Is the U.S. labor market for truck drivers broken?

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MARCH 2019

Is the U.S. labor market for truck drivers broken?

The trade press covering the U.S. trucking industry often portrays the U.S. labor market for truck drivers as dysfunctional, citing persistent driver shortages and high levels of firm-level turnover and predicting significant resulting constraints on the supply of motor freight services. We use three techniques to investigate the labor market for truck drivers. First, using data from the Occupational Employment Statistics survey of the U.S. Bureau of Labor Statistics, we delineate the structure of the driver workforce. Second, using data from the Current Population Survey, we describe the occupations and industries from which drivers come and to which drivers go when they change occupations, and statistically analyze these entries and exits. We find relatively high rates of occupational attachment among drivers, and importantly, we also find that truck drivers respond in the expected manner to differences in earnings across occupations. Finally, we point out that the issues discussed by the industry are concentrated in one segment of the overall market, that for drivers in long-distance truckload (TL) motor freight, which contains 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. 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.

How does the labor market for truck drivers compare with the labor markets for other occupations with similar human capital requirements? The most prominent story about the market for drivers is that told by the American Trucking Associations (ATA), an organization representing firms that are central industry participants. The ATA has been arguing systematically since 2005 that firms hauling freight face a shortage of truck drivers, and discussion within the industry of a shortage actually dates to the late 1980s. Stories about a persistent driver shortage—and its potential effects on the larger economy—have also appeared periodically in major media outlets, most recently in 2018.

The consistent position of major industry stakeholders that there is a long-standing shortage of drivers poses a puzzle for empirical labor economics. Economists think of a shortage as a type of disequilibrium that normal market forces will tend to moderate and eventually remove, other things equal. A sound theoretical foundation for labor surpluses has long been recognized in the concept of efficiency wages, according to which employers maximize profit by holding pay above the market-clearing level, creating a surplus of job seekers and queues for such “good jobs.” Shortages, however, are harder to understand.

A shortage is generally alleviated in the short run by price (i.e., wage) increases and in the longer run by the development of new supply in response to higher wages. While it is not unusual for any specific market to be out of equilibrium at a point in time, it is unusual for a market to be consistently out of equilibrium in the direction of a shortage over more than a decade. This disequilibrium suggests either some unusual and persistent causal factor at work, such as a skills mismatch or a regulatory constraint preventing workers from entering employment or changing occupations, or a misapplication of economic terminology in describing the business situation.

Labor economists have addressed the problem of how to identify “occupational labor shortages” in various settings, starting with research by David Blank and George Stigler, who offer the following definition relevant to the current question: “the quantity of labor services in question that is demanded is greater than the quantity supplied at the prevailing wage.”4 In her turn-of-the-century review of previous work, Carolyn Veneri argues that no single criterion based in standard governmental data sources can be used to identify an occupational shortage.5 However, she suggests that there are some signs that would indicate a “tight” labor market, which in turn could make it appropriate to speak of a shortage. These signs are (a) increasing wages relative to alternative employment opportunities for potential job seekers, (b) lower unemployment rates than in alternative employment opportunities, and, sometimes, (c) employment levels that are either rising or holding steady, but not falling.

In this article, we examine the state of the labor market for truck drivers, using publicly available nationally representative data collected by agencies of the U.S. government on employment, earnings, and occupational mobility. We first describe the structure of the occupation—there are three detailed occupational categories which fall within the broader occupation of truck driving—and identify the number of drivers engaged in the different types of truck driving. Second, we compare the earnings of truck drivers and their unemployment rates with those of a broad group of related occupations requiring similar human capital, to look for signs of a tight labor market. Third, we ask whether the labor market for this occupation operates in the manner predicted by economic theory. We tabulate the occupations and industries from which individuals entering truck driving originate and the occupations and industries to which individuals exiting truck driving go. We then present an econometric model of entries and exits, analyzing how differences in earnings and hours affect movements into and out of truck driving, to see if these are consistent with economic theory.

We find some indicators suggesting that the market for truck drivers has been tight over the period from 2003 through 2017: wages in the occupation have been strong relative to those in similar occupations and employment numbers have been robust by the same standard. But we also find indicators of normal labor market behavior. Individuals who migrate into and out of truck driving come from occupations that either allow on-the-job contact with truck drivers or have similar human capital and job-skill requirements. In addition, entries and exits respond in the standard way to differences in earnings, controlling for hours. Surprisingly, the occupational attachment of truck drivers is actually a bit higher than that of some other blue-collar occupations. This finding suggests that the market for truck drivers works about as well as that for other blue-collar occupations, and that, broadly speaking, we should expect that if wages rise when the labor market for truck drivers is too tight, the potential for any long-term shortages will be ameliorated. We conclude by noting that the labor supply issues highlighted by the industry are concentrated, by the industry’s own account, in one specific segment of the market—that for drivers in for-hire long-distance truckload (TL) motor freight. A more specific analysis of this segment is needed, but is not feasible with the data used in the present article.

The remainder of the article is organized as follows.

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