Bucking trends in industries with similar workforce demographics, self-employed truck drivers earn more per hour and work more hours for more money than company drivers who are paid per mile or per hour, according to an analysis conducted by Aaron Terrazas, Convoy’s director of economic research.
His report, based on the U.S. Census Bureau’s American Community Survey (2015-2017), and Current Population Survey (1990-2018) casts light on why drivers might decide to work for companies or strike out on their own.
“Despite the risks, the upside for truckers who want to be self-employed is clear,” Terrazas writes. “Being an owner-operator can be both more lucrative and provide more autonomy for the best drivers.”
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.
CM Evans
The focus of the article in my opinion is on the Top 10% of IOO’s. Good driving records equal lower insurance costs. Industry experience to make good business decisions and as mentioned in the above comments taxes & investing. The Top 10% rolling those large cars have proven relationships to find freight/trade into new equipment from an equitable position/focus on paying less taxes to increase their income.
John Broadis
Overtime may be due to getting around HOS? Seriously? Company drivers don’t maintain their vehicles, do the additional paperwork required to run a small business or find the freight to keep that truck running to make that extra $11-19k per year.
As a writer for a ťrucking paper your ignorance is staggering.
John
Soooo untrue…
Who ever doesn’t drive a truck can not talk or write about anything when it comes to trucking. So please stop, keep your political and double face writings and statistics to yourself and to those that you fork for.
Corey Altman
This entire article was off track. 46 hours a week? Where do you come up with these numbers? As an owner operator and still making truck payments even after all expenses including 22% for taxes, I still cleared over $17k in the past 12 weeks alone. Let me also make clear that my truck payments are over $3k a month.
Ion
Lol I make twice more that I used to get when I was company driver. And all my friends do.
Ross
O/O works best for me. I’ve been a company driver, a trainer, and a yard manager. I’m single and work as much as I did when I was a company driver. I made $9286 EBITDA in June, after expenses ( with honest logs). Just like OTR is not for everyone, neither is being an O/O.
Dave
Being a true O/O is far better than being a company driver. O/O net double sometimes triple the amount of a company driver and o/O work far less. That’s after expenses and everything else. Yes it’s more paperwork but the write offs alone. No force dispatch, go home when you want for how long you want. Go where you want to go. If you want to stay in the south during the winter months then you do that. If you’re unhappy with the job you go to another carrier that pays good. Most O/O don’t get paid by the miles but by % pay. O/o can work local and take home $2k per week after fuel and insurance. After all the write off hardly pay anything in taxes. If you’re going to be away from home and your family maximize your income. You should set up your own retirement plan and your own medical. Or if you have a wife who works get on her insurance. Or if you’re a really good o/o and your wife works for your company ? and makes a good salary that also helps when tax time comes, For you guys afraid of the taxes.
Globetrotter
If you buy a truck you better be ready to pull Max shifts and a minimum of 3500 miles a week. Think Max efficiency all day everyday… It’s not easy.
Better yet is to get paid percentage and run HARD coast to coast running reefer.
Unless your truck is paid off Max logs all day.
Where a driver is grossing 6-8k a month the o/o takes home 12-18k depending on payments and fuel economy.
This business is not ez and being an oo isn’t for everyone, that’s for sure, the stress of having an older truck is crazy…
Is it worth it?
Lots of sacrifice for owners but it’s worth it if you know the formula.
Ross
Globetrotter, your comment is the most accurate. Most of the comments regarding this article are merely personal justifications of the writers’ choice.