Busting the ‘Trucker Shortage’ Myth

Busting the 'Trucker Shortage' MythPhotograph by Robson Hatsukami Morgan

One could be forgiven for thinking that U.S. trucking companies are having a hard time finding enough drivers to meet demand. Consider the following headlines, just from the past year: “America has a massive truck driver shortage.

Here’s why few want an £80,000 job.” (The Washington Post[1]) “Facing a Critical Shortage of Drivers, the Trucking Industry Is Changing” (NPR[2]) “Truck Driver Shortage: No One Behind the Wheel” (Supply Chain Management Review[3])

Despite a wealth of anecdotes, there is precious little actual data available to support the underlying hypothesis. If companies were struggling to find truck drivers, wages in the sector ought to be rising rapidly relative to the rest of the economy. Think of the six-figure salaries paid to roughnecks working in the oil patch (and their barbers[4]), for example.

Yet, since 2011, average hourly wages for production and nonsupervisory employees in truck transportation have grown by 21%[5], or 2.4% each year, on average. Over the same period, hourly wages for nonmanagerial workers grew by 20% across the entire U.S. private sector[6], or 2.3% a year on average. Trucker wages have grown rapidly since last spring, but that simply compensates them for the wage stagnation that occurred from June 2016 to March 2017, and again from October 2017 to April 2018.

Since the start of 2016, truck driver wages are up just 2.3% at an annual average rate, compared with 2.7% for nonsupervisory workers across the U.S. private sector. The American Trucking Associations, an industry group, has long argued that there is a shortage of truck drivers for long-haul routes. While the group’s chief economist wasn’t available to comment for this article, the ATA’s public-relations office referred Barron’s to its regular “Truck Driver Shortage Analysis.”[7] The report is vague about its methodology, simply asserting that a shortage exists and will get worse over time as demand rises and existing truck drivers retire.

While turnover at many trucking companies is high, the ATA notes this is mostly caused by “drivers moving from one carrier to another.” Meanwhile, the ATA’s most recent compensation survey[8] suggests that driver pay is rising at a rate comparable to that of workers in the rest of the U.S. private sector. The unemployment rate for workers in “transportation and material moving occupations” has dropped considerably since the worst of the financial crisis, but it remains above the overall jobless rate.

Moreover, the gap between the overall unemployment rate and the unemployment rate for workers in transportation has been broadly stable over the past 20 years[9] after accounting for seasonal variation. A valuable new study[10] from the Bureau of Labor Statistics confirms that there is not, and has never been, a serious shortage of people willing to work as truck drivers. In fact, they find that “the market for truck drivers works about as well as that for other blue-collar occupations.”

Moreover, truck drivers are somewhat less likely to leave their job, compared with other workers in similar fields with similar demographics. Those who leave jobs at dedicated trucking companies tend to take other jobs within the transportation and warehousing sector, often ending up in a managerial role. Unsurprisingly, workers who take up truck driving do so because the pay and hours are better than at their current job, while workers who leave do so because they can do better elsewhere.

The absence of labor shortages also explains why the data do not indicate meaningful increases in the cost of truck transportation services. The producer price index for long-distance trucking[11] has grown just 1.6% a year since the start of 2008. While prices are up about 4.3% a year on average over the past three years, this largely reflects rising fuel costs.

Prices fell by about 1% from the end of 2011 to the beginning of 2016. In fact, prices are down more than 2% just in the past couple of months, thanks to the recent decline in oil prices. The producer price index for local trucking[12] has behaved slightly differently, but overall presents a similar picture.

Since the start of 2008, costs have grown just 1.5% a year on average. Over the past three years, the index has grown at an annual average rate of just 3.3%. Another way to see this is to look at data on truck rates net of fuel surcharges, as can be seen in the following chart (courtesy of CreditSights):

There was a meaningful spike in costs in 2017, partly to offset years with essentially no price increases, but the latest figures show that truckload rates net of fuel surcharges stopped rising in 2018.

Overall, costs excluding fuel have not been growing out of line with other prices in the rest of the economy. As the CreditSights analysts put it, “While anecdotes of truck driver shortages and high logistics costs are likely to continue, it seems like transportation cost/activity growth has peaked, which may eventually provide relief for retailers and limit core goods inflation.” Write to Matthew C.

Klein at [email protected][13]

References

  1. ^ The Washington Post (www.washingtonpost.com)
  2. ^ NPR (www.npr.org)
  3. ^ Supply Chain Management Review (www.scmr.com)
  4. ^ and their barbers (www.wsj.com)
  5. ^ have grown by 21% (beta.bls.gov)
  6. ^ the entire U.S. private sector (fred.stlouisfed.org)
  7. ^ “Truck Driver Shortage Analysis.” (progressive2.sef.playstream.com)
  8. ^ most recent compensation survey (www.trucking.org)
  9. ^ the past 20 years (fred.stlouisfed.org)
  10. ^ A valuable new study (www.bls.gov)
  11. ^ for long-distance trucking (fred.stlouisfed.org)
  12. ^ for local trucking (fred.stlouisfed.org)
  13. ^ [email protected] (www.barrons.com)

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