Driver Pay: The Elephant in the Room
Driver Pay: I have been asked to take on this subject on many occasions, and although I have touched on it on and off over the years on numerous occasions, I’ve never really gone at it head on. There is probably a couple of good reasons for this, including but not limited to the fact that this subject is a bit of a rabbit’s hole. It can easily lead many different places once you start heading down this road, and you are likely to disenfranchise yourself with any number of folks, no matter what position you take on these subjects. Having said all that, let’s get at it, as I have said in the past, and it is still true today, at times, there is nothing more illusive than an obvious fact and this is one of those times!
The obvious fact here is that we live in a free-market society whose economy runs on a supply and demand structure. The market will dictate the remuneration you’re paid, determined on the specialty of your trade, or skill in conjunction with the scarcity of workers in your sector. So if one is to put forth the position that drivers are vastly underpaid the argument that there is a driver’s shortage holds no water and must be false, you simply can’t have it both ways. If you don’t believe me, talk to any economist about this situation.
To do the subject justice, it might need more than one article, it will definitely need your input, so please give me your feedback, and I want to hear from you on this – both company drivers, owner operators and executives. I will give you my opinion on the only two paradigms that matter in this subject, first the driver’s then the company’s.
Driver Perspective
When I look at this subject from a driver’s prospective I don’t blame any of you for being completely confused, over the last 3-4 decades you have been heard and been repeatedly told that there is a driver shortage, and it is at a critical stage. Problem is, if this is in fact, then why hasn’t the average driver wage reflected that reality, depending on where you search or who you ask, you keep seeing average annual pay rates between 50K and 65K, what gives? Meanwhile, you just paid your plumber $120 per hour unclog your drains??.
Obviously something is amiss, and has been for quite some time, extreme shortage and 57K annually don’t add up. To be accurate there are companies out there that pay their driver’s markedly more than this, and likely some that pay much less this is the average – the range I found was from 38K to 100K. The typical driver take home is greater for the most part than that of the general average over all sectors no doubt, but again I can see a high frustration level when folks in this profession are continually told of the dire situation that the industry is facing with its overall lack of drivers.
It’s hard to bridge the gap between what we continually hear from industry trade magazines, and the national press, and what we see in the numbers and average pay scales, the two don’t add up. So whats one to do if you’re a driver? A number of things come to mind especially in light of the fact that any number of driver surveys over the past couple decades reveal that money is not always the least satisfying element of the job, nor the top reason for a driver to quit their current carrier.
There are two messages here; One is for the drivers to first, and always be checking the market to ensure that your being paid at or preferably above market rates for your services. If your research reveals that you’re not, I would have the discussion with your employer, and let them explain their perception of the situation. The second message is of course for the employers – you have to make your driver’s pay packages understandable (even customizable), and manage very closely the relationship between their expectations and your expectations. I might suggest an average base pay rate certainly no less than industry average for your sector is a good platform to start with, then a gain-share bonus plan predicated on all the familiar touch points, fuel burn, accident free miles, longevity, production – whatever those KPIs are for your company. These bonuses should provide the driver with the opportunity to get to the top of the range of driver wages in your area. Finally, and the most critical part of the strategy, is they need for these gain-share bonus plans to be obtainable, under promise and over deliver, what a concept right! You get this part right, and the word gets out you may have something, you’d think anyway, reality might be a bit more harsh, because surprise-surprise there is another twist waiting around the corner and it’s called a Human Resources Strategy and Driver Satisfaction.
Do assuming the driver has done their homework, they are now aware of where you stand with your company’s payment schedule relative to the rest of the market in your area. They can stop looking for greener grass, and focus on delivering the goods now right? Not quite. I have discussed Maslow’s hierarchy of needs in previous articles and that we as human beings are driven to needs is a sequential order as is in our nature as human beings. For us to truly enjoy the sense of Physiological (or money) needs we have achieved we now need to move on to the Safety level and then of course up to the belongingness, esteem and finally self-actualization levels. These universal laws drive everyone from the Driver Seat to the C-Suite (no one is immune). If a company decided to lead the industry with their wage package, they will still be challenged to retain their drivers unless they offer an entire package that includes a sense of community and all that goes with it.
Is there a driver shortage? To me the numbers reflected in driver wages would suggest there isn’t, not that I can see anyway? It’s more aptly described as a Driver Churn problem. The churning of drivers in the industry is more a reflection of companies not spending near the amount of focus on their retention efforts than they do on building very efficient recruiting departments, and the vast eco-system of businesses designed to simply get people in seats – as opposed to keeping them in seats – with a true sense of purpose. When I ask most executives their turnover rates very rarely do I get a definitive clear answer, there is usually some hesitation and what looks to me as a very loose estimate of where they are at. This needs to change and until carriers realize that this subject needs to come out of the closet and be a daily focus moving forward we will as an industry continue to confuse driver shortages with driver wages levels.