Raise the Wages, and the Drivers will Come, Reporter Says

It has become “common knowledge” that the US has a severe truck driver shortage.

Just a few weeks ago, for example, Chris Spear, CEO of the American Trucking Associations, said the current driver shortage was now at 80,000, a big jump from its previous estimate, and a number that quickly was reported broadly in logistics industry and mainstream publications and web sites.

Supply Chain Digest Says...   To address these lifestyle issues, Rivero says that the US will have to invest in infrastructure improvements to alleviate some of the hardships that drive truckers out of the industry. What do you say? Click here to send us your comments   Click here to see reader feedback

However, there are some who question at least in part the driver shortage narrative.

For example, in 2019, a couple of economists from the US Labor Department issued a report that said there were not any “structural” barriers to meeting demand for truck drivers.

The report then made this interesting comment: "The long-distance truckload segment has high levels of competition, similar average costs across all scales of production, and a very limited ability to differentiate prices in the product market. These characteristics result in labor market conditions in which individual firms are forced to accept high turnover as a cost-minimizing response to their competitive position in the market for their outputs."

In other words, carriers don't believe they can raise driver wages sufficiently to alleviate the driver shortage because they think they won't get paid for it by shippers. (See US Labor Department Report Challenges Beliefs Relative to a Truck Driver Shortage.)

That in general is also the conclusion of reporter Nicolás Rivero, writing this week on the Quartz.com web site.

“The assertion that the US is suffering from the latest round of a 16-year truck driver shortage is misleading at best,” Rivero writes.

He notes that states issue more than 450,000 new commercial driver’s licenses every year.

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The problem, he says, is driver retention.

“Many of those licensed drivers are no longer behind the wheel because they can find better working conditions and pay elsewhere,” Rivero notes, adding that “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.”

If we had good driver jobs, we wouldn’t have a shortage of drivers staying into the professions, Rivero says.

SCDigest notes that there is certainly some truth in that, but that many companies with private fleets, such Walmart, also struggle to find drivers for jobs that pay pretty well and get drivers home most nights.

Still, Rivero says economics suggests that if there is the driver shortage we first started hearing about in 2005, by now wages should have risen to close the gap.

“Raise wages, and the workers will come,” Rivera says.

And indeed, driver pay in the US overall is up 6.7% since April (up much more at some private fleets and carriers), and sure enough the number of drivers is also up, as shown in the graphic below from Quartz.com:

And while some carriers have increased rates 25%, guaranteed minimum weekly pay, and are paying bonuses of up to $1,000 per day for drivers who get stuck waiting in lines at ports, it still hasn’t been enough to bring the driver market to equilibrium.

The Teamsters Union says the problem is that driver wages have been depressed for decades, and haven’t yet risen enough yet for the industry to reach full employment.

That’s especially true given the nature of the job, which for long haul drivers can involve 70-80 hour work weeks, and often being away from home for many days and even weeks at a time.

To address these lifestyle issues, Rivero says that the US will have to invest in infrastructure improvements to alleviate some of the hardships that push truckers out of the industry.

Those work issues include waiting in long lines at ports and frustratingly wasting time searching for overnight parking.

The bottom line: it seems the driver shortage is real, but could be eliminated with even more wage hikes and infrastructure improvements.

Is the driver shortage real? Will highe wages solve the issue? Let us know your thoughts at the Feedback section below.