Why Carriers Will Set Sights on Hourly Wage to Attract, Retain More Drivers
Empty space lines store shelves, and the economy’s future hangs in the balance. While freight moves around the globe, there’s a critical problem coming to light. The truck driver shortage is worsening, and everyone is trying to figure out the best solution. Many have argued that keeping drivers happy is the best step to overcoming it. However, there’s another obvious problem.
As FreightWaves reported, DOT Secretary Pete Buttigieg said, “my department estimates that 300,000 people leave that field every year. So we have to make sure that not only are we recruiting people into the field but that it’s not a leaky bucket. Rather, we make sure that the working conditions and the compensation reflect the fact that those jobs are absolutely essential.” But what does that mean?
In short, carriers need to find a way to get more drivers and make the pay commensurate with expectations. Still, what solutions might help to solve this existential trucking crisis?
My money is on changing how drivers operate and get paid. Allow me to explain.
Typical truckers are paid by the mile, and a few factors influence that rate. One is the type of freight they haul. For example, goods that are perishable or hazardous will pay more. The distance the truck is traveling is another factor; the farther it goes, the higher the rate. And finally, the logistics of the move — like whether a driver has to wait for a load — can also affect their pay.
Yes, a host of accessorials (for example, dwell surcharges) can help pay for extra trucking companies costs. Still, unless drivers are owner-operators, there’s no real way to know if the carrier passes those surcharges along to their drivers.
Consequently, the payment model for trucking must evolve. Truckers need to get paid for every minute they’re on duty, not just the hours in the cab and on the road. They need to be paid for their time inspecting the truck, checking the load, and beyond.
There are many other factors to consider when looking at the pay for truck drivers. One of the primary considerations is the number of miles that a driver can cover in an hour. Some companies pay by the mile, while others pay by the hour. It’s important to consider both options when looking at pay.
Another factor to consider is the type of work that a driver will be doing. Some jobs are more dangerous or difficult than others, which should factor into discussions regarding driver pay. Benefits and bonuses are also important considerations for drivers. But it all comes down to two primary issues: what is the driver worth to the company, and how can the company ensure drivers feel paid fairly?
According to the U.S. Bureau of Labor Statistics, truck drivers make a median wage of $47,130 annually. Still, differences in point of origin, destination, and other criteria can push that well above $69,000. During times of disruption like the ongoing COVID-19 pandemic, those wages can skyrocket.
Unfortunately, higher rates can be difficult for carriers to manage, so instead of figuring out an all-in mileage rate for each move, a better solution might be using hourly pay models.
Hourly pay benefits for truck drivers are important. Drivers often work long hours, and they must be compensated fairly for their time. Some companies offer hourly pay rates, ensuring that drivers get paid for every hour they work, including if they are sitting in traffic, waiting at a shipper, doing a pre/post-trip inspection, or fueling. This can help ensure that drivers are paid correctly and do not worry about rounding up their paychecks. Additionally, hourly pay rates can help to prevent overtime pay violations.
Now, a few other pieces of the puzzle are left to address.
While the Federal Motor Carrier Safety Administration continues to monitor potential hours-of-service regulations, offering an hourly rate means carriers could give truckers an extra incentive when necessary. Since truck drivers are exempt from overtime pay requirements, it builds more flexibility for carriers that need to extend capacity in their networks.
For over-the-road truckers that get to come home every other week, other forms of payment, such as per diem rates for food and lodging, can be added to yield an even bigger paycheck.
With that in mind, the continuing evolution of technology in trucking also makes paying by the hour much more manageable.
Using telematics within existing ELDs, drivers could spend less time worrying about clocking in and out and simply have their hours automatically uploaded to the company systems.
With all that in mind, there’s one final point to address.
While primary carriers and their trucker-employees can realize substantial hourly pay benefits, maintaining transparent and flexible payment options is critical. If the hourly option isn’t acceptable to the driver, the carrier might lose that driver. And that’s not an acceptable outcome at any time, but especially during the height of the ongoing disruption that is game-changing for today’s freight world.
In other words, carriers need to have both an hourly and cost-per-mile model to leverage. Using data, carriers can ensure that whatever model is used holds win-win-win scenarios for the shippers, carriers, and drivers alike. That’s the real secret to attracting and retaining drivers in the industry, and that’s why I believe that hourly employment for truck drivers is going to become the ultimate solution to the driver shortage too.