In 1980, an ivy-league educated but mostly unknown author at the time, Lisa Birnbach, released what became one of the greatest selling non-fiction books in America: The Official Preppy Handbook. With over 2 million copies sold and 38 weeks as #1 on the New York Times bestseller list, Birnbach’s serious but not-so-taken-seriously tome on prep culture inspired millions to redress themselves and match the uppity, old-money creatures of the early 1900s. Brands like Ralph Lauren, J. Crew, and L.L. Bean grew in popularity largely because of her book and sparked a huge sub-culture of those pink-panted preppies I alluded to in my first post. If you want a lesson in culture change, take a look at what her book did. Prep culture continued to remain primarily an elitist cultural phenomenon of course, but the middle classes began to enjoy new fashions and social habits they wouldn’t have otherwise experienced.
While prep fashions in the U.S. became more widespread, trucking culture was also going through a major shift. Growth in U.S. production caused the number of trucks on the road to grow by over 50% between 1975 and 1990, and a significant piece of deregulating legislation in 1980 called The Motor Carrier Act led to increased average wages for OTR truckers and improved overall flexibility in the logistics market. As a result, higher wages sparked a new wave of entrants to the trucking industry. Driving became a relatively cool thing to do, much like wearing penny loafers without any socks to the office. Owner-operators made between $30-$40k per year, and in the 1980’s that was good, middle-class money. Being a trucker at that time you could save money for retirement, feel the freedom of the open road, and own a chromed-out big rig with tons of shiny lights. Those folks were “livin’ the dream.”
But unfortunately, that’s only half the story. Industry growth hit the brakes, and post-inflationary pressures of the late 1980’s and early 1990’s kept driver pay relatively in place. On average, truckers have earned about the same ever since, making their economic power to buy just about anything today smaller than ever. A recent report from the Bureau of Labor Statistics shows that increased competition during that time led to an overall decrease in average wages for most folks in the industry. And according to the Department of Labor, the average OTR trucker in the U.S. now earns only $42,000 per year, barely more than they did 30 years ago. And truckers aren’t the only ones. They’re just one great example of large systemic wage suppression in the United States (if you don’t believe me, check this article out).
Despite a considerable driver shortage (as much as 50,000 truckers according to some reports), wages have remained incongruently low for years. It’s tempting to think that a shortage could have brought about higher wages, but it hasn’t. It likely will though if the industry doesn’t make some drastic changes. The shortage will get worse. With an average trucker age of 49, there’s a looming retirement bubble waiting to burst like bubblegum on the industry’s prickly face. Some employers don’t see this as a problem and find ways around it. But with an industry average turnover rate of around 90%, most employers feel the pain. To alleviate that pain many companies have developed robust recruiting efforts, but in doing so they’ve missed the big picture. Most trucking companies are just running over their own feet trying to get folks to drive for them under oppressive conditions.
One major issue right now is that the trucking industry generally views driver pay as an operational cost rather than a business opportunity cost. For those of you not so business savvy, this is similar to the difference between looking at your bathroom toilet as a household utility instead of an everyday necessity. In effect, companies have paid truckers low wages and worked around driver shortages by adjusting rates of production and by cramming additional freight in trailers. As if truckers are the problem, companies continue to squeeze them for as much work with as little pay as possible. In the end, drivers feel the brunt of it.
Some companies try to lure new drivers through increased home time and specialty pay. Since most truckers are out on the road 200+ days of the year, employers with those programs have realized a slight competitive advantage in the employment market by logistically orchestrating more home time for their drivers. But here’s the catch: drivers working for those companies make even less than the average because of the time off and logistical cost to employers. And drivers are finally starting to catch on to this.
Another strategy, specialty pay for hauling goods like hazardous materials (HAZMAT) or pharmaceuticals has allowed some drivers to make a considerable amount more than the average driver (up to six figure incomes in rare cases). But that’s still not attracting new and younger entrants. One article suggests that sign-on and safety bonuses have not helped companies either. With how impossible those bonuses are to actually achieve, this comes as no surprise to me. Tactics like these are at least part of a relatively intelligent logic train, but the tracks still point in the wrong direction. Most companies continue to spin their wheels wondering why they can’t attract or retain decent workforces.
Let’s take a step back now and recap. There aren’t enough drivers. They’re generally not paid well. They’re overworked and under-appreciated. Growth in the U.S. economy over time hasn’t helped. Companies can’t really figure out why. The situation’s not getting any better. And there’s seemingly no good solution. This sad reality is where the pejorative phrase “livin’ the dream” actually comes from, meaning that what once was a dream is not really any longer.
So what’s really going on? And why is everyone in the industry not getting it? The brightest minds in the business have yet to address the real issues at play. Here’s at least one reason why: the trucking industry is fascinated right now with technological innovation (e.g. autonomous trucks) and operational efficiency (e.g. Six Sigma). Things like these will be discussed in future posts, but the main point to note is that neither of these focal points will be the base for success in meeting future market demand. Virtually no one understands this and is willing to address more complex cultural factors.
And who’s to blame them? Large marginal returns don’t exist in the industry. Profit is based on freight volume and keeping operating costs low. Numbers. Numbers. Numbers. The cheaper you move the goods, the greater are your chances for marginal return. But things like advanced technology and process improvement cost a ton of money, since it means large capital and infrastructural investment. As long as the trucking industry focuses on these strategies, they’ll keep breathing air into that bubble until it bursts. Remember what would have happened if the banks weren’t bailed out? Yeah, it’s about as big of a deal. Imagine a world with a toilet paper shortage.
Today’s generally accepted business principles maintain that good people doing good work happily do good business. Right now, that does not describe the trucking situation. The problem is that drivers today are lost in the midst of a complex super-structural industry machine and are relatively forgotten about and exploited. Even worse, most companies don’t really seem to care. Something drastic needs to be done. To set the industry down the right path, trucking will need to develop its ability to appeal to the cultural needs of highly educated post-millennial generations. They’re the (near) future.
In my opinion, the existing driver shortage in America stems from three dominant cultural factors. First, people today are more highly educated than ever with over 30% holding a bachelor’s degree or higher. This number will only continue to grow since most employers now see a four-year college degree as the new minimum requirement. This highly educated young culture expects higher wage earnings, job prestige, and better quality of life.
Second, along with large acquisitive business growth over the last 15-20 years, large corporations have become the occupational bedrock for young educated Americans. We now, more than ever, rely on the stability of large companies for job opportunities and respectable wages. And third, negative cultural stigmas associated with trucking have deterred new entrants from joining the rank and file. Simply not carrying enough prestige and cultural influence to be noteworthy, America’s new average citizen sees trucking as beneath them. And who wants to be away from home so much just for that? Money isn’t everything you know.
In short, if trucking is to overcome existing and future pressures such as an ever-present driver shortage, it’s going to need to address various cultural factors instead of ones simply found on a company’s balance sheet. Preoccupations with profit-focused business tactics will only lead to further exploitation of drivers and future market inefficiencies. Bottom line: the industry needs a culture change in order to thrive in the future. What might that look like? Stay tuned…maybe someone will write The Official Trucking Handbook.