Payment by mile is the norm in long-distance hauling
By Richard Pummell, Foley Carrier Services
While a driver shortage continues to plague the trucking industry, it is very important for owners of trucking companies to delve deep into the issue and try to come up with unique ways to attract new drivers to the industry.
That brings me to the topic of driver pay. I am not as concerned with the amount of pay drivers receive, but more interested in the way (or the ‘how’) drivers are getting paid today.
More commonly than not, over-the-road truck drivers are now getting paid by the mile. Why is that? While I was doing some digging, I came across a Trucking Truth blog post (www.truckingtruth.com/trucking_blogs) that does a fantastic job of explaining why driver pay is what it is today. I recommend checking out the article (entitled Why Drivers Are Paid by the Mile) if you are interested in the topic, and I do want to highlight one paragraph from it here: “Piecework Pay is an economic theory that actually has roots in Karl Marx… Marx’s idea of ‘surplus labor’ was basically that anytime a worker earns his ‘keep’—enough money to sustain his family—then any extra work that is done is solely for the profit of the company. The result (according to Marx) was that companies would work people 24/7 if they could for profit. By paying people by the ‘piece’ you would maximize surplus labor, and the company would have a greater profit without shelling out too much money to workers.”
The History behind Piecework Pay
Let’s take a quick look at two key moments in the history of driver remuneration.
In 1938, President Franklin D. Roosevelt introduced the Fair Labor Standards Act, which is also known as the Minimum Wage Law. The trucking industry was exempt from this, and driver pay was to be handled by the Interstate Commerce Commission or ICC.
The in 1980, Congress passed the Motor Carrier Act, which took the ICC’s control away.
These events help us put the pieces (no pun intended) together. We must remember that when the Motor Carrier Act was passed, the trucking industry was still exempt from the Minimum Wage Law. What does that mean? The industry became completely deregulated, resulting in the current Piecework Pay method.
Of course it makes sense to think about why trucking companies would maintain the Piecework Pay method: It helps to eliminate cost. However, when the driver shortage is thrown into the mix, it could be more beneficial for trucking companies to begin moving away from this method of pay.
In a Fleet Owner online article (FleetOwner.com) entitled Truck Driving Would be a Great Job If You Got Paid, owner-operator Dave MacMillan reflects on a 40-year driving career: “The driver shortage is bad, and it will continue to get worse. You can’t attract young people to this industry anymore. When I was a kid all I ever wanted to do was drive a truck. Now, you look at this industry and you think, ‘Geeze, I may stay away from home almost all year long, in and out, and only make $30,000. Or, I can go into construction, be home every night, and make $50,000.’ It’s not much of a choice.”
If the industry did move about from paying by the mile, what would the alternative be? Paying by the hour. “I think the only way is to pay drivers by the hour, because there’s so much time lost in transportation that paying by the mile just doesn’t cut it,” MacMillan wrote. “You spend so much time in traffic or sitting at shippers and receivers who abuse your time as a driver. Big carriers continue to pay by the mile, and they get what they pay for. At the end of the day, many of the really good drivers leave the industry because they’re not making enough money. This trickles down, and you end up with guys that really shouldn’t even be on the road.”
Pay by the Hour
As with everything, there would be drawbacks for trucking companies if they decided to begin paying drivers by the hour. Those drawbacks are mostly going to be on the financial side of things. Well, if paying drivers by the hour brings more drivers, and better drivers to your trucking company, wouldn’t that, over time, bring in more money?