are truck drivers underpaid?
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Are truck drivers underpaid?Dale Belman a & Kristen Monaco ba School of Labour and Industrial Relations , South Kedzie Hall, Michigan State University ,East Lansing, MI 48824-1032, USAb Department of Economics , California State University Long Beach , 1250 Bellflower Blvd,Long Beach, CA 90840, USAc Department of Economics , California State University Long Beach , 1250 Bellflower Blvd,Long Beach, CA 90840, USA E-mail:Published online: 16 Aug 2006.
To cite this article: Dale Belman & Kristen Monaco (2005) Are truck drivers underpaid?, Applied Economics Letters, 12:1,13-18, DOI: 10.1080/1350485042000291411
To link to this article: http://dx.doi.org/10.1080/1350485042000291411
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Are truck drivers underpaid?
Dale Belmana and Kristen Monacob*
aSchool of Labour and Industrial Relations, South Kedzie Hall,Michigan State University, East Lansing, MI 48824-1032, USAbDepartment of Economics, California State University Long Beach,1250 Bellflower Blvd, Long Beach, CA 90840, USA
There is an emerging debate over whether truck drivers are underpaidgiven their human capital and working conditions. Using data from the2000 Current Population Survey, the pay differentials between truckdrivers and other blue collar occupations are investigated. While truckdrivers appear to receive a small premium in their hourly wage comparedto workers with similar skill requirements, they receive substantial pre-mium in their weekly wage. This weekly wage differential is primarilythe result of a substantially longer work week.
It is well established in the literature that truckdriving became a less desirable occupation afterderegulation in the late 1970s, when wages plum-meted significantly.1 Average hourly wages foremployee truck drivers fell from $16.00 to $12.72over the period 1979 to 1993, a decrease of 20.5%.2
After bottoming out in 1993, hourly wagesrebounded somewhat and reached $13.70 in 2000, a
7.7% increase.Truck drivers face demanding working condi-
tions, especially long-haul truck drivers (Belzer,2000; Belman et al., forthcoming). Drivers hoursof work are governed by Federal Hours of ServiceRegulations which limit drivers to 60 hours of workin a seven day period. It is widely acknowledged inthe industry that long-haul drivers routinely violate
these regulations (Belman et al., 2004; Braver et al.,1992; Beilock, 1995) and often work considerablylonger than 60 hours per week.
In combination with the long hours of work,the post-deregulation decline in drivers real earningshas fuelled discussion over whether drivers are
adequately compensated for their work. The viewthat drivers pay is too low is common currencyamong those who drive, but such views are notlimited to drivers. Belzer (2000) argues that sincederegulation the non-union sector in trucking hastaken on many of the characteristics of sweatshops:below subsistence wages, overwork, and unpleasantand unhealthy working conditions. Others, such as
Corsi (2001) and Beilock (2001, 2003), argue againstsuch conclusions. In particular, Beilock notes thatdrivers earnings are closely aligned with those ofindividuals with similar education levels.
How might this issue be addressed? Economictheory suggests that wages are largely determinedby an individuals productivity, however, pay is notdetermined solely by productivity. The theory of
compensating differentials implies that pay is influ-enced by working conditions. Employers who pro-vide substandard working conditions will be unableto attract a sufficient supply of workers at the goingwage rate, which compels them to offer an incrementto pay to attract workers who would otherwise
*Corresponding author. E-mail: email@example.comResearch on deregulations impact on the trucking labour market includes Belzer (1995), Rose (1987), Hirsch (1988, 1993),Hirsch and Macpherson (1998), and Belman and Monaco (2001).2All figures are calculated in 2000 dollars using data from the Current Population Survey. Data from the May Survey is usedin 1979 and from the Outgoing Rotation Groups files after 1979.
Applied Economics Letters ISSN 13504851 print/ISSN 14664291 online # 2005 Taylor & Francis Group Ltd 13
Applied Economics Letters, 2005, 12, 1318
choose jobs with better conditions. As labour mar-
kets are characterized by a certain level of fluidity,
this compensating differential applies not only to
similar jobs within an industry but across industries
and occupations. Given the demanding nature of
truck drivers jobs, we would expect that if truck dri-
vers were underpaid their wages would resemble
those of workers with similar human capital working
under better conditions.
One way to determine whether the market is
compensating drivers for their working conditions
is to isolate the component of individuals wages
associated with their occupation and compare this
to that of similar occupations.3 This is done by
estimating a wage model with an indicator variable
for each occupation but no overall intercept. The
coefficient on the occupation indicator variable is
the occupational wage component, which reflects
the market valuation of the advantages and disadvan-
tages of that occupation. The estimated magnitudes
of the occupation components can be compared
between occupations and judgments made about the
appropriateness of the implied wage differentials.
This approach is necessarily somewhat judgmental
as there is seldom a perfect fit between occupations.
Nevertheless, it provides a workable means of explor-
ing the issue of driver underpay.4
We use data from the year 2000 Current
Population Survey Outgoing Rotation Groups files
to estimate a conventional human capital wage equa-
tion with controls for educational attainment, age,
gender, race and ethnicity, union membership, region
of residence and residence in a metropolitan area. We
limit our sample to those individuals employed in the
private sector only and exclude individuals who are
self-employed. The 99 821 individuals in the resulting
data were engaged in 484 different three-digit private
sector occupations according to the CPS definitions.
The model includes indicator variables for each of
these 484 occupations. To better understand the
occupational effects of employment in trucking, we
separate truck drivers employed in the trucking
industry from those employed in other industries.
We estimate this model using in turn log hourly
earnings and log weekly earnings as the dependent
variable, and report results for each of these respec-
tively in Tables 1 and 2.5 We use the log wage
estimates to construct predictions of the hourly
wage by occupation, and report these in the tables.
The predictions are standardized for human capital
by calculating the predicted wage at sample mean
human capital characteristics.
For each table, we display the occupational title in
column 1, followed by the occupation code used in
the CPS in column 2, the actual mean hourly earnings
by occupation (unadjusted for human capital or other
characteristics) in dollars in column 3, and by the
earnings predicted by the regression model (calcu-
lated at the mean human capital characteristics),
also in dollars, in column 4. In the next column, we
show the difference between the earnings of drivers in