The market for truck drivers

Getting a signing bonus is often associated with top young athletes. Now, taking a job driving a chemical truck in the U.S. can earn you a signing bonus of as much as $5,000 — and then there are also recruiting bonuses, retention bonuses and safety bonuses.

Those are the tactics that Randy Strutz, president of Quality Carriers in Tampa, Florida, is using to fill positions as unemployment lingers near the lowest level since before the last recession. The situation is cropping up across more industries in the U.S., as businesses feel increasing pressure to offer better wages and incentives to attract workers.

“It’s been a challenge to get good, qualified drivers,” said Strutz, who supervises about 2,500 truckers at the company owned by private-equity firm Apax Partners. “I expect we’ll probably have to spend more money to find applicants.”

That is from Patricia Laya.  What does it say about the job prospects for the remaining able-bodied, male unemployed?  There has been some recent coverage of video games, and incarceration, now it is time for more consideration of “can’t pass a drug test.”

Comments

Trucking booms anytime fuel is cheap. When the price of oil goes back up, we'll be hearing about truck driver layoffs and unemployment.

Oh? In late 2008 oil was at about 35 dollars a barrel. I do not recall hearing of a trucking boom.

Did you really need him to add the caveat "except when the overall economy is cratering?" Or was that kind of obvious?

"This time it's different" because they are imposing restrictions on the number of hours a driver can be within sight of a truck and monitoring it using real-time electronic instrumentation. This will increase demand for drivers until someone can setup a pipeline to send household goods to wal-mart.

That said, you need a commercial drivers license, and a clean driving record and to be willing to live in a truck. A drug test is relatively easy to fake by comparison.

The conference calls for logistics companies I've been listening too actually indicate excess supply of trucking and soft load pricing, and that some drivers are shutting down for a while because there's not enough hauls to go around.

So my guess is the this specific observation with chemical trucks is isolated and not representative.

Thanks for the great comment. Specific domain knowledge is a wonderful antidote to generalizations, which are part of being human but also not very helpful.

Ok, interesting. So this "shortage" is like the "shortage" of tech workers, i.e. a shortage at current salary levels.

It is more than that - hazmat drivers require an additional license than that required to drive an 18 wheeler. Which in a rational world, actually makes sense - though apparently not in the sort of world that members of the GMU econ dept. inhabit, where the idea that the only thing keeping a bunch of 19 year old unemployed male video game players from flooding the hazmat driver market is they might not pass a drug test.

So, your think that it is wrong to prevent drug users from driving hazardous chemicals around the US?

That is actually your serious considered opinion?

I cannot blame you for not reading the comment that actually precedes this in time - which is below - but there is a bit more than only a drug test keeping a bunch of unemployed 19 year olds from driving hazmat trucks.

In other words, the premise presented by Prof. Cowen is already, being as charitable as possible, extremely nebulous in this case.

If you had just stopped after the first line it would have been an incredible milestone in you actually participating in the conversation like an adult. Too bad you had to prove that you are really a whinny moron at heart.

Licensing is just a conspiracy of rent seekers. :-)

It often is. Sometimes it may be best, in the public interest, to allow a supervised conspiracy to exist. Often it would be far better to bust it.

Hazmat requires an endorsement to a regular CDL license, not a separate license.

So this “shortage” is like the “shortage” of tech workers, i.e. a shortage at current salary levels.

That is one way to put it. Another way is "a shortage at current productivity levels." While the same thing, leads to different analysis.

why is it when we talk about the labor market people who normally swear by the Law of Supply and Demand find reasons that it is not applicable?

@Tyler; Yes, can't pass a drug test makes sense but what happened to your hypothesis of people not moving to where the jobs are?

$5,000? Dr. Evil a Million Dollars isn't a lot of money anymore. Most drivers either own a rig or get shit for wages. Mexican drivers have flooded the market with cheap labor. We don't have an economy anymore. Apple, Google, Facebook and Wal-Mart all have something in common. Cheap labor. Google and Facebook are way overvalued. Both have a paltry few millions of ad revenue, and some few millions in outdated servers, but their stock value is huge. Facebook isn't even cool anymore. All the kids and teens left cause their parents are putting wedding pictures and baby photos on there. When they start putting slideshows of vacations to the Grand Canyon on their timelines, Zuckerberg is going to be Mr. Nobody.
We've had eight summers of recovery and still 100 Million people are out of work. You all better pray for a President Trump. Civil War II is a lot closer than you believe.

Every driver that shows up at my business seems to be a Russian. Some don't even speak English. How can you get a CDL if you don't speak English? Happened just yesterday, in fact.

Similarly the home building crews here are Russian. I haven't heard a word of English.

The big new thing Pinterest revenues are .8% of market valuation. Be sure and get in on the coming IPO..

So much to LOL here from JJ, but my favorite is his estimation of Google's and Facebook's revenues.

'What does it say about the job prospects for the remaining able-bodied, male unemployed?'

Not much? Essentially nothing? Nil?

'now it is time for more consideration of “can’t pass a drug test.”'

Or perhaps, we should wonder why more people (no reason for truck drivers to be men in this high tech wonderworld we live in) don't actually have a commercial vehicle operator's license with a Class H endorsement.

The HazMat Endorsement Requirements are as follows -

'Below is what you can expect when applying for a Class H endorsement:

* You must have a valid commercial drivers license (CDL) for the state in which you’re applying. It must be valid (not currently suspended or revoked) and not checkered with serious road violations.

* Provide proof of your full legal name. Photocopies will be rejected.

* Furnish proof of U.S. citizenship or permanent legal presence.

* Provide proof of identity and date of birth.

* Show proof of Social Security number.

* Present a valid medical examiner’s certificate (DOT medical card).

* Present, if applicable, a medical waiver.

* Pass the Hazardous Materials Endorsement Knowledge Test. Study the chapter on hazardous materials in your state’s CDL drivers manual.

* Pass a vision screening test.

* Pass a Transportation Security Administration (TSA) criminal background check. Give yourself plenty of time with this. Some criminal background checks can take up to 60 days. The background check includes submitting fingerprints. Be prepared to pay. Most background checks cost in the $80-$110 range.

* Pay all applicable test and endorsement fees. http://www.dmv.org/articles/how-to-apply-for-a-hazardous-materials-endorsement/

It isn't as if a 21 year old unemployed can get up from their comfortable couch and start driving a chemical truck the next day. Or even the next day after getting a commercial vehicle operator's license. And drug testing is not the only problem - a couple of speeding tickets and you are not getting that H Endorsement either.

Maybe this should be the sort of post that Prof. Tabarrok tends to focus on, pointing out how occupation licensing regulations (such as actually having to pass something as ridiculously named as a 'Hazardous Materials Endorsement Knowledge Test') are preventing a large number of unemployed American young men from driving hazmat 18 wheelers.

Another ridiculously named test to pass that prevents many from being un/under-employed: Bachelor's of Arts degree or Bachelor's of Science degree. Especially when it is from a mediocre directional regional institution.

Meant to say prevents many unemployed from stable jobs

There are some interesting comments in your link:

> Can someone with a felony drug possession conviction pass the background check?

>> Yes. I am a multiple offender, possess the TWIC Card, and now getting the Hazmat. Companies though may not hire a felon with a drug offence.

>> I just got my Class A CDL last week. I don't have any criminal or driving violations nor accidents. I was turned down by a few companies because I was unemployed for over a year within the past 3 years, yet you have multiple felony convictions and you're working? So a truck driver is more marketable if he breaks the law than if he couldn't find a job? WTF!

I've worked in trucking and construction for 16 years and my experience is a felon would be a safer bet than a prospective driver with a long period of unemployment.

"It isn’t as if a 21 year old unemployed can get up from their comfortable couch and start driving a chemical truck the next day. Or even the next day after getting a commercial vehicle operator’s license. "

Not the next day, but pretty soon, and without a ton of effort. Not sure what you're complaining about.

Well, let us leave aside the actual cost of acquiring a Class A commercial vehicle license (unless that unemployed 21 year old just happens to have a truck available to pass the driving test), followed by the H endorsement (which is where the 21 years old requirement comes from).

How many 21 year olds, without any driving experience at all, are likely to be hired as hazmat drivers? And if your answer is more than 0, you can reflect on just how stupid some companies can be when it comes to safety.

This cited test is not about general hauling, it is specifically about hazmat drivers.

And time to confess - I worked at GMU with one of the tanker drivers who worked out of the Texaco terminal in Fairfax City, who had a few interesting tales (if I recall after all these decades, one for example is that all the drivers had to be married - and getting divorced meant losing your job as a driver). But nobody hands over the keys to a tanker truck to someone who has no previous experience driving a truck, and I can imagine him chuckling at the very idea, before saying never get involved with such complete idiocy.

But times change, and America seems to be ready for 21 year old hazmat drivers who have no experience behind the wheel. Certainly it must be better for them to be hauling 8000 gallons of gas on the Beltway around DC instead of playing video games.

Admittedly, this happened a decade and a half after leaving that GMU job - 'A tank truck filled with gasoline overturned as it pulled onto the Capital Beltway in Annandale during the evening rush hour, spilling nearly all its 8,900-gallon cargo and turning miles of highway into a virtual parking lot, police and fire officials said.

---------------------------------------------------------

Three people, including the truck driver, Roderick Veney, 23, of Dale City, were injured in the accident.

There have been at least three major accidents involving gasoline-laden tank trucks at the site -- the Beltway interchange with Route 236 (Little River Turnpike) -- over the years. Fires after tanker wrecks in 1979 and 1988 damaged the bridge that carries Route 236 over the Beltway.

State police said the truck in yesterday's accident had come from a tank farm for petroleum products about four miles to the west in Fairfax City. The tank farm, which is fed by interstate pipelines, has been a source of controversy over the years because of underground leaks and because of accidents like yesterday's involving tankers distributing gasoline in the Washington area.

Veney was taken to Fairfax Hospital, where his injuries were described as not life-threatening. A firefighter suffered a knee injury, and a third person was overcome by gasoline fumes, but additional information on their conditions was not available.

Police said the accident occurred as Veney tried to pull onto the Beltway's outer loop from a ramp from Route 236. As the truck pulled onto the straightaway, it toppled on its side, rupturing its tank and spilling nearly all its fuel. Police said he apparently had been going too fast on the ramp, and they charged him with reckless driving. Fairfax County fire spokeswoman Renee Henningsen said some of the fuel leaked into nearby Accotink Creek, which feeds Lake Accotink, a major recreation facility about 2 1/2 miles to the south in the Springfield area.' https://www.washingtonpost.com/archive/local/1995/03/17/overturned-fuel-truck-snarls-rush-hour-beltway/35c7a5b9-e659-40e1-a47c-7e883ab880c1/

So this is the world I work in.

The problem isn't the 21 year old, the problem is if he's motivated (and likely to be a good employee) he hasn't been twiddling his thumbs since he was 18. He's been working for the last three years in construction, driving a forklift, or whatever. He's making money and doesn't want to go back to no income while he studies for his CDL. Plus he'll be stuck driving team for at least six months, maybe as much as two years, because just like new car drivers accidents mostly happen early in your experience. The reputable companies won't hire a solo driver without a year of safe driving, two is better. The guy in Andrew M's comment didn't get turned down because he's been unemployed, he got turned down because he's inexperienced.

Hazmat endorsement is another can of worms. You usually also need a tanker endorsement to make it worthwhile, which is another set of exams. Employers won't take hazmat or tanker drivers with any driving blemishes because the insurance costs are already extreme. A tanker-size hazmat spill cleanup can cost in the millions. I usually pay a 50% premium over dry van for a hazmat tanker move.

The drug screens and health requirements are important, I'd leave those and change some of the other regulatory factors. The recent hours of service changes went too far and need to be relaxed a bit, there's no evidence that they're going to reduce accidents or deaths. Make the minimum age for an interstate CDL 18 instead of 21.

The highest signing bonus I've seen in the last two years is $12k. It feels like the market's back towards equilibrium but not all the way there, it's certainly softer than two years ago.

"The problem isn’t the 21 year old, the problem is if he’s motivated (and likely to be a good employee) he hasn’t been twiddling his thumbs since he was 18. He’s been working for the last three years in construction, driving a forklift, or whatever. He’s making money and doesn’t want to go back to no income while he studies for his CDL."

Take a random sampling of truck drivers, and you'll mostly find people over 35, and you'll find a lot of divorcees. Truck driving isn't a job that people dream about going into. Nobody young sits around thinking about how great it will be to work 60 hours on-duty a week, sleeping away from home several nights a week, for the privilege of making a less-than-the-median salary.

The hard truth is, there's a shortage of motivated, intelligent, hard-working truck drivers. Anyone who's motivated, intelligent, and hard-working is going to find a career that doesn't require them to give up their social lives for the moderate salary that trucking offers. Motivated blue-collar workers will get a tech school degree and work a job that allows them to stay home during the week.

Either the average trucker salary needs to jump by $10k a year without adding any more hours to the workweek, or it needs to evolve to accommodate more relays and intermodal drop-offs so that fewer drivers have to go over-the-road. If trucking can't do either of those things, then trucking is never going to be any more than the job that people take when they've got no other options.

Most of those requirements are easy enough to pass. The hazmat test is no more difficult to study for and pass than the test for becoming a regular driver.

The background check is the biggest stopping point. When I went to driving school, there were several people in teh class who'd come out of prison and were trying to start their lives over, only to be told that many companies won't hire them because they can't pass the background check to get hazmat.

Those requirements don't actually sound so bad. You have to have a commercial driver's license, take one test, and jump through a few hoops. Nothing that would be too difficult for an industrious young person who wanted to break into the industry.

Tyler, what do you make of this (from Calculated Risk):
https://4.bp.blogspot.com/-3JL40Q22QoY/V-vJcrubFoI/AAAAAAAAo50/vTXVGIUaZXUGJO5UAiGqZh57PpAOkQ8mwCLcB/s1600/AtaAug2016.PNG
ATA Trucking Index

Is the big rise due mostly to imported goods needing to be shipped.
Or perhaps could this big rise have to do with the difficulty of establishing new rail capacity?

Prof. Cowen's example specifically refers to hazmat drivers, and as Shane m contends, does not actually reflect the current shipping market.

Besides, Prof. Cowen is unlikely to bother with calculatedrisk - after all, McBride generally makes academic economists look like ignorant idiots.

The heightened demand for truckers generally is implicit in his post IMO.

Certainly a point (of the sort McBride would delve into deeper if he was looking at this), but the second cited sentence says 'Now, taking a job driving a chemical truck in the U.S. can earn you a signing bonus of as much as $5,000.'

Hazmat drivers are a fairly specific subset of general truckers and fairly tightly regulated - it does not represent the sort of job that anyone can fill, even if the 'anyone' includes those already holding commercial vehicle licenses.

To create a fairly simplistic example - lots of people have pilot licences. However, the number of people holding a commercial pilot license is less, while the number permitted to commerically fly a helicopter is even smaller than that. An increase in demand for commercial helicopter pilots might show that the oil platform business is booming, but has little effect on whether a large number of unemployed 24 year ol American males can get a job doing such flying because they might not pass a drug test. The oil platform example was intentional - a lot of fracking fluids are extremely likely to be classified within a hazmat category, and when a well shuts down, the waste generally needs to be transported - though it may not be considered hazardous, but instead merely 'industrial.' This was fairly straightforward to read through, with a fair amount of detail - https://www.cga.ct.gov/2014/rpt/2014-R-0016.htm

“It’s been a challenge to get good, qualified drivers,” said Strutz, who supervises about 2,500 truckers at the company owned by private-equity firm Apax Partners. “I expect we’ll probably have to spend more money to find applicants.”

As our office says it ain't 2009 anymore with worker relations. Companies have not had to hire young, cheaper and inexperienced employees from 2008 - 2014 and they have not changed their hiring practices. Trucking companies only want 10 years experience and are unwilling to train young employees (or assist paying for the specialized license here) so they can't fill positions. (Have you noticed the filling for unemployment benefits has been at 40 years lows the couple years? Our office has had a major layoff since 2011 and that has never happened even during the 1990s.)

The problem with employers is they want to hire like George Steinbenner who invest more in proven talent and don't want Branch Rickey goal of training talent. (That would get them off the video games.

Notices advertising job openings with bonuses for truck drivers are posted on the rear of truck trailers, where they can be seen by other truck drivers. They're not posted on the packaging of video games. Trucking companies prefer to steal drivers from other trucking companies.

Maybe they should invest in development of a cool, truck driving related video game with embedded ads.

There's a reason for that: insurance. The only trucking companies that hire newbie drivers are the companies that are large enough to self-insure. If you run a smaller company and you try to buy insurance from a standard broker, they're going to tell you that your quote goes down dramatically if you only hire drivers with at least 2 years of experience. It's pretty standard practice for a new trucker to go work for one of the big carriers for a year or two until they get past the insurance requirement for the other companies.

And then this happens......video games stagnation? https://twitter.com/JoshZumbrun/status/784388378947047424

Why do you keep repeating the lie about video games? Total leisure has declined for the unemployed, and the rise in video games has been mainly substitution away from TV and other leisure activities. I’m not sure why you keep repeating the “video game” myth:

https://twitter.com/ernietedeschi/status/780473553993039872

I have been reading the same "looming trucker shortage" articles for 20 years. Does it not occur to anyone that these articles are planted? Search through transcripts on earnings calls. Search for "driver shortage" and similar. None of the executives ever complain about a driver shortage when they talk to investors. That's because there is no driver shortage.

this was a great article, although i still fail to see why truck drivers need this.

I am interested in the article. Thank so much. I hope to see more useful news from you.

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