We Need More Than Overtime Pay to Fix the Driver Shortage
Transportation logistics faces a conundrum. The U.S. commercial trucking industry is the foundation of our economy, yet it consistently struggles to recruit and retain drivers.
The American Trucking Associations (ATA) reports the industry needs nearly 80,000 more drivers, but the Owner-Operator Independent Driver Association points to the turnover rate of 90% as the real issue. Regardless of which association you agree with, it’s clear something needs to be done to keep drivers in the industry.
To address this, five U.S. senators co-introduced a bill called the Guaranteeing Overtime for Truckers Act, aiming to improve wages and working conditions for the people who kept America’s economy moving during the height of the pandemic. The bill would end the overtime wages exemption put into law by the Fair Labor Standards Act of 1938, as trucking companies do not have to pay most employee drivers’ overtime due to the law’s motor carrier exemption.
The legislation is, undoubtedly, a well-meaning attempt to help the trucking industry, logistics industry, drivers and consumers, and it raises the profile of the most critical challenges the industry faces.
While the bill’s ultimate fate is still up in the air, we should consider what a comprehensive solution would look like.
No one-size-fits-all solution
Unfortunately, when it comes to wages, the bill offers a one-size-fits-all answer to a complicated reality. The bill would almost certainly pose significant challenges for large carriers, but the extent to which it would impact owner-operators is much less clear.
First, not all companies pay the same way. For example, 80% of the trucking industry is owned by small companies (with 15 or fewer trucks), which rely heavily on spot rates that are determined by the real-time balance of supply and demand.
Some drivers are paid by a percentage of the revenue; in some cases, being paid by the hour and receiving overtime could result in lowering their pay instead of increasing it. The goal should be to keep or increase driver wages while offering reasonable working hours. Anything less would be unacceptable.
Second, the law may have unintended consequences for the full-time employees it aims to help.
Large carriers that tend to employ company drivers may cut benefits or rely on independently contracted owner-operators to keep total earnings primarily unchanged. This would reduce the number of company-driving positions; jobs that offer stability, insurance, and retirement savings.
Single truck owner-operators leased to larger carriers stand to reap the reward. Although such owner-operators’ independent contractor status prevents them from receiving overtime pay as a direct result of ending the exemption, they may indirectly benefit if large carriers start paying company drivers overtime and freight rates rise as a result.
While the full-time employees who survive the industry shakeup might receive higher wages, the most coveted stable, full-time positions could end up being even harder to come by than they are today.
Working conditions should be a priority
There are many issues, like improving working conditions, that would have a more immediate positive impact on the industry.
The abysmal driver retention rate suggests that even when drivers enter the industry believing the pay will be worth it, the day-to-day aspects of the job quickly lead them to find a different line of work.
To cite one example, long-haul truckers must comply with Federal Motor Carrier Safety Administration (FMCSA) hours of service (HOS) regulations, which specify driving time and rest periods. Instead of waiting to see if the overtime bill literally pays off, companies can self-regulate how long they push their drivers to work by ensuring that electronic logging devices are accurately collecting HOS data.
Meanwhile, drivers themselves continue to say their number one issue is finding parking and rest areas.
Drivers who can’t find a safe rest stop have to drive past their limit or park illegally. This puts them at risk of a $500-plus ticket, which goes on their permanent driving record and increases insurance rates due to unnecessary fines.
In October, the USDOT announced intentions to expand the nation’s truck parking capacity on the interstate system, investing $37.6 million to create approximately 225 new parking spaces in Florida and Tennessee. It’s a start, but greater investment is needed.
Don’t stall on important issues
Until the bill is ratified, we won’t know whether it will have a positive impact on the industry. There is a lot to fix in a short time, and more data will help us devise better solutions.
That said, there are things companies can do now to tackle the most pressing and immediate issues. In the end, we should get ahead of the curve to improve drivers’ working conditions and wages. Our nation’s supply chain can’t afford a continued exodus from the transportation logistics industry: Without drivers to deliver the goods we rely on every day, life as we know it would come to a grinding halt. Isn’t it time to prioritize truck drivers’ wages and working conditions?