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Carriers differ on how much to raise driver pay

Oct. 17, 2012
New survey also shows carriers less concerned about healthcare costs

A whopping 77% of motor carriers surveyed recently related that they “expect” to raise driver pay this year. However, despite rising driver turnover, those in the survey group differ on just how much they will boost those wages.

Transport Capital Partners (TCP) just reported that its Q3 Business Expectations survey found that almost 50% of the carriers surveyed “expect that they will need to raise driver pay 2 to 5% this year” and that 25% of the carriers plan to up pay, too, but by less than 2%. On the other hand, a much smaller percentage of carriers— just 3.3%-- stated that they would boost pay by 6 to 10%.  And not one of the respondents plan to increase wages more than 10%.

The survey of course did not delve into whether or not putting forth a raise that doesn’t reach 2% would make a carrier appear a piker to its drivers.

But TCP partner & survey leader Richard Mikes did offer this admonishment to carriers: “The pressure on driver wages is evident in the survey and [in] our visits with carriers.  The ATA [American Trucking Assns.] turnover statistics have risen over the past year as driver wages lag behind other career paths.”

Indeed, driver turnover for large fleets surpassed the 100% mark for the first time in more than four years, according to an ATA report released last month.

ATA’s quarterly Trucking Activity Report stated that linehaul fleets reporting more than $30 million in revenue saw a 16% rise in driver turnover in the second quarter, reaching 106%. The last time it was over 100% was the first quarter of 2008. The current level is the highest it’s been since the fourth quarter of 2007.

TCP found that a key reason why carriers are expecting to hike driver pay is the reported number of “unseated trucks.”  While this situation varies by carrier size, in the survey “overall,” 75% of the carriers reported having unseated trucks.

Thanks to the high number of unseated trucks, “drivers are a controlling input in equipment plans,” according to TCP. “Without better pay and affordable healthcare for drivers, carriers will not be able to increase capacity for shippers,” emphasized TCP partner Steven Dutro.

 TCP’s survey also discerned that the national debate over healthcare costs is also affecting carriers’ future planning— but “not as significantly as reported in November of 2011. Last year, 50% of surveyed carriers reported that recent changes in healthcare [costs] have adversely impacted their company compared to only 30% this quarter,” stated TCP.

In terms of actual actions, TCP found that larger carriers (revenue over $25) plan to have employees contribute more to their healthcare coverage, while smaller carriers plan to reduce overall coverage. Other “popular strategies” to tackle healthcare costs noted by TCP include having employees pay for family coverage and implementing wellness programs.

“Many carriers are waiting on results of the Presidential election before considering health-plan options and costs going forward,” pointed out TCP’s Mikes. “Like decisions related to income and estate tax planning, the pause button has been hit,” he added, “given the two different potential pathways ahead.”

There may have been less concern expressed about the healthcare issue in this survey because more information about the federal Patient Protection and Affordable Care Act (ACA) will actually cost has begun to filter out to the wider business community. 

Also a possible factor in healthcare being less of a concern at the moment is that most of the ACA mandates don't kick in until 2014-- which is when most Americans will be required to have health insurance or pay a penalty. That penalty will start at $95 a year or up to 1% of a person's income, whichever is greater.

It is also true, as noted by TCP, that the fate of healthcare reform will rest on which party ends up in the White House and gains control of Congress after the November elections. President Obama and most Democrats on Capitol Hill are intent on seeing ACA put into action. And Congressional Republicans as well as GOP presidential nominee Gov. Mitt Romney are just as determined to see it overturned.

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