The Coming Driver Shortage, Part 2: Who Will Be Driving Your Trucks?
May 2011, TruckingInfo.com - Feature
That trucking is about to experience its worst labor shortage ever should as come no surprise. Our fate was cast years ago, though a few cruel twists have conspired to make it worse than it otherwise would have been.
Over a series of several articles, Heavy Duty Trucking
is looking at the causes of the pending driver shortage, and seeking solutions to minimize its impact. We say minimize, rather than avoid, because it is inescapable. Drivers are leaving (or have already left) at rates faster than we can replace them. We simply haven't the time to recruit enough drivers to satisfy the coming demand.Last month, we looked at the regulatory influence on the labor pool:
hours of service, the new CSA enforcement program, electronic onboard recorders, etc. Each of those has some capacity and/or productivity-limiting potential. This month, we look at demographics - the physical characteristics of a population such as age, family size, education, occupation and inter-generational preferences - and how inevitable changes in our population will affect our staffing requirements and ultimately our ability to meet service demands.
It's not just that truckers are getting older and approaching retirement age that stands to hurt us, but also that younger people in the workforce are a) wired differently, b) fewer in number, and c) have far more career options than the baby-boomer generation had.
Simply put, we'll soon begin to lose larger and larger portions of our older drivers, while fewer and fewer young people are choosing to drive trucks for a living.
With the baby-boom generation reaching retirement age, some economists predict labor shortages of 10 million to 15 million workers between now and 2020, according to a 2009 report from the Sloan Center on Aging & Work at Boston College.
A report prepared by Global Insight Inc. for the American Trucking Associations in 2005 comes to a similar conclusion, but its observations are more specific to trucking. The report, "The U.S. Truck Driver Shortage: Analysis and Forecasts," noted then that "the size of the white male population of ages 35-54 - a demographic group that currently provides over half of all truck drivers - will decline by over 3 million persons between 2004 and 2014."
By 2015 or 2020, we'll be experiencing the greatest exodus of that particular bunch of workers. They were 35-54 when ATA did the study in 2004. Today, that group is between 41 and 60. (The Owner-Operator Independent Drivers Association, for example, put its members' average age at 53 in 2010.) By 2015, the group that makes up half of today's workforce will be between 45 and 65.
Visualize a wave with the peak moving across time, and you can see how economists predict aging trends. Of course, what usually follows a peak is a trough. The generation behind the baby boomers, called Generation X, is a smaller group. In its 2018 Labor Outlook, the U.S. Department of Labor projects the number of workers 55 and older to increase by 29.7 percent, more than any other group (the peak of the wave). Those 45 to 54 are expected to drop by 4.4 percent (the trough).
Yet in its November 2010 Industry Sector Report, "Responsive Action Steps for the Transportation and Warehousing Sector," The Sloan Centers says as many as 77 percent of the employers surveyed for the report "had not analyzed projected employee retirement rates or assessed employee career plans."
The implication, of course, is these industries - including trucking - are basically unprepared to deal with the pending labor shortage, or at least, have done little to plan for it. As far back as the mid-'80s, demographers were warning us about the aging population and its effect on future labor markets. The future is here, but the writing has been on the wall since the end of World War II.
One of the cruel twists alluded to earlier was the Great Recession of 2008-2009. If, prior to the recession, there had been much consideration given to keeping those older drivers in the industry, those plans are largely out the window today.
According to Mike Hinz, vice president of driver recruiting at Schneider, a lot of drivers left the industry during that period, either through downsizing or bankruptcy at the fleet level, and through the high rate of failure within the owner-operator community.
"We've rolled into 2011 with fewer drivers than we need," Hinz says. "The driver shortage is here again, and it is significant."Courting the casualties
A bird in the hand is better than two in the bush, they say. Today, the bushes are full of birds. The challenge lies in getting them back in hand. Over the course of the recession, an estimated 150,000 to 175,000 trucks - maybe more - were idled by business failures. Donald Broughton, trucking analyst and managing director of Avondale Partners, reported that in the first nine months of 2008 alone, 127,000 trucks (6.5 percent of the fleet) were sidelined. We know more carriers failed in 2009 and 2010.
Presumably, the people who once drove those trucks are still out there, but not all of them will be rehired. Some will have found other work, some will be weighing extended unemployment benefits against drivers' wages, and still others would be deemed unqualified by their safety records. Of those that could be rehired, the challenge will be getting to them in time.
Noel Perry, managing director and senior consultant with FTR Associates, says getting the recruiting infrastructure in place and running will take time. Many carriers folded up their recruiting departments during the recession, he says. To make it worse, in these post-recession days, many are delaying reopening the recruiting departments because they are cautious about jumping back in too soon.
"Recruiters were laid off, schools closed down; think about it. How long will it take to get those up and running before the intake system can begin to function?" he asks. "It's all about the capacity of the pipeline right now. There are people out there we can hire, but it'll take time to get them into the system."
Then the next stage of the challenge arises. Perry says there's roughly a 3-to-1 hiring-to-retention ratio in the industry.
"You have to hire, screen, and train three drivers before you get one who will stay with you," he says. "Before you get to the hiring stage, you may have to interview three drivers to get one serious prospect. And to get one to interview, you might have to talk with three of four potential candidates."
As a result, explains Eric Starks, president of FTR, "We expect the industry can hire only about 100,000 drivers into the market each quarter. But what we're going to be looking at is demand for drivers going up over the next several quarters and is going to outpace that supply line.
"Look at it like a funnel. Even if you have a million people that want to come into the industry, you can only physically get 100,000 a quarter. These guys are playing catch-up now. We don't think they can do that in a timely enough fashion to help the industry substantially."Keeping existing talent
There's a lot to gain from maintaining your existing workforce, but it's a question now of how long they will be around.
It's widely assumed that our graying workforce will be making for the doors as it reaches "retirement age." But Chad Minnich, communications coordinator at Boston College's Sloan Center on Aging & Work, thinks the magnitude of the retirement boom might be exaggerated.
"Our research shows about 75 percent of those eligible for retirement actually want to continue working, and not always for financial reasons," he says. "They want to stay mentally, physically and socially active."
There are two trends that intertwine here, Minnich says. "There's also a sizable group w