The road to riches is paved by owner-operators

According to Terrazas’ analysis, once you control for factors such as age, education, family status and sex, owner-operator truck drivers earn on average about 5 percent more per hour or around $1,900 more per year compared to company drivers. 

Not controlling for demographic factors, owner-operators earn on average 16 percent more per hour – nearly $6,000 over the course of a year – than company drivers. 

The edge self-employed truck drivers hold over their full-time counterparts contrasts with jobs that employ workers with similar demographic profiles. In construction and mining, for example, both earnings and hours are lower among the self-employed. Likewise, in food service, the self-employed work longer hours for less money per hour than wage and salary workers. 

Terrazas’ findings contain a couple of qualifiers. First, there are huge variations in the amount of money individual owner-operators earn. For example, the top 10 percent of owner- operators earn 52 percent more per hour than company drivers, about $19,200 more over the course of a year, after controlling for demographic factors; the bottom decile of owner-operators earn 30 percent less per hour than company drivers, or about $11,000 less over the course of a year.    

Owner-operators also work about 2 percent more hours, which translates to about 1.1 more hours on the job each week than company drivers. (Some of the overtime may be due to drivers getting around hours of service rules, a practice that may come to an end with the full implementation of the  ELD mandate.)

The advantages that accrue to some owner-operators lessens somewhat when you factor in the overall risks associated with being self-employed. Owner-operators are responsible for maintenance costs of their vehicles and are also more vulnerable to economic cycles. During the boom years of 2005 and 2006, the hourly earnings premium for owner-operators was around 16 percent, but in 2008-09 during the Great Recession, it essentially disappeared. 

The analysis doesn’t specifically address the issue of truck driver shortages or the role driver pay has in contributing to those shortages, Terrazas told FrightWaves in an email. But a separate Convoy report showed that over the past three decades, total earnings among drivers has lagged behind earnings for workers more broadly, although it has kept pace with earnings among workers in occupations like construction, mining/extraction and food service. 

“Obviously higher pay would help attract more workers, but there are also substantial lifestyle and regulatory barriers that prevent would-be drivers from entering the profession,” Terrazas said.

The number of truck drivers who are self-employed – 11 percent – has stayed flat since the early 1990s. Among workers across all jobs, self-employment has been slowly trending lower, from about 16 percent in the early 1990s to about 15 percent today.