Responding to claims by labor groups and court rulings increasingly hostile to independent contractors on the West Coast, the California Trucking Assn. (CTA) on Wednesday published a report challenging one of the key arguments against the model. The Owner-Operator Driver Compensation Study, by CTA and the Inland Empire Economic Partnership (IEEP), shows truck drivers who operate as independents are routinely able to earn more than employee-drivers—and substantially more, in many cases.
According to research conducted by supply chain economist John E. Husing, Ph.D., of Economics and Politics Inc., independent owner-operators earned $17,400 more than the median pay for employee drivers in California, with 3 in 4 taking home more than drivers in employee-based models.
Additionally, the top 20% of owner-operators earn more than workers in 156 of the 158 logistics occupations in Los Angeles County and the Inland Empire, including those with Bachelor’s degrees.
“This study is a strong indication that independent owner-operators continue to thrive” says Husing, “Estimated to make up nearly 20 percent of all trucks on the road today, nearly 75 percent of independent owner operators are still earning more than company drivers.”
The 2013 median net income for the independent owner operators was $59,478. In comparison, California Employment Development Department found that in 2015 company drivers attained median annual earnings of $42,078. Nationally, the U.S. Bureau of Labor Statistics shows 2014 median annual wages of employed drivers at $39,520.
The study found the 2013 median net earnings of the highest 25 percent of independent owner operators to be $102,087.The next 25 percent earned $68,936, the third 25 percent earned $47,005, and the last 25 percent earned $28,297. In conclusion, the majority of independent owner operators exceeded the median of $42,078 for company drivers.
“Some of the largest and most successful carriers started as independent owner operators with a single truck,” stated Shawn Yadon, CEO of CTA. “CTA will continue to support our professional drivers who choose to utilize the incredible entrepreneurial opportunity that comes from being a part of the trucking industry.”
The study summarizes and examines data from a wide range of sources:
- California Employment Development Department’s Occupational Employment Statistics survey
- U.S. Census Bureau
- American Transportation Research Institute; and
- 28 different firms which includes data from 2,648 California IOOs.
This data was used to characterize gross revenue and business expenses for IOOs such as repairs and maintenance, fuel and insurance, mileage, and other applicable costs.
The complete report is available here.