Bureau of Labor Statistics report downplays impact and severity of truck driver shortage

A consistent theme in the freight transportation sector recently is the truck driver shortage—the myriad difficulties motor carriers face in finding and attracting drivers.

This sentiment has been echoed not only by the motor carriers themselves, but also many other industry stakeholders—shippers, 3PLs, and freight brokers. But a recent report issued by the Department of Labor’s Bureau of Labor Statistics (BLS) questions if the driver shortage is as bad as it’s purported to be within these industry circles.

The BLS report “Is the U.S. labor market for truck drivers broken?” examines three ways to gauge the labor market for truck drivers. Using data from the Occupational Employment Statistics survey of the BLS, it delineates the structure of the driver workforce; using data from the Current Population survey, it describes the occupations and industries from which drivers come and to which drivers go to when they change occupations. The report also points out the issues discussed by the industry are concentrated on drivers in the long-distance truckload segment, which, it says, make up between one-sixth and one-fourth of all heavy and tractor-trailer truck drivers.

“These findings suggest a more nuanced view of this labor market,” BLS wrote. “As a whole, the market for truck drivers appears to work as well as any other blue-collar labor market, and while it tends to be ‘tight,’ it imposes no constraints on entry into (or exit from) the occupation. There is thus no reason to think that, given sufficient time, driver supply should fail to respond to price signals in the standard way. The persistent issues localized in the TL segment are not visible in the aggregate data and require a distinct analysis.”

BLS highlighted how the American Trucking Associations has long argued, going back to 2005, that motor carriers have faced a driver shortage, with anecdotal industry discussion on the topic dating back to the late 1980s.

It also noted that a shortage is generally alleviated short-term by wage increases and in the longer run by the development of new supply in response to higher wages. However, it also adds that even though it may not be unusual for a market to be consistently out of equilibrium at a point in time, it’s unusual for a market to be “consistently out of equilibrium in the direction of a shortage over more than a decade,” which appears to be calling out the validity of an actual truck driver shortage.

The report explained that with heavy-duty truck drivers accounting for around half of total truck driver employment, driver employment fell during the 2007-2009 recession. By 2013, it was roughly back to 2003 levels of around 2.9 million drivers, including 1.5 million heavy truck drivers and 2.8 million truck drivers in 2013 (including 1.6 million heavy truck drivers). And by 2016, it said, those numbers jumped to 3 million truck drivers (including 1.7 million heavy truck drivers).

“The stability of trucking employment over the past 14 years provides some evidence of a tight labor market for truck drivers—the demand for drivers has remained strong while the demand for workers with low levels of education has declined substantially in other sectors,” the report said.

Referring again to ATA’s data between 1995-2017, the annual turnover rate at large TL carriers averaged 94%, while small TL carriers averaged 79.2%. And it noted that following the 2007–09 recession, in the first quarter of 2010, the annual turnover rate at large TL carriers 39%, while small TL carriers hit 35%, which BLS said each “are still very substantial percentages by the standards of blue-collar occupations,” and stating that “the problem of managing recruitment and retention becomes harder to solve when the industry has a lagged pricing response to a positive demand shock because much TL freight moves under contracts, and aside from a spot market, freight rates do not adjust upward quickly. This lagged response has occurred twice post recession, in 2014 and again in 2018.”

Despite opposite perspective from the trucking sector, BLS said that economists would not view high turnover rates and related issues like recruiting and retaining drivers in this part of trucking as a long-term shortage. And it also said that they would not call these conditions a “broken market,” except to the extent that one might use that term for a secondary labor market segment because the high turnover that marks such a segment is an indicator that the jobs in it are unattractive to many potential employees.

In its conclusion, BLS said that the labor market for heavy and tractor-trailer truck drivers indicates a tight labor market going back to 2003, due to what it called resilient employment and nominal annual wages having persistently exceeded those of other blue collar jobs.

“The overall picture is consistent with a market in which labor supply responds to increasing labor demand over time, and a deeper look does not find evidence of a secular shortage,” BLS said.

Unsurprisingly, the ATA blasted this report, with ATA chief economist Bob Costello saying BLS demonstrated some basic misunderstandings about the trucking industry on a general basis, as well as how ATA and trucking stakeholders view the driver shortage.

“First, the trucking industry is large and diverse with many types of carriers, services, jobs and career paths for drivers,” Costello said in a statement. “ATA has long recognized this when we discuss the driver shortage, repeatedly emphasizing that the shortage is generally contained to one segment of our industry: the over-the-road or long-haul for-hire truckload segment. The authors go out of their way to say their data could not tell the difference between drivers in this segment and other drivers—this error is compounded by the fact that some of the data utilized in the analysis is nearly two decades old. Second, this work ignores ATA’s long-standing contention that at the heart of the shortage is the need for qualified drivers. Unlike other ‘blue-collar’ jobs the authors compare truck drivers to, motor carriers cannot simply hire anyone to do the job. There are simply too many barriers to entry for new drivers: age requirements, CDL testing standards, strict drug and alcohol testing regimes and, perhaps most importantly for many fleets safe and clean driving records.”

Costello also observed that the BLS report ignores how truck drivers differ from other blue-collar jobs, in that they are often away from home for long stretches, something that is not adjusted in BLS’s conclusions and leads to what he called ill-found claims.

At February’s RILA LINK 2019 Retail Supply Chain Conference, Costello addressed driver turnover, as it relates to the ongoing challenges motor carriers have been up against. One of the key components related to that, of course, is driver pay, which Costello observed has lagged for a long time.

“If you look at what driver pay was in 1980 compared to now in real currency terms, it was higher then…so we still have a lot of catching up to do,” he said.

But there are signs of improvement with large turnover rates falling 20% over the second half of 2018, as per ATA data, with Costello pointing to pay increases as the reason for that reduction.

That situation could change, even if the next recession is mild, he said, as it could lead to a fair amount of carriers exiting the business, as it will be difficult for them to keep those pay increases intact.