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Driver shortage goes beyond basic economics

(Photo credit: Shutterstock)

( Photo: Shuttertstock )

Stifel’s John Larkin expands on issues affecting carriers’ pursuit of drivers

Last week, FreightWaves published a commentary on how the often-cited driver shortage is not a lack of drivers, but more accurately reflected as an economics issue.

“The reality is, there is no driver shortage. It’s [an] economic shortage. That’s right- it’s Economics 101. Basic supply and demand. Where there is a scarcity of a good or service, prices will rise. Where there is surplus, prices will go down. There is certainly scarcity in the driver population and it all comes down to economics. Raise the amount someone can earn and our driver issue will self-correct,” the article noted.

We received many comments on the article, some praising us for pointing out what many view as a reality that others refuse to acknowledge, and some suggesting we don’t know what we are talking about.

That’s the great thing about commentaries – they stir emotions and you don’t have to agree with them, but they play an important role in opening up discussion. One of the responses we got came from John Larkin, managing director of Transportation and Logistics for Stifel Equity Research. Larkin noted that he agreed with much of the article, however he struggled to understand how the shortage could be solved simply raising pay.

“If Economics 101 was in play, high paying [Heartland Express] would have a line of prospective drivers out its door and lower paying [Convenant Tranportation Group] would not have a single truck seated,” he wrote us. “In fact, the LTL and private fleets are now also struggling with the driver issue. Drayage drivers are scarce. Historically, OTR TL drivers simply moved into these more desirable sectors.  Something has changed in recent years.  My thought is that this is a much more complex issue than higher compensation can solve.”

Read: There is no driver shortage

Larkin, who studies the industry and whose views are as well-respected as any, went on to list some of the reasons he believes contribute to the problem.

Work-life balance. Larkin argues that younger workers have been influenced by their upbringing, which has involved more solo play with video games and tablets and more managed time. Also, the push for everyone to go to college has hurt the industry, and in general, “is not the key to a successful career and may do more harm than good.”

Blue collar jobs are for Uncle Joe. Kids today see themselves creating the next-great app, or building their own business, not working in a blue-collar job. “Blue collar jobs are for others,” Larkin said. He also noted that the underground cash economy is growing, allowing people to work cash – and tax-free – jobs such as lawn maintenance and snow plowing.

Autonomous trucks. The massive hype that has accompanied autonomous trucks is scaring away potential drivers. “Why go to the trouble of getting a CDL when my job will be automated in a few years?,” he wrote. “And the only thing more boring than driving might be sitting in a truck that drives itself.  What does one do, monitor the gauges, sleep, play x-box, handle the trucking company’s paperwork (soon to be automated, by the way, thanks to blockchain technology), or call prospective customers (who went or will soon go to automatic bids and load tendering)?”

Minimum driving age. Those teens that don’t attend college are banned by law from interstate driving until they turn 21. “And most insurance companies prefer a minimum age of something more like 23, 24, or 25,” Larkin said. “While the ATA is endeavoring to get an apprenticeship program approved in Washington, to alleviate this issue, I, for one, believe the insurance industry will nix this idea.” Larkin notes the likely views of the insurance industry on teens driving trucks. “Many of us were teenagers once ourselves,” he said. “Still others have watched their children move through this awkward stage in life where decisions are entered into lightly and consequences are seldom considered. Do we really want 18-year-olds piloting an 80,000-pound rubber tired missile down the highway?”

Lack of a career path. Larkin argued that the lack of a career path for advancement hurts recruiting efforts. “What am I supposed to do, master my profession by the time I turn 19, and then continue on in the same manner for another 40 or 50 years?” he said. “Most Americans aren’t focused enough to even contemplate this type if potentially mind-numbing career. Of course, a company driver could move on to become an owner-operator, a fleet operator, and the owner of a small trucking company. But that is harder to accomplish than it used to be given today’s hyper-efficient big fleets and the never-ending stream of tax and regulatory hurdles erected by multiple layers of management.”

Larkin concluded that basic economics and pay scale are a factor, but it is not the only factor.

“Econ 101 is a factor here, but when one carrier moves to increase driver pay or to enhance bonuses and incentives, others typically match as a defense mechanism to help keep their drivers from jumping to the carrier that just increased compensation,” he said. “Until the industry can figure out how to bring new, competent folks into the mix here, our beloved industry will be haunted by the challenges associated with driver recruiting, training, and retention, I am afraid. Unless, of course, fully autonomous operations are closer than we think.  But, my view is that just about all other supply chain functions will be automated first.”

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  1. Phil

    Most is pay related But then you have the under training that probably has the effect of making 7 out of 10 leave ! As they either get lost and feel helpless ! Or hit something trying to back in and get fired ! But the biggest thing is money ! You take a new driver ! They are broke you put him or her in a truck usually with someone ( not all but a bunch ) who are not quialfied to train as chances are they can just barely make it themselves ! So they send them out for 2-4 weeks 2 weeks or more before they get paid ! But by then they have drawn most of their check because of the need to eat and live on the road ! The little bit left ? If married or in debt that goes into their bank account discourages the hell out of them ! Then they turn them lose own their own and still broke not yet trained well enough to back into most parking spots or at a shipper / receivers ! So they get exhausted and the first thing you know they make a mistake and are fired or quit ! So now do you get it ?


    The drivers shortage is caused by the industry itself,let me clarify this statement.If wages were much higher new recruits would be beating down the doors for jobs .Most wages are set by what the autoworkers are making at any given time,what makes them so important in myth the auto industry is the ENGINE OF THE EcONOMY! In reality the trucking industry is the true engine of the economyIt is a proven fact when trucks stop the backlash is people are sent home due to parts shortages.In 1989 several international bridges were block for three days FORD GM AND CHYSLER all lobbied the US AND CANADIAN GOVERNMENTS TO END BLOCKADES which was done and legislation banning all future blockades or convoys.What does an auto worker have invested in their job A $3.99 LUNCHPAIL AND A LITTLE LUCK LANDING THE JOB,they whine and cry our job is repitius and boring.ON the other hand what does a truck driver have invested in his or her job thousands of dollars in training medical renewals of licence and special material handling coursesusualy at his or her own costs.Try sitting in a truck day after day shifting gears now that is repititus and boring.To top it all off a mistake on a drivers part can result in thousands of dollars in fines or jail.I have never heard of an auto worker jailed for a mistake at work!Unfortunately the only way to get an increase in wages is some type of action!Since we ve been stripped of any powers to blockade or convoy by governments at the request of the general population and large corporations!LEAVES ONE ALTERNATIVE SIMPLY PHONE IN SICK FOR 5 DAYS STRAIGHT IF EVERY DRIVER FROM THE DELIVERY DRIVER ON UP TO LONG HAUL DRIVERS DID THIS.IN 4 DAYS THE NORTH AMERICAN ECONMY WOULD IMPLODE.NO GAS DIESEL GROCERYS ETC THE GOVERNMENTS WOULD GIVE US ANYTHING TO GO BACK TO WORK.SURE PEOPLE WOULD GET FIRED FOR EVERY 10 A COMPANY FIRED THEY WOUDL HAVE TO REPLACE TEN

  3. Tyler Bassett

    If you calculated pay per hours worked peopl realize really fast they are getting crud. 80hr work week no overtime? Or about 110 hrs a week if you did pay overtime for 1200 or on a good week. School bus pays more and they cant find drivers. Add in the cost to buy everything at high truck stop prices in and your spending a few hundred a week just on food. Its pay. I have a cdla and make more driving local b class delivery in ny. 25per hour and i can stop for lunch and get payed to sit and enjoy my food. I will never work cpm its for idiots. To many you dont get payed in that. Im checking out your truck you should be paying. Im fueling you should be paying. Im stuck in trafic you should be paying. Thats the real reason people need drivers. Because they dont pay for that.

  4. WillieBill

    I have been a teacher at several CDL schools. Truck Driving Schools are attracting anyone that will qualify for federal, or state government financial assistance. They don’t care who it is. Truck driving isn’t like it used to be where people with a grade school education could survive and thrive in it. If a person struggled through high school, or didn’t finish it, chances are they won’t be successful in the driving profession. The driver must be a quick, logical thinker, and able to make good decisions without the help of management. Success in the job requires a sharp aptitude. The driver must understand the rules for each state operated in, abide by federal DOT, company regulations, and know what to do when confronted with a potential hazardous situation. He should have at least a general understanding of the vehicle he drives, and the technology that he is required to operate like (ELD’s). Not every student falls in the bad category, but based upon experience this is what is being attracted to this profession. (Students will tell you they chose tuck driving because they were told it was easy!) You can’t expect a person that was a terrible student, spent most of the time behind bars, has a bad attitude towards work, people, and life in general to suddenly become a superstar worker, much less a supertrucker. He won’t suddenly abide by the rules just because he has a CDL.
    The 4 to 6 week CDL programs at many schools are set up as money making CDL mills. A good education is out the back door. Some of the students have been given certificates of completion, and graduated from a Community College Truck Driving Academy without ever having dropped, or hooked a trailer.
    Someone thought (anyone)-people that chose to be the lowest of the low in society could drive a CMV, and learn it in six weeks. Someone thought a person could walk out from a 10 year jail cell, or a person that never held down any type of job, or someone that decided they didn’t like grade school and dropped out could walk direct into a CDL/A driving position. Better candidates need to be attracted to the field.
    100% turnover? Driver shortage?
    Should anyone be surprised?

  5. terry clear

    If a company has endured decades of 70, 80, or even over 100% turnover in their drivers, the problem is not a driver shortage. The problem is the current job as designed is not a job people want to keep.

    Redesign the job and you will have plenty of highly qualified drivers that will stay with you for many years.

    Or, continue to whine.

    Repeat after me, "There is no driver shortage"

Comments are closed.

Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]