Trucking Associations (ATA) showed pay numbers that were a little higher, around $53,000. For “truckload, national and irregular route van drivers,” median pay came in at $46,000.
When discussing pay and truck driver turnover, it’s also important to remember that private fleets and less-than-truckload fleets consistently report far less turnover than truckload fleets. They also pay their drivers more. The ATA’s study discovered that private fleet van drivers came in at $73,000.
When compared to pay for construction workers, from 2009 – 2014 long-haul truckload wages have eclipsed that of their construction counterparts at a rate of 4.2% versus 1.5%. This has resulted in long-haul truck drivers’ wages narrowing the gap with construction sector pay. In 2010 that gap was around $5.15 per hour. By November of last year it had closed to an estimated $3.29 per hour.
Trucking is also catching up to other industries. The rate of wage growth in trucking is second in the country in terms of mean percentage of wage increases. But when looking at this problem through the lens of the employment squeeze, is pay the final answer?
How Important Is Pay?
In any industry, everybody generally says pay is the number one driving force in attracting and retaining talent. In one recent survey, however, pay was not what truck drivers listed as the most important factor. The number one factor, perhaps not surprisingly, was respect.
Tim Judge, a professor at Notre Dame and the director of research for the company that carried out the survey, said that “when people complain, they most often complain about their pay. But while it’s true that [truck] drivers don’t like their pay, it is not one of the areas that best predicts turnover.”
It’s not that pay doesn’t matter. It’s just not the only thing that matters. It may not be at the top of truck drivers’ list of concerns, but it certainly is in the top three. What those other reasons are can be saved for a future investigation. For now, it’s apparent that trucking companies are betting the house on higher pay as a way of attracting and retaining new truck drivers.