How much is enough to retain truck drivers and attract new drivers to the industry? According to the Driver iQ 1st Quarter Trends in Truckload Recruiting and Retention survey, $75,000 a year is the magic number.
The survey of recruiters who are Driver iQ clients or potential clients found that more than 90% of carriers making more than $30 million in revenue believe driver pay needs to be above $75,000 to attract the proper candidates. According the American Trucking Associations, driver pay has increased 15% from $46,000 in 2013 to $53,000 in 2016 in the truckload sector. Private carriers raised pay from $73,000 to $86,000 during that time frame.
Smaller carriers, those making less than $30 million per year in revenues, were less optimistic on driver pay, with fewer than 70% suggesting it needed to be above $75,000. That group was the most aggressive, though, when it came saying pay should be over $100,000, with close to 35% saying it should reach at least six figures.
The Bureau of Labor Statistics reports that driver pay, adjusted for inflation, should be $111,000 per year following deregulation of the industry in 1980, which may explain partially why driver turnover at private carriers is typically much lower than at for-hire carriers.
According to ATA, driver turnover at large truckload fleets (more than $30M in revenue) in the fourth quarter of 2017 fell to 88%. Small fleets saw the rate dip to 80%. Both rates were 14 points higher than the fourth quarter of 2017, ATA said. Private fleets generally report driver turnover rates near 30%.
“Despite the continuing tight driver market, I think there are a couple reasonable explanations for the dip in turnover this past quarter,” Bob Costello, ATA’s chief economist, said. “First, freight demand was very strong, which may have encouraged drivers to stay at their current fleet because they were making money with strong volumes. And second – many fleets implemented or announced pay increases last quarter, which may have disincentivized drivers from moving to new jobs.”
The Driver iQ survey reported higher turnover rates in both the second and third quarters prior to the latest survey, which has come after many larger fleets started announcing pay increases.
The survey respondents were also split on whether the turnover problem would become worse. Slightly more than 40% expected the turnover rate to remain about the same in the first quarter of this year while 25% thought it would rise when numbers are reported. Based on economic growth, though, 38% expect it to rise in the second quarter.
The survey also found that carriers are attacking the turnover problem through higher pay packages, with 60% of respondents indicating they have increased their pay per mile and 51% boosting performance bonuses. Depending on the fleet size, the pay packages differed. Driver iQ found that larger carriers were more likely to increase per mile pay and offer “soft bonuses” such as more home time. Medium-sized carriers ($30 to $100M in revenue) preferred performance bonuses, with 55% going this route versus only 23% that increased per mile pay.
Just over 10% of medium and large carriers reported adding guaranteed weekly salaries to drivers and no small carriers (less than $30M in annual revenue) offered that option.
According to the recruiters in the survey, the desire to make more money and spend more time at home are the primary causes of driver turnover, with approximately 55% reporting total compensation as the primary reason and 50% saying time away from home is a major cause. Also cited was a lack of communication, unpredictability of paychecks, and issues resolving problems.
Interestingly, despite national unemployment rates of 4.1%, survey respondents expect to see an increase in applicants for driver jobs in the second quarter. Driver iQ attributes this to carriers being more aggressive in their recruitment efforts, including higher starting pay, more benefits and larger sign-on bonuses.
Driver iQ cited ATA’s survey data on the driver shortage, which the lobbying group says will reach 60,000 drivers in 2018. That data attributes 47% of the shortage due to retirements, yet the Driver iQ survey found that 76% of respondents said their carriers are either not taking steps to replace retiring drivers or were unsure what steps their company was taking.
The survey concluded that carriers are, in general, taking steps to attract and keep more drivers, but most of the effort is focused around pay at this point. Despite these efforts, though, they expect turnover to increase this year as more drivers jump to better paying jobs.
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