Today's Trucking
opinions Mike McCarron

It’s time for hourly driver pay

Posted: November 7, 2018 by Mike McCarron

The trucking industry has trouble finding drivers, and it’s no secret that pay is part of the problem. The fact that truck drivers bring home the same dough as they did 40 years ago, when the cost of living was half of what it is today, certainly has something to do with it. Carriers have increased driver pay lately, but all those empty seats indicate that reform is still needed.

I’ve spoken to many carriers that are switching to an hourly pay model for highway drivers. An hourly wage gives drivers a predictable income and, considering that it’s the way nearly every other industry pays its workers, the model can help carriers compete.

Michael Belzer, associate professor of economics at Wayne State University, sums it up this way: “Driver pay continues to be a problem. Just pay people for all their time and the problem is solved.”

Driver point of view

The most compelling argument for an hourly wage comes from drivers themselves who are literally tired of getting paid only when the wheels are turning. With per-mile pay, they’re incentivized to keep working and cover more distance in a day regardless of how they feel.

I’ve talked to drivers who are frustrated that they never know how much money they’re going to make from week to week, which places financial stress on their families (who they rarely see).

Finally, drivers don’t like being penalized for delays and other situations beyond their control. They wonder why they should essentially work for free when at the wheel but stuck in traffic, while the dock workers waiting for them are on the clock and doing nothing.

Technology and efficiency

One of the concerns carriers express about the per-hour model is how to keep drivers motivated and productive when they can earn more for taking longer to complete a task. Many small carriers still rely on drivers to weed out and report inefficiencies in the system, particularly at consignees’ docks.

A carrier who has been paying highway drivers by the hour for 18 years tells me this thinking is hogwash. Technology allows dispatchers to digitally peer into a truck cab at any time, from anywhere on the planet. If a driver takes seven hours to complete a five-hour run, the carrier will know instantly. Taking the onus off the drivers and using technology to manage their performance could be the tipping point to support a change to per-hour pay.

Safety and snow 

The 14-hour clock and winter weather represent the perfect storm for unsafe highways. One of the benefits of hourly pay is that drivers feel like they don’t have to race around in a panic to make up for lost hours or meet deadlines.

To improve safety, carriers that pay by the mile can switch to hourly pay during inclement winter weather. That kind of creative thinking is a small but important step in the right direction.

Administrative burden

For mid-sized and large carriers, switching to the per-hour model can bring unexpected administrative costs. In fact, several carriers I spoke with have not made the switch because of this concern.

No doubt, switching hundreds of drivers from per-mile to hourly pay would be a massive headache. But the short-term pain “might” be worth it to solve a chronic driver shortage.

I say “might” because the jury is still out on hourly pay. Carriers that have made the switch and love the system could not offer me tangible proof that the model helps retain or attract drivers. Smart carriers who know a lot more about hauling freight than me are skeptical it will change anything.

Something has to give, though. “Carriers and shippers will consume an infinite amount of free labor as long as they can get away with it,” Belzer says.

In today’s job market, they can’t get away with it much longer.

Mike McCarron is the president of Left Lane Associates, a firm that specializes in growth strategies, both organic and through mergers and acquisitions. A 33-year industry veteran, Mike founded MSM Transportation, which he sold in 2012. He can be reached at mike@leftlaneassociates.ca, 1-844-311-7335, or @AceMcC on Twitter.

 

Share

  • This field is for validation purposes and should be left unchanged.