Increasing driver pay: An incentive or reward?

Pay increases are a recent trend in an industry struggling to supply a rising demand, but it may not address the heart of the issue.

Some companies claim to have implemented revolutionary, one-of-a-kind pay increases, but adding monetary incentives is not a unique idea. It serves twofold—to attract new, younger drivers to a career filled with aging professionals and to retain seasoned workers in efforts to meet the needs of a growing industry.

But for certain trucking companies it’s more than a strategy—greater pay is a reward. Some fleet professionals said it is the first of many steps needed to revolutionize the industry in order to solve the driver crisis.

Dart Transit upped pay for new and current drivers, according to vice president of communications and marketing Russ Moore. The company increased rates three times in two years for new drivers, a weekly minimum guaranteed pay of $1,200 as well as an opportunity to earn a performance bonus of 3.5 cents per mile.

Owners and founders of Dynamic Transit, Fred and Michele Khani, implemented pay increases as well, most recently on April 27, with a previous increase in March.

The new bonus is 10 cents per mile for all drivers who earn their hazardous materials endorsement license, which Fred estimated was about 45% of their company drivers.Fred said that the past year has brought a wave of pay increases, along with a stronger economy and regulatory changes. With the flow of drivers out of the industry, “it’s kind of created a storm for better demands, better conditions for drivers,” he said.

TMW Systems director of value engineering and professional services Damon Langley said drivers may want “more than just a pay-per mile; they’re going to be looking for total comp and packages that include sign-on bonuses.”

These perks, he continued, may be in the form of stock grants and bonuses for safety, miles driven, tenure, and potentially salary or minimum weekly pay, as well as layover and vacation pay. Other executives he’s conversed with foresee 60 cents per mile becoming standard within the next two years.

Photo: Dynamic Transit

Dynamic Transit recently implemented pay increases for its drivers.

The Khanis recalled their time as professional drivers in efforts to relate to their company’s fleet operators. This perspective has helped them address and improve some obstacles, Fred said.

“Drivers deal with a lot of stress out on the road,” Michele said. “What it used to be and what it is now, there’s a lot more regulation, they’re looked at more specifically.” She also listed shipper and receiver delays along with tighter schedules

Fred added that driver productivity has room to grow, but is linked to other aspects of the industry, like working with the shippers, which trucking companies don’t have control over.

“We understood drivers are working hard and their earning is much deserved,” Fred said. But over the last decade, “freight rates have been so stagnant that we have not been able, not just us, but the industry has not been able to give the increases that drivers deserve and make the adjustment.”

Moore agreed on the critical role that rates play in the grand scheme of driver pay. “Rising freight rates are allowing motor carriers to pay for the escalating wage costs,” he said.

Photo: Dart Transit

Dart Transit increased rates three times in two years for new drivers, a weekly minimum guaranteed pay of $1,200, as well as an opportunity to earn a performance bonus of 3.5 cents per mile.

A report by the Wall Street Journal revealed that sectors of the industry slowed hiring or cut jobs altogether, possibly in frustration from failing to receive enough qualified applicants. Yet the demand for their services continues to rise.

Langley attributed recent challenges to accumulating industry problems.

“Where we are today is a function of not addressing several issues over the past couple decades,” Langley concluded. This includes driver wages on a per-mile, per-hour basis, failing lines of communication,  the overall lifestyle for drivers – irregular sleep, time away from home, unpredictable miles, and ineffective administration, from appointments to trailer management.

“And sometimes a lack of respect for their job; a lack of respect for who they are and what they do,” Langley added.

Michele agreed that a history of lack of concern for drivers has created this climate, which needs to be addressed to solve the shortage. Both she and Fred said their increase in drive pay was more of a reward than a stipulation.

“The bottom line is that we’re helping to fight for the drivers – for better conditions as well as higher wages,” Michele said.

Langley calls these main issues the heavy hitters. “It’s always interesting to know what the industry reasons are but you also need to know what your top reasons are. You need to find out why your drivers exit, you need to see where those things overlay, and then where you may have some differences,” Langley said.

And things like “running around looking for trailers,” being detained, long load and unload times and poorly-set appointments frustrate drivers make it worse, he added. “If you take these trucking 101 items and you address those effectively, strategically, and executionally, you’re probably going to retain some drivers.”

Langley reminds administrators that the highest rate of turnover is likely in the first few months following a hire. And because the onboarding process is expensive, he stressed the importance of valuable hiring techniques, beginning with targeting and attracting the right potential employees.

In order to attract what Fred termed “newbie drivers,” there must be enticing pay, sure, but people must also be “attracted to this lifestyle.” If more companies can offer high pay and a welcoming, safe, productive work environment, trucking will see an accordingly high interest in the industry, Fred predicted.

Trucking official told Congress they view technology as a tool for attracting more young drivers into the industry. (Photo: Neil Abt/Fleet Owner)

In efforts to increase new hires, and as a Women’s Business Enterprise National Council carrier, Dynamic has started lecturing and hosting seminars in high schools and colleges as well as on military bases. The company also has spoken to groups of young women to educate them and advocate for trucking as a viable career path.

“It’s opening up their minds to being able to do something like this, whereas 10 or 20 years ago I don’t think it was a thought about process when they were 17 and 18,” Michele said. “There were not many women out there when I was driving 30 years ago.”

Fred said the industry needs new infrastructure to attract millennials, who have interests that vary from other generations. He mentioned longer vacation time or working less than a traditional five-day week, and said it is possible to compensate for this as long as payment is restructured allowing the drivers to earn a fair living despite clocking less hours.

“But in order to do that you have to get compensated for it. And in order to get compensated for it, so you can compensate the driver, you have to demand from the shippers. That money has to come from the shippers, from somebody.”

While Fred said there is more market stability, there is still room for improvement.

“It’s not there yet,” he said. “So some of this squeeze that we’ve seen is even going to get tighter.”

This article was originally posted by American Trucker.