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Can the Industry Afford Not to Transition to a Guaranteed Pay Model?

CDL Driver Pay Trends and Outlook

Copyright © 2019: The National Transportation Institute www.DriverWages.com Reproduction in any form is prohibited without written permission. All rights reserved

Benchmarking Truck Driver Compensation Since 1995

The National Transportation Institute is the principal authority for company truck driver and owner operator compensation in the trucking industry. We provide you with data that is critical to your company like per mile and hourly driver wages, accessorial pay, benefit costs, and best practices associated with company programs.

We offer original economic research for the transportation industry relevant to truck driver compensation. Benchmarking your driver compensation allows you to support, retain, and recruit professional truck drivers in your fleet. Knowing the competitive wages ensures your trucks are seated with appropriately compensated, happy, and safe truck drivers.

NTI sponsors our coveted Top Pay Carrier designation, an elite designation for carriers that provide top tier pay, health & retirement benefits, and carrier stability, that together make professional driving a rewarding and secure career choice.


NTI Tracks Results that Support Your Critical Decisions

The National Survey of Driver Wages Driver Supply & DemandThe National City-Centric/Intermodal Driver Pay Survey Gap between For-Hire and Private FleetsThe National Fuel Surcharge Monitor Expert Witness TestimonyNational Transportation Alerts Custom Overview by Fleet/Trailer TypeThe National Major Fleet Benefit Report ConsultingThe National Student and Trainer Pay Survey Competitive Indicator by CityThe National Directory of Truck Driver Training Programs Driver Retention / TurnoverThe National Driver Wage Index Best Practices to Recruit and RetainThe National Private Fleet Survey Custom PresentationsThe National City-Centric Technician Pay Survey


What Makes For-Hire Driver Pay Move

Pay Model Description:

• Green indicates strength, Red weakness and Yellow neutral conditions • Driver pay can not increase when freight rates are red• Freight rates act as a gatekeeper on driver income; no meaningful upward movement can occur unless

freight rates are green• When driver supply is red, driver income cannot decline

Economic environment:• TL driver turnover is stuck near 100% • Capacity demand is out stripping supply, but lack of qualified drivers is constraining expansion• Offers extended to applications ratio is on a five-year downward curve

• Unemployment hits 50 year low • GDP growth averages 2.9%• Driver pay and freight rates continue to rise


2018 Truck Driver Pay Conditions

Economic environment:• TL driver turnover is stuck in a range between 75% - 100% • Well-qualified driver's remain in short supply leaving marginally-qualified drivers to fill the seats at low paying carriers• Offers extended to applications ratio improved from 2018• Unemployment stays near full employment levels

• GDP continues to grow, but a slump in exports and inventory build made a negative contribution to growth• Capacity has exceeded demand in many (not all!) markets • While lower than 2018, contract freight rates viewed historically are reasonably strong, with continued pressure from shippers to drop as the spot market continues to decline


Driver Income

Freight Rates

Capacity DemandDriver Supply

Driver Turnover

2019 Q3 Truck Driver Pay Conditions

● The U.S. has a systemic blue-collar labor problem

● The driver pool is shrinking● Truck driving jobs are considered

undesirable by many blue-collar workers § Relatively low pay § Very difficult work§ Lumpy pay§ Irregular schedules >70+ hours§ Work week length doesn’t compare

favorably to other blue-collar jobs

§ Inconsistent home-time§ Increasing regulation § Greater pressure to conform to work

models§ Loading, unloading inefficiencies and

congestion curtail earning potential

● Increasing drug use is reducing the number of blue-collar workers qualified to work as Class A & B Commercial drivers

● Drivers are not fungible

BLS Says We Have Plenty of Drivers


ü 10 States & DC allow the recreational use of marijuanaü 33 States allow the use of medical cannabis

ü 13 states prohibit employers from some forms of discrimination against medical cannabis usersü New York City bars most business and non-profits for screening applicants for the use of marijuana

ü No reliable test to measure the impairment or non-impairment of a marijuana user exists todayü Most current nationwide surveys show support for legalizing recreational marijuana in the 65% range

Workers Testing Positive for THC 2015 vs 2017*

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If Only We Could Attract Gen X and Millennials • Baby Boomers are a retiring,

aging work force, sharp decline in births 1965-66

• Gen X – 9M active duty military Vietnam War 1964-1975, Birth rates cratered; 60k didn’t have kids, the rest had fewer due to absence and later marriage

• Based on age and trends, Millennials would just now be considering trucking is 2nd, 3rd, 4th career choice

• Gen Z – not even accessible to us until after 2016, relative to age alone

• Gen X and ongoing - Latino influx ignored by trucking

20-24 yrs., 4.10%

25-34 yrs., 14.90%

35-44 yrs., 23.40%

45-54 yrs., 30.30%

55-64 yrs., 20.70%

65+, 6.80%

0.00%

10.00%

20.00%

30.00%

20-24 yrs. 25-34 yrs. 35-44 yrs. 45-54 yrs. 55-64 yrs. 65+

Class A CDL Driver Ages1994 2003 2013 2016 2018

Trucking Industry Average Age 54


McDonalds

Minimum Wage

U.S. CPI-U

Private Fleet W-2

For-hire Truck Driver W-2

113.6%

47.1%

21.8%

23.3%

18.2%

Driver Wages vs. Inflation 2007 - 2018

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-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-2.43%

-7.36%

-2.69%

0.87%

1.26%2.42%

3.94% 4.26%

5.47%

0.40% 2.66%

9.58%

U.S. CPI-U NTI For-hire Driver W-2 Private Fleet W-2

Lumpy Pay Isn’t Just Week to Week, it’s Year to Year

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Above-Average Pay is Only Step 1

Pay is simply the handshake that greets our drivers. Pay alone does not generate a new pool of highly qualified drivers … But it helps!

• Can generate new interest when well-promoted• Can reignite folks that have a CDL or left the industry to return• Can improve retention if elevating pay to well-above-average or especially from below average to

averagePay alone is not the only reason a driver selects a motor carrier or why they leaveIncreasing pay without adjusting other factors that impact retention is ineffective in the long runHome time Equipment failuresCongestion Bidding for shifts at a private fleetTreatment when out on the road/customer sites Inward Facing Cameras Unproductive time when working Work/life balanceLack of (safe) parking with accommodations Ineffective managementHighly physical/labor responsibilities

NTI Truck Driver Pay Competitiveness2017 2018 Q-3-2019

NTI Truck Driver Competitive Index Weekly Pay Weekly Pay NTI TDCIBlue-Collar Jobs Weekly PayUtilities $1,660 $1,755 54.6%Mining & Logging $1,432 $1,506 63.6%Construction $1,135 $1,204 79.6%Manufacturing $1,051 $1,110 86.3%Oil Field Worker $1,605 $1,669 57.4%Blue-Collar Weekly Average $1,320 $1,449All transportation workers $921 $958 66.1%For-hire OTR Class A Drivers $1,082 $1,181 86.8%Private Fleet Class A Drivers $1,494 $1,582 109.2%

NTI Truck Driver Pay Competitiveness

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NTI Truck Driver Pay CompetitivenessGuaranteed Pay remains inconsistent

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• Not one fleet has ever said, “We love our Sign-On bonus and it works,” yet the disparity between fleets committed to a Sign-On and fleets committed to Guaranteed pay is indicative of the industry’s reliance on the productivity pay model i.e. “It’s the drivers’ responsibility to do more in order to earn more.

• Recruiters tell us Sign-Ons are passé, and that Guaranteed Pay and Transition Bonuses better reflect a driver’s value but too often Guaranteed Pay is too low, which doesn’t promote productivity for the folks in the truck, or in the office = Turnover!

• Guaranteed Pay remains reliant on the driver’s availability and willingness to work, and often even a minimum productivity.

NTI Truck Driver Pay CompetitivenessConflict between Guaranteed Pay and Sign-On Bonuses

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• It’s widely accepted that Guaranteed Pay is a proven solution to retain drivers, yet fleets are conflicted about committing to the concept.

• The current predominant pay model forces driver income to remain susceptible to productivity, weather, mechanical failure, congestion and even shipper inefficiencies.

• 55% of Flatbed fleets offer Guaranteed Pay, but 54% are a short-term guarantee –Transition Pay

• Only 15% of Tanker fleets offer guaranteed pay, but only 45% pay by the mile. The rest are per hour, per load and percentage plans.

• Findings prove that retaining drivers isn’t just about the minimum, but also about consistency.

NTI Truck Driver Pay CompetitivenessTurnover is expensive and we prove it daily!

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New Hire/Partial-Year Driveractual pay outcomes are 26.29% less

than a Full-Year Driver at the same fleet

Even if the truck is re-seated, fleet productivity is severely impacted by turnover.

● Rapidly accelerating pay for trainees● Guaranteed pay, which reduces turnover by up to 30% just in the periods

administered. When continued as salary, can improve by 100%● Shifting of responsibility of productivity to operations, not the driver● Gamification to drive engagement and KPIs and to connect to pay outcomes● Cell Phones or Tablets with ability to connect with loved ones● Driver engagement via Podcasts, Facebook Live, Video Messages ● Predictive analytics to reduce accident severity and turnover● Reduce unproductive time: App to identify trailer location, video learning,

load matching, shift from irregular OTR to Dedicated● Safe, paid parking with accommodations


Winners in 2019

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● Overall the U.S. Labor Supply will stay very tight● 2019 For-Hire Pay will remain flat while Private Fleets increase wages 3-5%● Local, Regional and Dedicated are top-desired roles by applicants● Package delivery, final-mile and local private fleet opportunities are growing● In light of tightening labor supply, we’re competing with other industries who are

now paying near our entry-level trainee wages for hourly/home-nightly jobs● The number of fully qualified drivers will continue to dwindle as new entrant

numbers remain low, as retirements, regulations and high turnover continue to take a toll on the driver pool.

● Driver Supply will become critical again (GDP, Trade deal, Regulations)


NTI’s Driver Supply and Wage Expectations

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Thank You!

Leah ShaverChief Operating Officer

The National Transportation Institute612.263.9983

[email protected]


Download - CDL Driver Pay Trends and Outlook - MemberClicks … · Benchmarking your driver compensation allows you to support, retain, and recruit professional truck drivers in your fleet

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