The term “driver shortage” gets thrown out by the powers in the industry to explain nearly every major problem or issue that our industry faces- Spot-rate volatility, cost inflation, companies missing their earnings due to unseated trucks, etc. Driver shortage has become the “go-to” explanation to explain every problem.
But the reality is, there is no driver shortage. It’s 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 a 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 industry likes to point out that someone can make a good living without a college degree. Forbes recently reported that drivers make an average of $52,280 per year and driving salaries saw the second fastest growth in incomes of all jobs in 2017. What isn’t said in these numbers is what it costs to be a driver. Being over the road is expensive- both in quality of life factors and in cash.
Drivers spend a lot more money on basic goods than the average household, due to the lack of choices on where to shop. Food and basic necessities at truckstops are far more expensive than at alternative shopping locations. Back in 2013, CDLLife did a comparison of common goods purchased at truckstops compared to Walmart and found that prices at truckstops go for as much as 20% higher.
Truckstops generate nearly 50% margins on items purchased in store, making them among the highest margins in retail goods- far out ranking super markets and big box retailers. Truckstops don’t have to compete with Amazon and are not under normal pricing and competitive pressures, due to the nature of the transient driving labor-force.
Plus, there are far fewer choices on goods and the selection is quite narrow. Combine this with higher healthcare costs, lower quality of life factors, and other things that make driving miserable at times, it is no wonder that carriers have a problem filling the seats, even with marginally higher wages.
With fewer people wanting to drive a truck, the industry is forced to pay more to compete with other sectors that have more attractive lifestyle factors like construction, electrical work, maintenance, etc. The energy sector has also been on a tear of late as oil prices recover. Oilfield work might be difficult, but it doesn’t have the lifestyle issues typically seen in trucking. Even in certain markets, trucking is competing with fast-food jobs, as cities raise minimum wage standards to $15/hr.
The government, education, and media industries do not help, convincing young people that a college degree is the only way to fit the image of a respectful member of society. Once a kid goes to college and is saddled with tens of thousands in debt, they come out convinced that they should work in a career with substantial upward mobility. Unfortunately, driving a truck does not meet this image.
In a normal cycle, immigration would provide a degree of relief, but with that seems to be a no-starter in our polarized political environment.
We are currently experiencing the tightest labor market since World War II and a tax cut will further accelerate demand in the commercial and consumer sectors. Trucker wages will go up over the next year. Don’t be surprised to see 10%+ driver pay increases across the industry as trucking companies compete for a shrinking labor pool.
What we face isn’t a driver shortage- its an economic opportunity shortage and the only way to fix it is with cold-hard cash.
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