Trucks at Work
Highway View of Trucks Photo: Sean Kilcarr

The ‘underground economy’ versus trucking

Trucking is competing with a growing 'shadow economy' of often off-the-books work.

One of the below-the-radar issues connected to the growing truck driver shortage deals with the rise of what’s being called “the underground economy” here in the U.S. and the “shadow economy” elsewhere in the world; a subject Gordon Klemp, founder, president, and CEO of the National Transportation Institute (NTI) recently touched on in a recent conference call hosted by Stifel Capital Markets.

He explained that, in the past, the “underground economy” referred to largely criminal enterprises such as drug dealing and prostitution.

Then, in Klemp’s words, “new money started showing up from people working ‘gig’ jobs” over the last decade or so – “gigs” that often revolved around cash-only work in landscaping, home repair, and the like.

“The size and scope of recent of consumer spending is part of the tip off; spending is increasing and growing apart from wages and incomes,” he said.

“The obvious benefit is not paying taxes,” Klemp explained. “Take part time lawn-mowing work. If you can mow 30 lawns a week – that’s not a heavy load – at $35 per lawn, you are making over a grand per week ($1,050) with no taxes.”

He added that such work pays well in relation to what truck drivers typically get in terms of a weekly paycheck. “And it’s hard to get caught because the resources devoted to finding un-reported income under a six-figure threshold are almost non-existent,” Klemp said.

This is not the first time he’s touched on this subject, either – indeed, six years, I made the point that driving a truck is still considered “unskilled labor” and remains a career frowned upon by many families.

Indeed, it’s a sad commentary on truck driving as a profession when you can make the same pay or better mowing lawns or working as an Uber or Lyft driver.

Photo courtesy of Uber.

“Uber and Lyft are ‘ad-hoc’ cab companies, if you will – but it’s the worker who dictates when they work, how they work, and when they get paid, and they are home every night,” NTI’s Klemp noted.

“Their earning potential is $50,000 to $55,000 if they work full time and work at high-demand times,” he added. “That is very competitive with a truck driving job; particularly with long haul where drivers still pay for their meals and other living expenses.”

Klemp also noted in his commentary about truck driver pay trends last week that wages for big rig operators are not only growing slowly, they are far below the warning potential of what the profession used to pay back in the days before deregulation.

In 1979, if you fast forward with the rate of inflation to 2016, pay for a union driver would average $101,600. Yet according to NTI data, the average pay for a similar driver hit $52,406 in 2016.

“This means pay has really been a long-term problem,” Klemp said. “Between 2006 and 2017 net growth in [for-hire truck] driver income reached 6.3% – that is very low.”

By contrast, private fleet pay went up 16.55% over that same 11 year period –which just about mirrors the inflation rate at 18.5%, he pointed out. Yet over the same time period, the minimum wage went up 45.6% and McDonald’s pay up 94.2%.

“So that puts driver pay in perspective; it’s becoming ‘less attractive’ versus ‘more attractive.’ That puts a real damper on growing the driver pool,” Klemp noted.

It’s just one more challenge motor carriers need to address as they try to win the hearts and minds of younger workers and get them to choose trucking for a career.

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