Crash and Churn

Everyone who has traveled the highways and byways of America and found themselves behind an 18-wheeler has seen these signs adorning the rear ends of trailers:

Let Us Put YOU in the Driver’s Seat!
Highest Cents Per Mile in the Industry
Want More Home Time? Join Our Team!

Supposedly, these ads are products of an acute driver shortage. But strangely, they’ve beckoned nonstop for more than 30 years. Even more strangely, there is, in fact, an oversupply of truck drivers in the United States. The problem for trucking companies is retaining drivers, but doing something about this problem costs them more than ignoring it and using government funds to paper it over. As it is, the rest of us pay the price—in fragile supply chains, unsafe roads, worse jobs, and a lower wage floor throughout the economy. These are the combined consequences of the government’s failed policy of deregulation and the industry’s cynical practice of churning through new drivers produced by questionable schools rather than training and compensating workers properly.

It wasn’t always this way. In days gone by, truckers were largely trained informally on the job, through family, or by operating similar equipment on farms. I myself am one of those dinosaurs who learned this way. Way back in high school I started working for a trucking company with which my family had a multi-generational association. My father has returned to work with that same company and plans to retire there. These long-running family employment relations are an endangered species, being driven towards extinction by the same forces causing the retention problem.

In a way, the story of trucking is the story of the American economy’s decline. Markets delivered the goods as far as the experts were concerned, but truckers, and the broader public, suffered. But common-sense, worker-first policies may still be able to get the industry under control and make trucking into a viable career once again.

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In The Big Rig: Trucking and the Decline of the American Dream, University of Pennsylvania sociologist Steve Viscelli writes that, before the 1980s,

trucking was for most a lifetime career. This was especially true for Teamsters members, who enjoyed high wages, good working conditions and job security. There were few, if any, jobs that drew such workers away from the trucking industry, and this resulted in little need for companies to recruit and train new labor. When such labor was needed, hiring was heavily influenced by the Teamsters, and workers were likely to be trained by union members on the job. For nonunion operators, experience with heavy equipment and trucks on farms or through a family member remained a primary means for learning to drive a truck.

But the Motor Carrier Act of 1980 (MCA) brought sweeping changes to the American trucking industry. Pricing controls vanished, as did barriers to entry. Opening the industry to more competition caused prices for trucking to drop precipitously, which meant that wages for drivers also began to head south. Economists like President Carter’s inflation czar Alfred E. Khan both predicted and sought such outcomes. Deregulation also ended the dominance of the Teamsters, the largest labor union in American history, who prior to 1980 had represented 70% of truckers in America; today that figure is about 5%.

The market forces let loose by deregulation wreaked havoc on the trucking industry, necessitating a return to regulation of a different sort. The price of trucking dropped, but the cost stayed the same: Deregulation does not make it less expensive to move goods from point A to point B, but it did shift the burden from customers onto the truck drivers, others on the road, and taxpayers. There were no rules except profit, so other entities had to impose them. In what Wayne State University economist and former trucker Michael Belzer calls “social regulation,” truckers themselves experienced increased enforcement—on the side of the road by the Department of Transportation and the police, through fairly steady increases in regulatory requirements, and with the various monitoring and surveillance technologies to which they have been subjected.

In the 1970s Hollywood had venerated truckers in such iconic films as Convoy and Smokey and the Bandit. But in the wildly popular 1986 film Top Gun, after pilot Pete “Maverick” Mitchell is reprimanded for breaking the rules of engagement, his second seat radar intercept officer, Nick “Goose” Bradshaw, berates him further: “Maybe I could learn how to be a truck driver. Mav, you have the number of that truck-driving school we saw on TV? Truck Master, I think it is. I might need that.” Trucking was now seen as a job of last resort.

Had deregulation “worked”? Viscelli explains that “in terms of the explicit goals of deregulators, trucking is arguably the most successful and important case of deregulation in US history.” However, the achievement of these goals created new market realities:

Estimates suggest that more than 60 percent of the cost reductions achieved in the years immediately after deregulation came from lower compensation. Total employee compensation per mile, including benefits, fell by 44 percent in over-the-road trucking from 1977 to 1987. . . . If we take into account the very long hours they work today, long-haul truckers are producing twice the amount of measurable output, compared with the late 1970s, for wages that are 40 percent lower.

I interviewed Belzer last September, and he noted that his pay “was cut by about one-third, just like that, overnight, in 1981.” This race to the bottom, sometimes celebrated by economists as the “lowest market clearing price,” undercut the basic rate structure necessary to safely operate fleets and pay drivers near-middle-class salaries. Many more experienced drivers took early retirements or left the industry completely rather than work for less. Unwilling to tolerate the debasement of their wages, they left for greener pastures, and a new market dynamic was born, built from strategies in which trucking companies offloaded either costs or risks onto their employees and the public.

In his seminal study of the effects of deregulation on the industry, Sweatshops on Wheels: Winners and Losers in Trucking Deregulation, Belzer observes that 1980s “deregulation” merely replaced one form of regulation with others. The first, “market regulation,” consists in the new constraints on carriers necessitated by competitive pressures. The industry was now open to virtually anyone who wanted to start a trucking business, regardless of experience or business acumen, sending rates for trucking services straight into the ditch. Companies attempted to cut costs by chiseling away at drivers’ wages, thus incentivizing drivers to work ever longer and harder hours to make ends meet. Overworked drivers were more aggressive, and drivers were more likely to speed so that they could cover more mileage at lower rates per mile.

According to Viscelli, large carriers managed these new market realities by offering drivers the opportunity to eventually become independent operators. In the “lease-operator” model, for instance, a large carrier identifies a new driver who has performed well for a few months to a year as a candidate to own their own truck. But these offers were extremely predatory, and the arrangements between many carriers and these budding small business owners were tilted heavily in the carriers’ favor. They shifted to drivers all the risks and bills that came with owning the truck while providing very little of the advertised independence. Though some truckers have succeeded with this model, so many people have tried it and failed that a number of lawsuits have been launched, and won, against companies that engage in this practice.

Just as in other areas of the economy where precarious gig work is offered as a path towards becoming a small business owner, the high washout rate in trucking has left many precarious workers left holding the bag on a vehicle that costs around $200,000 and rapidly depreciates in value. Many a bankruptcy has resulted from the lease-operator model. Trucking companies also participate in immigration scams and schemes, covered in multiple exposés over the past few years, in which foreign nationals come to the United States or Canada to work as truckers and are then confronted with unsafe working conditions, terrible hours, and dishonest employers. One subject of a story on these practices was called a “modern-day indentured servant” by USA Today; another, in the industry journal FreightWaves, was called the victim of “an alleged human trafficking scheme.” Such abuses are symptomatic of the industry’s preference for predation over people.

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The late 1980s saw newspapers reporting on the apparent shortage of truck drivers. The Free Lance Star in Virginia reported claims of a “serious shortage” from the American Trucking Association (ATA), noting an ATA effort to “test the truck-driving skills of 18- to 21-year olds” and firms’ new willingness to hire “woman, immigrants and anyone who shows driving competence.” The Spokesman-Review Spokane Chronicle managed to conjure some interesting culprits:

An even more serious shortfall of drivers is coming . . . People born between 1946 and 1964 are having fewer children than their parents . . . Making things even worse for the trucking industry are two measures being taken because of a widespread public clamor for truckers to improve their safety record. First, drug testing of applicants and current drivers is being stepped up within the industry . . . Second, states are cracking down on the use of multiple licenses by truck drivers.

In 1990, the Los Angeles Times noticed that “a discouraging number of [trucking school] graduates quit,” with one CEO saying that “35% of his school’s graduates quit after a year and go on to different firms or to new occupations” and “other trucking companies report[ing] disappointing retention rates.” Fast forward to the 2020s and the rate of churn, the percentage of drivers who start at a company and leave within a year, has actually risen, reaching 92% for many companies.

Compared to training on the job or by family, churn is not cheap. With the Teamsters reduced to a sliver of a shadow of their former selves, and the trend toward safetyism reducing the number of kids riding along with Dad in his rig or taking a teenage job that requires operating equipment, traditional pathways no longer send potential drivers to the industry. Companies looking for prospective drivers have found a variety of ways to finance the cost of near-constant training to fill vacancies left by those who were only very recently new trainees themselves. Sometimes trucking schools have their own in-house credit, which they extend to drivers; some companies pay up front if a driver agrees to a payback program and a minimum length of service contract.

Some trucking schools are part of local technical schools, such as the network of New York State’s Board of Cooperative Educational Schools. Some are independent operations. Many are owned directly by very large carriers. Training regimens vary widely. What many of these mills have in common is that they rely, directly or indirectly, on taxpayer funds. There are so many publicly funded truck driving schools now that they have their own association, the very straightforwardly named “National Association of Publicly Funded Truck Driving Schools.” While it is difficult to get an exact number on the various grants and subsidies given directly to these schools, or indirectly via financing student drivers themselves, the total is at least in the hundreds of millions of dollars over the past four decades. The Workforce Innovation and Opportunity Act (WIOA) hands out so much money that many trucker recruiting websites advertise it directly to potential recruits. The same occurs with Pell Grants. The Biden administration has committed an extra $48 million to the truck driver training pot. State governments hand out a great deal of money as well.

State-level agencies in California dared to ask where the money is going and why the purported driver shortage problem is not being solved. They commissioned a study about hauling state-grown produce; it found that “inadequate private training schools (some funded with public dollars), poor job quality, and segments of the industry that profit from high turnover are clearly part of the problem.” California spends around $20 million a year on training new drivers, but they are trained poorly and often grossly underpaid, then set up for failure with counterproductive regulations and unsafe working conditions.

One of the dangers of trucking lobbyists, rather than truckers themselves, having the ear of Congress is that the reality of our working lives is likely to be ignored. Most media pieces decrying the supposed driver shortage do not mention the problems intrinsic to the job, or possible solutions to those problems, which might cost companies money. But some journalists are willing to investigate these realities, such as Alana Semuels at TIME, who did the unthinkable in 2021 and spoke with an actual truck driver:

In fact, there are so many truck drivers right now that brokers are able to pit them against each other and worsen conditions, says Sunny Grewal, a Fresno, Calif.-based driver. Grewal, 32, has been driving since 2010, and has a refrigerated truck, which he uses to haul fruits and vegetables. It costs him $1.75 to $2 to drive a mile empty, so any job that pays less than $3 a mile isn’t worth it, he says. Yet as brokers see more drivers looking for jobs, they post more loads that pay less and end up requiring a lot of unpaid waiting around. “If they know there are a lot of carriers, they treat you like crap,” Grewal says.

In a rebuke last fall to the ATA and their near constant refrain about a driver shortage accurately titled “The Perpetual Truck Driver Shortage Is Not Real”, FreightWaves CEO Craig Fuller wrote:

As the ATA encourages Congress to pass laws and appropriations that fund employee driver training and recruitment programs — while minimizing regulations that favor larger trucking fleets that employ drivers rather than independent owner-operators — it helps to paint a picture of a perpetual driver shortage.

After all, if Congress realized how fast capacity enters the market from independent operators when there is a capacity crunch, it would mitigate the need for employee driver recruitment and retention entitlement programs.  

The United States Bureau of Labor Statistics has come to similar conclusions as Viscelli and Belzer:

How, then, do we reconcile the finding that truck driving is a relatively stable occupational choice (with migration driven in a predictable way by earnings and hours) with the view from managers in the trucking industry that the labor market for truck drivers has a serious and persistent shortage? We suggest that the occupation of truck driving is actually a composite of labor market segments, and that one segment in particular, long-distance truckload (TL) motor freight, is a “secondary market.” Arguably, the long-distance TL segment has high levels of competition, similar average costs across all scales of production, and a very limited ability to differentiate prices in the product market. These characteristics result in labor market conditions in which individual firms are forced to accept high turnover as a cost-minimizing response to their competitive position in the market for their outputs.

A newer trucker advocacy organization called CDL-Drivers Unlimited did their own investigation into the number of active commercial driver’s licenses (CDLs) in the United States and found that there were roughly three times as many licensed CDL drivers in circulation as jobs that require one. But often, a new driver trained by the taxpayers, even if he only sticks around a year, is cheaper to employ than any of those drivers who left after discovering how the industry really functions.

This real shortage—of experienced truckers—itself has substantial effects. Many niche market and specialty carriers express concerns over a seeming lack of truckers capable of hauling hazardous materials, or navigating the roads with oversize and overweight loads. The industry chews through so many people that not enough drivers stick around to attain the level of experience required for these types of trucking jobs.

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Churning through truck drivers is more economical for some large freight carriers because of low pay and publicly funded training. But it has high costs which are visible elsewhere. Within a large, multiple-author study called “When Is High Turnover Cheaper?” is the story of one large carrier that attempted to rectify its turnover problem by adjusting driver pay upwards and limiting the recruitment of less experienced drivers:

Observing the persistence of high turnover in its industry segment after deregulation, one of the largest general freight long‐distance truckload motor carriers, J.B. Hunt, in 1996 decided to try to break out of the “run hard, pay modestly, and experience high turnover” pattern. They announced they would raise starting wages by 35%, close their training school for inexperienced drivers, and hire only experienced drivers. They expected the reduction in crashes and turnover to pay for the higher wage costs. They implemented this plan in February 1997. Their results were extensively analyzed . . .Investigators found that turnover rates and crash rates were both cut in half. However, in March of 2002 managers at Hunt unwound this change, cutting their starting pay back to near its earlier level . . . A reasonable conclusion is that moving from the “run hard, pay modestly, and have high turnover” cost mixture to that of “run hard, pay more, and have lower turnover,” was not actually cheaper, and was therefore less profitable.

One cost that we all bear from the industry’s race to the bottom—an “externality,” in the economic lingo—is depression of the broader labor market’s wage floor. Roughly 3.5 million jobs in America require a CDL, mostly in either local or long-haul trucking. “Truck driver” is the most common occupation in 29 states. With so many trucking jobs distributed across every local labor market nationwide, the going rate for a trucker’s time influences wages across occupations: other entry-level jobs have to beat the trucking wage to attract workers. When truckers’ salaries go down, so do many other people’s.

Another cost of higher driver turnover is, well, higher driver turnover, in the literal sense of truckers who find themselves upside down in a ditch. According to statistics compiled by the Federal Motor Carrier Safety Administration, “5,700 large trucks were involved in fatal crashes [in 2021]. According to [the Motor Carrier Management Information System], 60,375 large trucks were involved in injury crashes, and 116,468 were involved in towaway crashes.” Factoring in incidents in which no one was hurt, but which still involved significant property damage, there were over half a million accidents in the United States involving trucks.

More experienced truckers drive more safely. Federal statistics show that drivers with less than three years of experience are 47% more likely to be involved in a collision. A Virginia Tech study has found that experience is a far more powerful predictor than age of crashes. Time and again, the studies back up common sense and the tacit knowledge of those of us who have been on the road our entire lives.

Of course, insurance premiums and settlements shift some of the costs of all these accidents back to the carriers. But find the family involved in a crash with an 18-wheeler that prefers its payout to having never been hit in the first place. No amount of insurance will bring back the dead. And the insurance industry and litigation process themselves absorb enormous resources from more productive parts of the economy.

High accident rates have led to increased “social regulation,” in Belzer’s terminology. Truckers have become guinea pigs for the use of surveillance technology to discipline the working class. One of the most notorious of these disciplinary measures was the imposition of Electronic Logging Devices, or ELDs. These devices are hard-wired into a truck’s engine and can track where the truck is, which is required by the state to enforce Hours of Service regulations. Often, these devices can track many other operational metrics such as speed, fuel consumption, and other measures of driver performance not required by law. The imposition of these privacy-erasing devices was justified by safety concerns; the mandate’s origin goes back to MAP-21, the 2012 Moving Ahead for Progress in the 21st Century Act. Five years later, the ELD mandate was implemented, a massive imposition on workers in a supposedly deregulated industry.

In December 2022, Cornell sociologist Karen Levy published Data Driven: Truckers, Technology, and the New Workplace Surveillance, her decade-long dive into the use of surveillance technology and various regulatory systems on truckers. Levy found that the imposition of this technology has done nothing to improve driver behavior, driver retention, or road safety. For carriers of a certain size, the frequency of crashes increased, with a study finding an “obvious correlation” between the implementation of the ELD mandate and an increase in speeding and other aggressive driving citations amongst truckers. Most drivers are paid by the load or by the mile, and nearly every interaction in the supply chain seems deliberately set up to eat drivers’ time. Of course truckers make up for the imposition of hard stops by the ELD mandate with speeding.

An original selling point of ELDs was the collection of reliable data on how long trucks spent in “detention”—the unpaid time that truckers spend waiting at the facilities of shippers and receivers. Detention has been the bane of our existence since the first truck drove out over the dirt roads which would eventually become interstates, and ELD data could be used to shame customers into paying for it, or into making changes to their inefficient operations. Surprising no trucker anywhere, that hasn’t happened. Detention doesn’t just result in drivers’ time being stolen; it’s a drag on the economy, and an unnecessary burden on America’s supply chains. At virtually every juncture, when improving the lot of truckers could result in societal benefits across the board, the opposite has instead been done.

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A partial solution is slowly winding its way through Congress. The Guaranteeing Overtime for Truckers Act would remove an exemption to the 1938 Fair Labor Standards Act which denies truckers the right to overtime pay that is guaranteed to the vast majority of other workers in America. Boosting pay would keep more experienced truckers in drivers’ seats and put more money in the pockets of working-class families. And it might incentivize other actors in the supply chain to tighten up their operations and get trucks moving faster. Better and safer trucking will make supply chains more resilient, and the whole economy will be more efficient if trucking capacity is fully utilized. This, not the absurd behavior of the industry today, is how markets are supposed to work.

Overtime pay also just shows respect for drivers’ time. Between the “get ‘er done” attitude many of us have, and a culture that teaches us to accept our lot as lowly truck drivers, we truckers might not often think of our self-esteem and self-worth. But it does wear on a guy after a while—missing so much of our lives at home, constantly having our time wasted by forces beyond our control, and then not being paid for it. This is personal; it goes far beyond the wage itself. I have refused to work in those notorious parts of the industry where our time is wasted.

Another easy step would be to stop subsidizing the madness with taxpayer funds. It is clear that certain parts of the trucking industry have built the structure of their operations and profitability around a corporate welfare scam marketed as a jobs program. Just stop. Turn off the tap.

It is also far past time for trucking to be recognized as a skilled occupation by the Department of Labor. This would require the industry to develop a program that meets the two-year minimum training requirement for the designation, which could be paired with imposing a system of graduated licensing that requires a driver to spend a minimum of one year at each stage of the license. Countries such as New Zealand and Australia operate on this model. Exceptions could be made for those with previous experience operating farm machinery or heavy equipment, or who have driven for the military. A skilled occupation designation matched with a graduated licensing program would vastly increase safety on our roads. It would also prevent CDL mills from immediately placing graduates in one of the most difficult parts of the industry, long-haul OTR, which contributes greatly to churn.

The largest players in the industry would undoubtedly push back, as would the politicians to whom they donate so much money. Some ATA members are arguing now that drivers with only one year of experience should be allowed to train brand new recruits, a proposal supported by certain members of the Republican Party who have bought the driver shortage narrative hook, line, and sinker. They somehow believe that the industry is healthy despite what it claims to be a 40-year driver shortage, and that new drivers can be summoned to service from the ether by sweeping people off the street. But the drivers who keep the trucking industry rolling are too important to be treated in the way that they are. Let us call the driver shortage narrative the lie that it is, and demand that those promulgating it stop whining and start focusing their efforts on making trucking jobs good jobs.

Truckers are some of the hardest workers in America, and they make great personal sacrifices to keep the American economy moving. Treating them like human resources slurry is beneath a nation as great as ours. If only we would recognize what the problems really are instead of employing tired clichés in the service of continuing a failed policy, the trucking industry could operate much more safely and efficiently and provide good jobs, all without being a ward of the state. Isn’t that what the deregulators promised?