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ATA: Driver pay increases could come back to haunt carriers

Chief economist warns recent wage bumps raise red flags for next economic downturn

Safety group warned of pay-bump downside. (Photo: Jim Allen/FreightWaves)

Trucking companies outbidding each other for drivers using salary and per-mile wage increases are leaving themselves vulnerable when the next economic downturn hits, the American Trucking Association’s chief economist warns.

Bob Costello told the Motor Carrier Safety Advisory Committee (MCSAC), part of the Federal Motor Carrier Safety Administration, that while the ongoing pay increases in the industry are good thing and are necessary, the slim margins generated in the trucking sector – 5% on average – can be concerning within the context of such increases.

“I’m concerned about the next downturn. There are a lot of pay increases going on, but what happens then when rates go down next time?” Costello said on Tuesday. “Those [increases] are hard to take back and puts a lot of fleets under pressure. We could see fleets go out of business because of that, although I don’t see it happening for a while,” he said, adding that ATA is not forecasting the next downturn until after 2023.

Costello commented on the issue while presenting to the committee the latest ATA survey data on driver turnover. Turnover rates for large for-hire truckload carriers (at least $30 million in annual revenue) fell from 90% in 2020 to 87% in the first quarter of 2021, according to ATA, while the rate for small truckload carriers increased from 69% to 71% in the same period. Driver turnover in the less-than-truckload sector increased from 13% to 18%.

“The majority of the turnover is churn in the industry,” when drivers move between companies in pursuit of better pay and working conditions, he said. “When competition heats up for drivers, carriers aggressively go after each other’s drivers because of the desperate need out there.”

For-hire carrier power unit fleet trends (large fleets are at least $30 million annual revenue). Source: ATA

When times are good, carriers are eager to grow their fleets and attract the best drivers, which means they roll out the best perks and incentives to get the drivers to join their fleet. But ATA’s most recent survey found this largely not to be the case in the current market upturn. In the truckload sector, fleet sizes are down 6% and 4.9% for large and small carriers, respectively, so far in 2021 (see chart, above). LTL fleets are also down slightly year-to-date, by 0.9%.

Costello pointed to three potential reasons, including the inability to add drivers, companies selling parked trucks and leased-on independent contractors shifting to take advantage of soaring rates in the spot market instead of hauling contract freight.

Costello’s warning on the effect of pay increases on company stability echoed similar comments in June 2019, when he noted that the next recession could be particularly difficult on smaller carriers that had opted to boost pay for drivers. He noted that while insurance costs were a factor, wages are the carriers’ largest expense, and pay increases are extremely difficult to walk back.

Costello had predicted at that point that “a large number of trucking companies” would go out of business. By the end of 2019, nearly 800 had declared bankruptcy, according to some estimates, more than doubling the count in 2018.

Click for more FreightWaves articles by John Gallagher.


  1. FLE+LLC

    Wages in the trucking industry have been stagnated for the last 40 years.
    A significant wage increase is long overdue and thankfully the shortage during Covid and volatility of the labor market have pushed competition heavily into increasing wages. Thank goodness.

    The side effect of this increase is going to cause many carriers to go bust when the next severe downturn happens which is probably going to be in the fall of 2022 when they can no longer politically support the ongoing scam demic of the Corona virus.
    The increasing amount of heavy pushback against the coronavirus scam is going to start swinging the economy downward this fall with it having the largest effect in the next 12 to 18 months and we will see trucking fall off the map and a lot more companies going bankrupt again.

  2. Kyle Haines

    There is no difference between the carriers lobby groups whether it be the American Trucking Association or the Association of American Railroads for example. All they care about is enriching the carriers at the expense of the employees with long hours, abusive working conditions and as low pay as possible.

  3. Bruce Wright

    If you look at what these carriers are advertising, you can make UP TO X amount per mile. The base is still in the 50 cents per mile, then comes the bonuses, real simple to raise the mpg expectation and not pay it. Oh you didn’t get a inspection this quarter no safety bonus for you.
    If you have it in your rate to pay X amount, just pay it, quit the games.
    In the 80’s we were still running 55mph, HOS were simpler, I didn’t ever make 50k back then, but we had a good living and excellent health benefits. Freight rates aren’t going to tank, with this administration screwing with everything in the supply chain Americans are finally going to start paying some real prices for things.

  4. CM Evans

    You can expect the current wages to top out where they are as the border is open now and the Mega carriers will be working to get those folks behind the wheel.

  5. Richard Davis

    Not a surprise that the FMCSA and the ATA want to keep drivers wages down. Neither is really worried about safety. They like slave labor or as close to free as possible. They can control people better that way.

  6. Tcs53

    This is an article based in stupidity. The author has spent too much time in DC. Driver pay is finally starting to go up and this nitwit is sounding an alarm that doesn’t exist. I wonder how many years the author has spent on the road? I would say none. What a STUPID piece of journalism.

    1. Richard Davis

      It’s the ATA and FMCSA that are stupid, not the reporter/author. They are the ones that think it is a mistake to pay truck drivers a fair wage. The ATA is in business for big business and the FMCSA is just there for control. You can control people easier if they have no money.

  7. Economist

    God forbid we raise driver pay, companies might go under when markets dive again!

    You know? Pay in 1980 for an OTR driver was about 50k a year. Adjusted for inflation, that’s 125k today.

    Wages are still in the 70k range. We still have a *long* way to go. And the shippers, and the general public, society at large, will just have to either eat the cost of paying drivers a historically appropriate wage, or they can lower hiring standards like drug testing and physical fitness requirements!

    1. Gordon

      See where the CEO’s of a Trucking Companys lives and the pay they receive!!! And let still tell the Drivers to take less pay because the Companies are going broke. Has a driver myself we should all shut down for only three days. The pay would be 1.00 cpm.

    2. James+Stephens

      How many actual hours worked / miles traveled was required to make the 50K in 1980 and how many actual hours worked / miles traveled is required to make 70K today?

      1. Mike

        Roughly the same hours, I’ve never killed myself out here. Yes, I fudged the log book to do things like avoiding Friday traffic in Chicago, like I am doing right now. I remember making $20 an hour back in the early 90’s, most pay out here starts at $17 an hour and up, which is what my local Wendy’s and McDonald’s pay their starting help. It is getting rare to find anyone willing to pay much more than $21 an hour to drive a truck. As far as mileage pay, .50 seems to be the standard mileage pay, but I made darn near that in the early 2000’s, twenty years ago. So, you do the math. Freight rates, about the same, actually less when adjusted for inflation, quite a bit less.

      2. Richard Davis

        It’s probably 50/50. In the 80s you had to run more to catch up on lost time at the docks. Today you probably sit at the docks longers hours for free, but you can,t make that lost pay up because of ELDs. Detention has steadily hitting worse over the years.

    3. Gordon

      To the big trucking companies. Take my wife my kids and my dog and house. Please pay me $5.00 a day so I can eat every other day. I will drive your equipment because it is NICE for 00.50 per mile. To the CEO’s of the company … What are you having for dinner?

Comments are closed.

John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.