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The problem of ‘lumpy pay’ in trucking

Nov. 6, 2017
Though truck driver wages are rising, paychecks often remain inconsistent week-to-week.

Driver pay has been on the rise across the board in trucking industry this year, in many different segments.

Take TL carrier Epes Transport System: it boosted company driver pay two cents-per-mile this summer, increased hourly pay for local drivers, and switched its independent contractors to percentage-of-the-load based pay.

Then there is bulk hauler Kenan Advantage Group (KAG), which initiated a program that calls for guaranteed pay increases for its drivers over the next three years.

But many of those increases – welcome though they are – don’t address several key issues with driver pay. First, adjusted for inflation, truck driver wages remain far below what they once were before industry deregulation in 1980. And second, pay remains “lumpy,” in that it can vary from week to week based on the miles a driver accrues.

“Lumpy pay simply means if they’re not rolling miles, then they’re not getting paid,” according to Gordon Klemp, founder, president, and CEO of the National Transportation Institute (NTI). “If they have a weather delay, often times they’re not getting paid. If they have detention time at a warehouse, that’s on their dime.”

In a conference call hosted by Stifel Capital Markets, Klemp added that  driver pay in most respects hasn’t kept up with inflation. “Going from 1979, if you fast forward with the rate of inflation to 2016, pay for a union driver would average $101,600 a year,” Klemp pointed out.

Yet according to NTI’s data, average pay for truck drivers hit $52,406 in 2016. “This means pay has really been a long-term problem,” he said.

Between 2006 and 2017, Klemp noted, net growth in for-hire truck driver income totaled 6.3% – a percentage increase he described as “very low.”

Added to that issue is the “irregularity of pay,” which means if a truck break downs, if there are weather delays, or if there is significant detention time, drivers are not getting cut the same paycheck they got the week before.

“Week to week, your pay can vary a lot more; you may be making $54,000 a year but it’s not in 52 increments,” Klemp explained. “It’s not a very regular paycheck. It tends to go up and down a lot. And if you don’t get the expected amount on your check, it raises havoc on the other end of your life: your home life and your personal life. That tends to create a lot of turnover because drivers keep looking for regularity.”

The other part of the “lumpy pay” problem is that drivers are still often paying their own expenses in the truck relative to living expenses.

“When you look at that $54,000, he’s buying his own meals and in some cases his own shower – and it’s hard to live on the road for less than $1,000 a month after taxes,” Klemp noted. “That money is out of his pocket, so it makes the $54,000 even lower than what it looks like.”

Electronic logging devices (ELDs) get factored into this discussion because the ELD mandate, set to go into effect December 18, is designed to “take all extra miles out of the system eventually,” Klemp said – extra miles many drivers run to make up for mileage lost due to those aforementioned delays.

As of now, NTI’s model shows that the imposition of ELDs may reduce truck capacity by 3% “on the low end” and up to 7% on the high end.

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