BLS Associate Administrator Kristen Monaco discusses why the driver shortage is really about driver turnover. 
 -  Photo: David Cullen

BLS Associate Administrator Kristen Monaco discusses why the driver shortage is really about driver turnover.

Photo: David Cullen

A government official expert at analyzing labor trends contends that trucking is not experiencing a driver shortage. Kristen Monaco, Ph.D., Associate Administrator of the U.S. Bureau of Labor Statistics’ Office of Compensation and Working Conditions, sees the problem rather as one of painful turnover in one segment of the industry.

Pointing out that as an economist she has been studying wages with a focus on transportation labor markets for some 20 years, she began her presentation by slyly stating, “If I had a dollar for every time I heard ‘truck driver shortage’, I wouldn’t be here doing this.”

Speaking on Sept.11 at the FTR Annual Conference in Indianapolis, Monaco gave her own take on the driver issue that for years has been central to any discussion of the challenges facing over-the-road trucking.

The gist of her argument is that trucking isn’t suffering from a labor shortage, but carriers in a key segment are struggling to fill seats emptied over and over by drivers seeking a better deal down the road.

Monaco said that the dynamic of finding and keeping drivers is cyclical, not structural, and therefore will balance out at some point. “When labor supply and demand meet, you have equilibrium. The market tends to return to equilibrium in the aggregate.

“The labor market will react to wage increases,” she continued. “But a shortage is different than experiencing turnover. Annualized [turnover] rates in other segments of trucking are normal, but they are higher in truckload.”

Monaco said truckload’s experience with average turnover of around 100% indicates drivers “may leave rapidly, but they don’t often leave the industry.”

What happens is that “once carriers start recruiting [to combat churn], turnover becomes permanent. Turnover works as a market shock absorber.”

She said that 75% of truckload freight is under contract rates “and those are sticking so eventually wages rise. But wages are sticky; it’s hard to turn them back. So, instead of raising wages, fleets start with recruiting, which churns up turnover as drivers start responding and keep seeking better offers. She also noted that Monaco ign-on bonuses are also not the answer, as they “add to the churn.”

Another point Monaco made to underscore her argument is that “truck driver employment is rising at a faster rate than for other blue-collar workers. And when wages are sticky, employment rises faster than wages.” In other words, drivers end up chasing more dollars and the churning goes on and on.

“Driver wages started to rise in 2013-14 and now are rising at a higher rate than for other jobs,” she said, “and higher wages pull more people into the market.” Monaco added that the downside to rising truck rates is the cost of employment for trucking rises.

“Companies are using turnover to fill seats,” Monaco said. But drivers often jump for “a slight bump in pay and then leave when the annual amount doesn’t seem high enough. In the aggregate, you have nearly enough drivers, but they’re always switching companies.”

She said that “the sheer number of carriers [chasing turnover] are increasing the churn” as drivers become more and more aware of the offers out there.

Monaco did allow that to stem churn, “moderate wage increases would be preferred, but it would still be easier and faster to increase recruitment efforts” at least, presumably, for the short term.

As for the long term, she posited that the advent of automated trucks—whenever they get here—that would be used on interstates could positively impact the long-haul driver market. “SAE Level 4 ‘high automation’ is the tipping point to where you might actually pull truck drivers out.”

Referring to a chart she shared with the room, Monaco highlighted as candidates for replacement by highly automated trucks drivers who now handle runs that cover 200 to 500 and 500 and above miles. She pegged those targets as numbering 101,682 and 208,582 drivers, respectively.

About the author
David Cullen

David Cullen

[Former] Business/Washington Contributing Editor

David Cullen comments on the positive and negative factors impacting trucking – from the latest government regulations and policy initiatives coming out of Washington DC to the array of business and societal pressures that also determine what truck-fleet managers must do to ensure their operations keep on driving ahead.

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