At the Salt Lake City headquarters of C.R. England, company officials are continually evaluating what they can do to retain their drivers. Compensation is always a topic for discussion. Like so many other carriers, C.R. England has to weigh their own economics against the financial needs of their drivers. This year could be especially interesting.
The question is, will 2018 be the year of big raises for truck drivers? No one can say for sure, but signs are pointing in that direction. There is enough happening across the economy to suggest that trucking companies will be able to pay their drivers more in the coming months.
Let’s look at some of the positive signs:
The GOP Tax Cut
The biggest influence in the driver compensation decision will arguably come from lower corporate tax rates. The GOP plan has reduced the corporate rate from 35% down to 21%. That is significant no matter how you look at it. Lowering corporate taxes by 14 percentage points means a savings of $14 for every $100 earned.
A number of well-known companies have already embraced the lower corporate tax rate by giving bonuses to their employees. Count AT&T, Bank of America, Comcast, Southwest Airlines, and Walmart among them. Proponents of the tax plan say other companies will follow suit as a result of having more money to spend on their own operation; money that would otherwise be sent to Washington.
Larger Signing Bonuses
Trucking companies have used signing bonuses to recruit new drivers for quite some time. But as Overdrive magazine reported on January 18, the size of those bonuses spiked considerably as the new year opened. That is on top of the generous signing bonuses motor carriers were offering in the last quarter of 2017.
Higher signing bonuses usually signify that trucking companies have more money to spend on compensation. As a result, wage increases tend to follow spikes in signing bonuses. There is no guarantee that will happen in 2018, but there are indications it will. Companies will spend more on bonuses to recruit new drivers; they should offer greater compensation to keep them.
Increasing Spot Prices
Overdrive reports that spot prices began to creep up in 2017 along with the expanding economy. There is no reason to believe either will slow down in 2018. The U.S. economy now appears to be on a steady, upward trajectory that will only increase as both taxes and regulation decrease. We should see a commensurate rise in spot prices as a result.
The thing about spot prices is that they tend to translate into driver wages. This is certainly true for independent contractors whose income is derived solely from spot pricing. But even employers have been known to tie compensation to pricing. As spot prices go up, companies have more money to spend on their drivers.
The Ongoing Driver Shortage
Tying all the other things together is the ongoing driver shortage that is expected to be made worse by the ELD mandate. Whether fears of a worsening labor market come to fruition or not, trucking companies are desperate to find reliable drivers that will stick with them. One of the best ways to address the problem is through compensation.
In years past, motor carriers have not had the extra cash to address the driver shortage with higher pay. But that is no longer as much of a problem. Lower taxes, increasing spot prices, and a gradually expanding economy are improving the cash positions of almost every motor carrier in America. That should help alleviate the shortage somewhat.