There is no shortage of US truck drivers
The country is facing a shortage of 80,000 truck drivers, warned the American Trucking Associations (ATA), an industry group representing big US trucking companies, on Oct. 25. It’s a warning they’ve more or less repeated every year since 2005. But it’s particularly worrying in the middle of a global supply chain crisis when there aren’t enough truckers to haul goods out of jam-packed ports.
This driver shortage argument has appeared repeatedly in news stories examining why the gears of the global economy are grinding to a halt. Executives at publicly traded companies have referenced the “driver shortage” in at least 45 calls with investors in the past month alone, according to data from Factset.
But the assertion that the US is suffering from the latest round of a 16-year truck driver shortage is misleading at best. About 2 million Americans work as licensed truck drivers, and states issue more than 450,000 new commercial driver’s licenses every year, according to the American Association of Motor Vehicle Administrators. In fact, it's the most common job in 29 states.
The problem is retention. Many of those licensed drivers are no longer behind the wheel because they can find better working conditions and pay elsewhere. Jobs in factories, construction sites, and warehouses pay similar wages, and don’t require people to work 70-hour weeks, sleep in parking lots, or wait in line for hours without pay or bathroom breaks to pick up a container at an overwhelmed port.
The real shortage is of good trucking jobs that can attract and retain workers in a tight labor market. The annual turnover of drivers at big trucking companies averaged 94% between 1995 and 2017, according to ATA statistics. That means those companies have to re-fill almost every driver position every year to replace the people who are leaving. A third of drivers quit within their first three months on the job. The problem is particularly acute for long-haul truck drivers who carry goods great distances across state lines.
The trucking labor market isn’t broken
Economic theory suggests that when there’s a shortage of something—in this case, workers willing to drive trucks—prices (or wages) will rise and more people will be motivated to supply it. Eventually, the shortage should abate. Yet the “driver shortage” rhetoric has been repeated by the trucking industry since the late 1980s. How could such a clear shortage persist for three decades in a market economy?
In 2019, two economists for the US Bureau of Labor Statistics (BLS) set out to investigate the mystery of the perpetual driver shortage: Was there something fundamentally broken about the trucking labor market?
The short answer, they found, is no. The labor market for trucking works about the same as the labor market for all sorts of blue-collar work. Differences in pay entice workers to enter the truck driving industry—and leave it for better opportunities. “There is thus no reason to think that, given sufficient time, driver supply should fail to respond to price signals in the standard way,” the authors wrote.
In other words: Raise wages, and the workers will come.
Trucking companies are raising wages, and drivers are biting
The real world is testing those economists’ theory. Trucking wages have risen 6.7% since April, when the American covid-19 epidemic began in earnest, according to BLS figures. The number of working truckers is, accordingly, up 7%. When trucking companies raised wages in the runup to the 2020 holiday shopping season, trucking employment went up. When trucking companies cut wages immediately after, employment went down.
Trucking companies are once again hiking wages in an effort to attract drivers ahead of the holiday season. This year, drivers are in higher demand than ever thanks to the extreme backlog of containers clogging up shipyards: Ports simply can’t offload containers onto trucks fast enough. So trucking firms are giving drivers splashy pay raises of up to 25%, offering bonuses of up to $1,000 per day for drivers who get stuck waiting in lines at ports, and guaranteeing minimum salaries no matter how much cargo drivers are able to haul.
The market, in other words, is working as expected. Companies need more drivers, so they’re raising pay and benefits and attracting more employees. But it hasn’t been enough to solve the problem entirely: There are still more open trucker jobs than there are workers willing to drive. (The ATA estimates the difference to be 80,000 jobs, which is the basis for their warnings about the driver shortage.) And overall trucking employment still lags behind where it was during the holiday peak in 2019.
The problem, according to the Teamsters Union, is that trucker wages have been depressed for decades, and they haven’t risen enough yet for the industry to reach full employment. “Companies are now playing catch-up for a problem that has been developing for many years,” said Adan Alvarez, a spokesman for Teamsters Local 396, which represents drivers in southern California. The latest spate of pay raises hasn’t made a huge difference for US truckers’ average earnings. Trucker wages are still rising at about the same rate as overall US wages, so the premium relative to comparable jobs is negligible.
That makes it harder for trucking to compete against other blue-collar employers also raising wages in manufacturing, construction, and logistics. “Increasing pay a little bit can make a job slightly more attractive, but not noticeably more attractive than other occupations that come with less of a hassle factor,” said Todd Spencer, president of the Owner-Operator Independent Drivers Association, which represents independent drivers and small trucking companies. “There are many hardships and sacrifices involved in driving trucks. We’re talking about 70-80 hour a week jobs where oftentimes you’re away from home for weeks at a time.”
Jerry Sigmon Jr., COO of the trucking company Cargo Transporters, says recent pay raises have mainly just helped his firm keep up with rising wages at competing employers. Cargo Transporters, which operates a fleet of about 500 trucks, has raised wages three times this year. The third raise, announced Oct. 27, even came with an extra week of paid time off. “I'm not going to say we've had a flood of applicants coming in,” he said. “But we're able to take care of our existing employee base better to keep more from leaving.”
Paying truckers more isn't enough
Driver pay is important, but ultimately it’s just one part of the equation. To solve this problem, the trucking industry will have to offer more competitive wages and working conditions—and the US will have to invest in infrastructure improvements to alleviate some of the hardships that drive truckers out of the industry.
Stakeholders across the industry—the ATA, the Owner-Operator Independent Drivers Association, the Teamsters, and trucking executives like Sigmon—say the US needs to upgrade its infrastructure to make trucking less miserable for drivers.
Drivers are forced to wait in lines at ports that weren’t built to handle the volumes of cargo they’re currently seeing. They waste time searching for overnight parking and wind up ending their driving days early when they happen to find a spot. These challenges make the job more aggravating and less efficient; the more time drivers spend waiting and looking for parking, the less time they’re able to cover distance on the highway, deliver goods to customers, and get paid.
Even if wages are changing, America's infrastructure priorities aren't geared toward truckers.
The newly passed $1.2 trillion US infrastructure bill does include $17 billion for upgrading US ports and $110 billion for upgrading roads, bridges, and highways—but to the chagrin of the trucking industry, it does not include funding for truck parking (nor does the larger social spending bill working its way through Congress).
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