Business

Report downplays truck driver shortage, argues better pay could help industry

Riziki Ngolombe drives as part of his commercial driver’s license exam at the National American Driver Training Academy in Cedar Rapids on Thursday, June 14, 2018. Students from around the country learn to drive at the school before being hired to drive for Cedar Rapids-based CRST. (Rebecca F. Miller/The Gazette)
Riziki Ngolombe drives as part of his commercial driver’s license exam at the National American Driver Training Academy in Cedar Rapids on Thursday, June 14, 2018. Students from around the country learn to drive at the school before being hired to drive for Cedar Rapids-based CRST. (Rebecca F. Miller/The Gazette)

A new report says better pay could help freight companies maintain a stable workforce of truck drivers, despite industry officials’ arguments to the contrary.

The report, published last month in the U.S. Bureau of Labor Statistics’ Monthly Labor Review, argues that trends in the industry — including turnover rates, unemployment and pay — are comparable to other blue-collar jobs and represent a tight labor market, rather than an industrywide shortage.

“The overall picture is consistent with a market in which labor supply responds to increasing labor demand over time, and a deeper look does not find evidence of a secular shortage,” according to the report, written by Stephen Burks, professor of economics and management at the University of Minnesota, Morris, and Kristen Monaco, associate commissioner in the Office of Compensation and Working Conditions at the U.S. Bureau of Labor Statistics.

The position runs counter to arguments expressed by many in the trucking industry. A 2017 American Trucking Associations’ analysis found that the nation’s trucking industry was short about 36,500 drivers in 2016.

The shortage is expected to climb to more than 174,000 by 2026, according to the ATA study.

ATA chief economist Bob Costello in a March news release argued the bureau report downplays real challenges in the trucking industry, including the many types of jobs, the need for qualified drivers and a work-life balance present in the truck driving industry that isn’t comparable to other blue-collar jobs.

In the release, Costello said “the heart of the shortage is the need for qualified driver.” Drivers must have a Commercial Drivers License, meet drug testing requirements and have a clean driving record, he added.

“Carriers repeatedly say it isn’t that they don’t have enough applicants for their open positions — they do. What they do not have is enough applicants who meet the demanding qualifications to be hired,” Costello said in the release. “In some cases, carriers must reject 90 percent of applicants out of hand because they fail to meet at least one of the prerequisites to drive in interstate commerce.”

ARTICLE CONTINUES BELOW ADVERTISEMENT

But Burks said one of the industry’s biggest challenges is turnover and employee migration caused largely by pay and long hours.

“An economist reserves a shortage for a situation in which an increase in price doesn’t make quantity supplied and quantity demanded match. And increase in price is a wage increase here,” Burks said.

If and when wages increase enough, a supply of workers should be able to fill the need, he added.

Burks, who spent 10 years as a truck driver, said while he doesn’t believe there is a shortage, the industry still faces challenges.

The issue is that, as freight demand goes up, possibly driven by an exploding e-commerce market, freight rate increases often are delayed, he said. Those rate increases allow companies to pay drivers more.

“Nobody in any part of the business world wants to be in a situation where they raise the wage rate for somebody and then they cut it. That loses you people immediately,” he said.

To hire drivers, many companies have turned to sign-on bonuses, but that can lead to poaching among companies and increase overall turnover in the industry, Burks said.

According to the Bureau of Labor Statistics, the median annual wage for a heave and tractor-trailer truck driver was a little less than $47,000 in May 2018. The median annual wage for all workers was about $39,000.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Thank you for signing up for our e-newsletter!

You should start receiving the e-newsletters within a couple days.

Some freight companies, such as CRST, have said pay increases, as well as enhanced benefits, have helped recruit and retain drivers.

l Comments: (319) 398-8309; mitchell.schmidt@thegazette.com

TRUSTING NEWS

By Mitchell Schmidt, The Gazette

As The Gazette’s transportation reporter, I’ve been trying to keep up with freight industry trends as they arise.

Topics I’ve covered in the past have ranged from truck driver shortages to the need for more bus drivers to concerns in the airline industry over not having enough pilots.

This article follows our April 14 report on school bus drivers. After that report was published, a reader pointed me toward the Bureau of Labor Statistics cited in this article.

Here’s how we’ve covered transportation sector issues in the past:

l Iowa schools need to fill close to 1,000 driver positions every year, according to the Iowa Department of Education, out of about 9,000 jobs statewide.

l A 2017 American Trucking Associations truck-driver analysis found that the nation’s trucking industry was short about 36,500 drivers in 2016. The truck driver deficit is expected to reach more than 174,000 by 2026, according to the study.

l The nation’s airline industry — which transports both people and freight — is expected to be short about 5,000 pilots by 2021, which would keep about 500 aircraft out of the skies, according to Eastern Iowa Airport officials.

ARTICLE CONTINUES BELOW ADVERTISEMENT

By 2026 the shortage is forecast to reach 15,000 pilots and about 1,500 grounded planes.

l Union Pacific employs about 42,000 people — about 1,500 in Iowa — and last year offered as much as $10,000 to $20,000 in hiring incentives to attract the 2,100 new workers needed.

What should we write about next? Email Mitchell Schmidt at mitchell.schmidt@thegazette.com and let us know.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.