When most companies are attempting to attract talent and handle employment problems, they generally do the first thing that comes to mind, which is to throw money at the problem. While it may seem like this is a knee-jerk reaction destined to fail, keeping long-haul truck drivers happy in today’s job market does take more than just a pleasant thank you and a whole bunch of perks. Money does talk. How much you pay your people must be a tactical consideration.
Boosting the pay for your truck drivers has long been downplayed by long-haul fleets. It must be remembered that pay cannot be rolled back. As a result, many motor carriers have done everything in the playbook except increase pay outright. From bonuses to other perks, they have been looking for other ways to entice truck drivers, yet it may be time to consider calling the Monopoly man.
While offering perks designed to increase truck driver comfort, provide more home time, and generous healthcare and retirement benefits go a long way, it may be time to do more than offer various incentives as opposed to offering concrete increases in mileage-based and hourly pay rates.
With the nation’s economy on the rise, other-than-pay-raise solutions are increasingly seen as not enough to address the growing concern, when related to the truck driver employment shortage specifically. The freight market is on fire, but so is the overall economy, with the Labor Department’s December jobs report showing an addition of 228,000 jobs in November. The United States unemployment rate is currently at its lowest rate since 2000.
A Growing Problem
Look at the numbers provided by the American Trucking Associations and the picture looks even bleaker. The average turnover rate for truck drivers working for large truckload fleets rose in the third quarter of 2017, representing one of the highest levels of truck driver turnover in over four years.
According to ATA Chief Economist Bob Costello, “Since bottoming out at the end of 2016, the turnover rate at larger fleets has steadily risen — a function of an improving economy, rising demand for freight transportation, and fierce competition for drivers. Fleets continue to tell us that competition for good, safe and experienced drivers is fierce, pushing wages higher in hopes of attracting the best talent.”
As we have reported in the past, the truck driver shortage continues, with no end in sight. Yet, the problem also lies in the pay. Consider data from the National Transportation Institute, which shows that in 1979 a unionized truck driver would make the equivalent of nearly $102,000 if the numbers were drawn in 2016. Instead, the real numbers for truck drivers in 2016 shows they earn around just over $54,000.
Private fleets – which are generally insulated from these types of problems – are also feeling the pinch. Private carriers are pretty good at luring experienced truck drivers away from fore-hire fleets, but that is becoming a much harder proposition. Even offering starting pay packages that range from $50,000 to $70,000 hasn’t alleviated the problem.
Changing the Name of the Game
Because of these ongoing problems, you will find many fleets have completely revamped their pay and benefits packages over the past ten years to account for this problem. Since there are not enough truck drivers to keep the long-haul trucking model sustained, many fleets have moved to a regionalized model, which could include pay raises from 1 to 2 cents per mile all the way up to 7 cents per mile. These are big numbers.
Fleets are now looking to arrange their pay and benefits packages by region, rather than other factors less related to distance-per-pay by mile. Starting pay packages are weighted far greater by the type of haul the truck driver will be embarking on as well as the experience the truck driver brings to the table.
Referral bonuses are also becoming a far larger part of the pay picture. For some fleets, if you can find a truck driver to sign on, you could get up to a $3,000 referral bonus and – in some cases – even extra mileage pay for a predetermined amount of time.
Would you ever have imagined a $10,000 sign-on bonus for hiring a truck driver? These are staggering numbers. Of course, only the largest fleets can afford such bonuses, but that doesn’t mean other fleets with less resources aren’t also readjusting their strategy.
Looking at the Negatives
There is a demographical problem in truck driving. Many are under the impression that the new generations of job seekers will fail to consider trucking as a viable career choice. Others feel like money may be the key. The average age of truck drivers continues to climb. There must be an equalizing factor at play. While truck driving is physically demanding work, it comes with a host of benefits.
While some think it may be hard to live a “regular” life as a truck driver, a lot of the new benefits, perks, and pay packages are making it an increasingly tempting value proposition for those looking for a stable and secure career. Freight needs to be moved from one place to the next, and this has never been truer than right now.
Although blue collar industries countrywide are having trouble filling jobs, the market for truck drivers looks increasingly appealing. Although truck drivers are concerned about how much they are paid, they also want to make sure there is some security to what they are being paid and the frequency of said pay. While salaried office pay is predictable and set, some people interested in truck driving may not understand the intricacies of how truck drivers are paid, be it by the mile (whether actual or physical) or by the hour.
How Should Truck Drivers be Paid?
While many truck drivers and industry pundits point to truck driver pay as a major concern, as we brought up a moment ago, how they are paid is also quite important. Yet, one of the biggest challenges facing fleets today is how they are paying those truck drivers, whether it be weekly, monthly, by mile or hour or otherwise.
Part of the problem lies in the trucking business model. Payroll systems are not designed for the type of work truckers do. Truckers might often receive payroll reports from multiple systems, all while trying to reconcile them together. While third-party companies are attempting to address this problem, fleets must also come up with solutions.
Payroll managers and back-office workers must be able to explain how reimbursements will be handled in an easily understandable way for people looking to get into truck driving. They must be able to dispel confusion over different payroll systems, schemes, formulas and scale reimbursements. Are your fleet’s managers prepared to handle these conversations?
How to Structure Pay
Another question is how often pay is raised. In many industries, pay raises are merit based and can be expected every 12 months. Does the same hold true for your trucking company? When recruiting truck drivers from other industries or fleets, you must be able to differentiate yourself.
Some fleets are experimenting with a pay raise scheme that provides increases every three, six, and twelve months. This way it gives new truck drivers incentive to stay on for just a while longer to reach that higher pay grade. Once they cap out, then a twelve-month merit increase kicks in. Pay raise determinations can also be made based on experience within the industry and whether a potential truck driver has any DOT violations on their record.
Motor carriers must also factor in retention and recruiting costs. Retention costs and benefits should include such items as training, referral and seniority bonuses. Does your fleet offer company-paid healthcare, life insurance, retirements accounts, and other fringe benefits? Even if you do, remember that the focus should always be on truck driver pay.
Some companies also offer a weekly minimum pay guarantee, which provides a baseline level of pay that offers predictability to a truck driver’s life. Others offer a 2- or 5-cent-per-mile increase based on truck driving experience and certain safety measures. This way experienced and safe truck drivers are rewarded and offered a greater incentive to stick around.
When truck drivers have a lot of experience or over a million miles of safe driving, offering them compensation through increased pay provides more than a one-time shot in the arm like a bonus. They continually feel that greater appreciation each time they receive their paycheck. Benefits like that are hard to measure individually but carry great weight with the truck drivers they benefit.
Join us in the next Part of our series where we take a closer look at how to find the truck drivers you are looking for and keep them on, whether it be through increased pay, better benefits, or more. When it comes to attracting the right people, we have the answers you are looking for right here at the QuickTSI Blog.