There's No Shortage, Just A Price You Don't Like
In the absence of government meddling (e.g. price controls) healthy markets seldom create true shortages, meaning situations where one simply cannot obtain a product or service. One might think there was a shortage, for example, of Superbowl tickets, since there are only a few available and tens of thousands, maybe hundreds of thousands, of people who would like to attend. But in fact one can Google "Superbowl tickets" and find hundreds available. You may not like the price ($3500 and up for one ticket), but they are available for sale.
Yesterday, the AZ Republic lamented that there is a shortage of truck drivers nationwide:
Trucking companies across the country are facing a shortage of long-haul drivers....
High driver turnover has traditionally been a problem throughout the trucking industry. But retirements and growing shipping demand have made the shortage of long-haul drivers more acute. Fewer drivers means delayed deliveries and higher delivery costs that could be passed on to consumers. The issue is especially crucial for the Phoenix area, which touts itself as a shipping hub for businesses fed up with the costs and congestion around Los Angeles-area ports. The Valley also is headquarters to two of the country's biggest for-hire trucking companies: Swift Transportation and Knight Transportation....
Trucking experts say the problem goes beyond a labor shortage in the industry. They call it a threat to the economy.
"Our country needs to figure out how to fix this," said Ray Kuntz, chairman and chief executive of Watkins and Shepard Trucking in Montana and chairman of American Trucking Associations. "Our economy moves on trucks."
Here is the key fact:
• Long-haul wages vary by company and are typically based on experience, safety record and commercial-driver's-license endorsements. Long-haul drivers with two or more years of experience usually earn at least $50,000 to $60,000 a year.
• An entry-level driver with no over-the-road experience starts in the high $30,000 range. Team drivers can earn more.
There is no way in a Platonic vacuum to determine if a wage is too high or too low. But the driver "shortage" gives us a really good hint that maybe these salary levels are no longer sufficient to attract people to the rather unique trucking lifestyle. I probably could write a similar article about how there is a shortage of Fortune 500 CEO's or airline pilots who will accept a $30,000 starting salary. The problem then is not shortage, the problem is that wage demands are rising as trucking is out-competed for talent by alternative careers. In fact, there is not shortage, but a reluctance by trucking firms to accept a new pricing reality in the market for drivers.
By the way, to some extent this "shortage" is indeed an artificial creation of the government. Under NAFTA, Mexican truckers were long-ago supposed to have been given access to the US market, but overblown safety concerns have been used as a fig-leaf to block the provision as a protection for US truckers and a subsidy to the Teamsters. If a truck driver "shortage" is really a national economic problem, then let's stop blocking this NAFTA provision. But my sense is that the trucking companies in this article would freak at this, because they are not really concerned about the national economy but, reasonably, with rising wages hurting their bottom line. My guess is this article is the front-end of a PR push to get states like Arizona to subsidize ... something. Maybe truck driver training. Look for such legislative proposals soon.
Posted on January 24, 2008 at 08:38 AM | Permalink
They may actually be correct in calling this a shortage (although not in the way they mean).
I don't know the facts of the situation, but the trucker's union is a legalized cartel that limits supply and drives up price. It is possible that there is an actual shortage caused by regulations to limit the supply of licensed truck drivers.
Posted by: th | Jan 24, 2008 9:56:46 AM
Don't worry, this is yet another problem that will be solved by The Greater Depression.
Posted by: dearieme | Jan 24, 2008 10:02:16 AM
If the restrictions on Mexican trucks are lifted, will the next step be Mexican truckers filling the job vacuum cited by the transportation industry? For the truck companies this would be an attractive economic alternative and there would be a pool of (partially) trained drivers. I know that HB 177 (is that right?) is geared towards hiring hi-tech workers from overseas but there might be some way to tweak that to include Latino truckers.
Posted by: Rocky Mountain | Jan 24, 2008 3:23:49 PM
The "trucker's union" does not cover coast-to-coast over-the-road (OTR) drivers...its members are short-haul and less-than-truckload (LTL) drivers. I drove a truck for several years, then bought one. The OTR long-haul business is best left (or _was_, back around 2000 and before) to large companies that can hedge fuel costs and benefit from other economies of scale and scope. I leased my truck briefly to Landstar Inway, and they routinely offered loads that would barely cover my costs. There isn't a chance in hell that I would either recommend this line of work or get back into it. I went months without going home and without seeing anybody who I knew. Trucking's problems are self-inflicted, and it will take drastically higher pay rates to fix them.
Posted by: skh.pcola | Jan 24, 2008 4:27:31 PM
Thanks to companies exploiting the H2B visas, there are a ton of eastern european drivers now. And union drivers are such a small percentage of drivers they is no way they can regulate or control anything in trucking anymore.
You can't have a strong trucking industry with a weak economy, it's just not possible. And with the downturn in the economy, means less freight on the road.
The "Driver shortage" is a complete sham and it's only goal is to drive down wages.
The companies have the upper hand because if the truck doesn't move (because of lower freight volumns) the driver doesn't get paid. If he gets sick of not being paid, or not being paid enough, he quits and moves on.
Posted by: Wayne | Jan 24, 2008 6:04:48 PM
A similar situation exists in manufacturing in NJ. You constantly here about Shop owners bemoaning the fact that they can't good skilled machinists, but these same asshats want to pay wages to work long(60 hours or more a week) hours in fithy conditions with a "stopwatch" mentality, that are equaled by your local Home Depot.
That's right - they want to pay unskilled wages, for a job where skills take years(or even decades) to develop.
Posted by: HTRN | Jan 24, 2008 6:36:33 PM
I absolutely agree with the point made here. Very often, a shortage of labor is actually the result of firms not willing to adjust their labor costs to "market rates". I would even suggest that the current shortage of "IT workers" in the states is the result of similar circumstances.
Posted by: Ming Jack Po | Jan 28, 2008 3:14:59 PM
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