It's also overly simplistic to believe that trucking companies can infinitely raise wages to support demand. People/businesses only tolerate a certain cap of pricing on goods and to say that ceiling is infinitely high is silly.
If markets were perfectly efficient, sure all your wishes and hopes would be a reality. But we're not efficient, we're flawed humans running these things so the flaws are apparent when you attempt to accommodate.
This really isn't true. In practice it may be, but that's due to inefficient allocation, not due to a lack of resources. We have enough food to feed the entire human population. A shortage would be if we didn't.
We are constantly in a situation where we do not have enough resources to do everything we'd like to do, we have decide which are the best uses of the resources.
If we don't even have enough resources to keep everyone alive, then we are still in that exact same situation of not having enough resources to do everything we'd like to do. We are going to have to decide how to expend those resources (i.e. which people are going to live)
There’s many solutions, all of them involve incentivizing people to become drivers. If people want their Amazon orders so bad, they’ll end up paying. And if they don’t, then they have to re-prioritize what they want.
The disruption is these "moving pods". They are more expensive, but they are well advertised, and one fears that the established small players will be driven out of business.
If they removed those minimums, the price would go up substantially - your model doesn't include that cost on the train side, it would incur it on you as a shipping aggregator, making your costs uncompetitive.
Just a guess, I haven't done an analysis.
Trains also aren't that much cheaper. I'm not sure why this is, but my hunch is that much of the cost in transportation is pick up from origin and drop off at destination and this essentially has to be done via truck. So, if you're shipping via train, you incur an additional pick up and drop off, since the goods need to go from the trucker's hub to the train, then from the train to the trucker's hub. That probably erases a lot of the savings that you see when you just calculate costs based on the physics of truck vs. train.
Railroads, on the other hand, pay all their own track maintenance, and even have to pay property taxes on the track. The whole system is tilted against railroads.
And you can't just say 'there's lots of people for whom $200k would be a lot of money' because there's a lot of people who whom $50k is a lot of money and those jobs aren't filled either.
Short of literally offering a million dollars a year, it's got to be more complicated than how much you offer.
If there are alternatives available that use less or cheaper labor, then people will use those instead.
There's no cap for any price. And if the alternatives are cheaper, then maybe that type of business doesn't need to exist in the economy.
That's supply and demand.
The $50,000/year jobs that aren't being filled have one of:
1. Require years of non-transferable training.
2. Have insane working hours, that make your real pay closer to minimum wage.
3. In especially shitty working conditions.
4. Are in locations where $50,000/year isn't enough to live on.
5. Destroy your body after a few years on the job.
6. Have better-paying, better-work-condition alternatives that use similar skill-sets.
7. Or, more typically, two or more of the above.
That said, if it paid $200k/yr (median or even 75th percentile), the shortage would disappear post haste. The vast majorly of other jobs that pay that much tick boxes 1, 4, or both and are thus logistically out of reach of at least half the population.
I think the job has a very high incident of obesity and heart disease, as it's so sedentary, and a high incident of divorce because it's anti-social.
Driving a truck paid well and the carriers got fat.
After a series of deregulation acts beginning in the 70’s there was a race to the bottom on prices. Many carriers went out of business. Driver pay dropped (all though you could still make a good living doing certain types of OTR.
Swings in the economy are felt in transportation.
Until the trucks drive themselves there will forever be too many/few drivers. It’s the nature of a deregulated industry that moves with the economy.
Every swing in a labor market is not a social crisis. Although we can all probably foresee some real social crises’ related to driver labor in the future and not of the “too little” kind.
Because to do so is a tactic for maximizing the amount of money they get, that being their self interest.
When you see this sort of 'workers are fussy and childish even though they're treated and paid incredibly well!' business, it's safe to read it as 'reality has come knocking, and the reports of wonderful conditions and pay are greatly exaggerated'. It's like asking what's wrong with millenials that they're not buying enough diamonds.
Logistics is a profit centre, not a cost.
What is the goal of just exaggerating and debating a thing no one says versus just debating what people are actually saying?
So where people don't have much leverage (or are perceived to not have much leverage), they move slowly. Trucking is low leverage (the training is a couple months and a large proportion of people will be able to obtain a CDL). Around here they've moved to offer paid training, which wasn't the case a year or two ago.
As for this particular case, truck driving is a crappy job, with its long term prospects darkened by self driving technology, and equal paying professional jobs in decent supply. If you're motivated enough to be a professional, you can usually find a better career. And there's a fairly hard cap on how much long haul trucker drivers can be paid before rail becomes more economic.
No, I don't think that they are.
Like selling and leasing back real estate, which often pumps up cash flow for a few quarters and then cripples the company with operational expenditures instead of appreciating as land tends to do.
It's just that the subject is extremely important, though it's seemingly not related to 'truck driver shortage'. Part of the problem with seeking to first justify the way our economics are structured, and then explain the outcomes, is that it ignores externalities that can be important.
You could take the opposite tack and begin from 'wealthy people are inherently evil' and probably be almost as wrong, but then you'd be arguing a deeply anarchic position where leadership is only dominance and subjugation. That ignores things like Elon Musk's elaborate, sci-fi goals which are clearly that of a nerd writ large, and not simply a pointy-hair CEO guy wanting only wealth.
The truth is a lot simpler: value is what you're able to make happen, but compensation is sheer social engineering. CEO pay has absolutely nothing to do with whether they're more useful as a class than truck drivers. I think some of them are more useful than truck drivers, and some are not.
But CEO salary has nothing to do with the `Talent`. Tim Cook, Sundar Pichai, Satya Nadella all replaced their predecessors pretty well and will be replaced by someone better in future too.
The real reason for high CEO salaries is mostly about risk associated with replacement. Sundar Pichai got paid $100M in years 2015. Which looks high but when you realise there are 20M shares of Google it is merely $5 per share.
If you are a Google shareholder would you risk Google's steady growth for a $5 dividend per year ? Will you waste your time saving $100M or rather focus on empowering Sundar to find next $10B market to disrupt ?
CEO salaries are high and they will soar with time too as corporations become large and government regulations increase. As regulations and size of corporations increase a person friends with Ajit Pai would matter more than a person willing to take a pay cut.
As a free market person I have no problem understanding it. Whether it is desirable, good or bad those are value judgements but there is no magic or hidden conspiracies at play here.
P.S. : I think Sundar is getting paid really pennies. Justin Bieber made $80 Millions in year 2016. He is just a singer (and a bad one at it). Sundar on other hand is spearheading a company that forms the brain of our civilisational progress at the moment, responsible for employing millions across the globe and saving billions for entire humanity.
- Labor intensive, low margin industries typically have long-term financial structures that don't allow for high wage volatility. Most workers also dislike wage volatility, so this arrangement works. However, this means that there is limited ability by the business to address labor shortages by increasing wages.
- There is an actual labor shortage. If the market needs 1,000 neurosurgeons and there are only 800 in the world, no wage level will make that shortage disappear and it may be many years before the market can adapt. This is painfully evident at the high-end of the software engineering market. Paying higher wages doesn't eliminate the shortage, it just moves it around.
- Individual wages are capped by value produced. Companies that can pay the highest wages are those where employees produce the most value. The value produced by employees is finite so at some wage they are effectively unemployable; the market has to clear in the other direction as well.
- Spatiotemporal latency and distribution i.e. the required skills are trainable but do not exist when and where you need them. This is increasingly challenging as businesses are required to adapt on shorter timeframes; human populations change and migrate at relatively slow rates.
- Local monopsony for labor sets an economically optimal clearing price for the buyer. This creates a synthetic "labor shortage" of sorts in company towns and similar; market clearing, but in a skewed market. This is not the situation for the vast majority of Americans.
Most labor markets are some combination of all these, and the first four reasons are common in most American labor markets. None of those real labor shortages can be reasonably addressed simply by "paying more". That isn't how markets work.
Not quite to that extreme, but I'm giving up money now by choosing not to go into management and stay a senior developer because I don't want to be a manager and not to get a better paying job as a consultant who would have to travel more and be away from my family. My wife took a pay cut when we got married to work at a job she enjoys.
Some jobs are not worth the extra money to a number of people no matter how much money you throw at them.
The quote, “the market can stay irrational longer than you can stay solvent” comes to mind. Companies will not pay competitively. They’ll suffer in any other way, but they won’t pay people.
The same effect happens at many price points. For example, the huge push of hype into data science is often a way to push down wages in machine learning / stats. Jobs go unfilled for months, but the company will not offer competitive pay or benefits. I’ve seen this both as a candidate and as a hiring manager frustrated by HR & leadership teams vetoing rare, qualified candidates because they ask for $30k above the budget, or they want sponsored travel to academic conferences, or they want us to match their existing severance benefits at their current company.
Even when we have indisputable business needs for detailed experience in a domain specialty, they think: can’t you just hire a kid out of school with a cardigan & a macbook for $130K? When we show them a qualified candidate earning $200k, it’s just an unconditional no, without any thought as to why that wage gap is there, and why we have a “talent shortage.”
Just totally clueless yet extremely price sensitive.
One thing is that people up the food chain are usually rewarded for outwardly displaying one-sided emotional buy-in to the company's stated mission, to the point that their jobs largely consist of emotional labor, cheerleading every initiative, restructuring, TED talk, executive announcement, etc., as unequivocally "good", never "bad", and 100% forward-thinking genius.
Surely most of them have internal, private lives where they know this is nonsense, but they cannot let it be seen or even suspected. And as a result, their language must always be based in the presumption that any candidate in the world would be lucky to work for us, and would have to be a fool to choose to work somewhere else, and that if they turned us down for any reason at all, it must always mean their heart was in the wrong place and they were insincere and misguided to have any doubt about working for us.
When you are trying to create job requisitions, slides about growing a team, etc., and this is the sort of attitude you're going to face in the approval meetings, it is wickedly difficult. There's no way you can come right out and say we don't offer competitive salaries, because that would mean somehow "we are bad." And HR, whose job isn't tied to the actual productivity of my team, is more than happy to sycophantically agree with upper management, and try to spin the story that either it just takes time to find the right (read: unwittingly cheap) candidate, or else it's the technical team's fault for not doing a good job with interviews.
Then there will be some lengthy song and dance about hiring third party recruiters (who will tell them the same thing -- candidates who are good enough are not cheap enough), sexy new start-ups in the HR space, like HackerRank nonsense, or management consultants, followed by tenuous re-orgs, restructurings, constantly reworded job ads, tweaking of job titles, creating more and more "road maps" about what roles we see the team growing into, etc.
And after months, or even years, of wasted effort on all that junk overhead, we'll still just be lacking the basic productivity we need to create the basic business outcomes we need. Different managers will have quit or gotten promoted. Different start-ups will have gone out of business or popped into existence. Different consulting companies will offer new over-the-moon promises about finding talent. And it all just repeats.
When it comes to wages in these companies, the amounts it would take to hire a top-end candidate (say, maybe, $350K in total compensation or something) is absolutely trivial to the company's budget. They could pay thousands of people at that wage, even including overhead for benefits, etc.
It really has nothing to do with the wage. It's just about this perception that the company is entitled to get the labor it wants at whatever price it wants. Followed by great ideas being slowly bled to death by never-ending re-orgs, consultant engagements, and ever changing management personnel.
The correct price of farm labor is whatever it costs to obtain it. There is no cap. It's whatever it costs to persuade people to move from their comfy office to the farm.
If someone can choose to make $30K a year and adjust thier lifestyle accordingly instead of making $90K a year doing a job that they don't want to do, many people will choose the former.
I would go so far as to say the vast majority of public school teachers make the choice between less pay and being able to do a job that they enjoy as opposed to doing a job that they don't enjoy.
Anecdotally, every person I know that decided to work in the school system (including my mom and my wife) chose to do it because of stability, being off for the summer, and being able to work with kids when they both could have made more money doing something else. I doubt you could offer them 10x the amount of money to be willing to work in the fields.
But more to the point of the article, many people would not take the trade off of the dangers and long hours away from thier families, for any amount of money.
Heck, I wouldn't. Once you have a comfortable lifestyle, the marginal value of a dollar goes down.
After the kids get 4-5 they are in school during the day and you have the same schedule for the holidays and the summer.
My mom not only went back to work part time for the school board, she voluntarily took a pay cut from what they were willing to offer her so she could work more hours helping at risk kids without interfering with her pension.
She could have easily worked at a college, made more money and received her full pension
> Some jobs are not worth the extra money to a number of people no matter how much money you throw at them.
Which is fine. As price rises, demand wanes. If strawberry pickers cost more than the consumer is willing to pay for strawberries, we'll stop growing strawberries and they can start eating something that is more efficient to produce (for example, something that is more easily harvested with machines) instead.
I will point out that this is why the formal definition of shortage is not "being able to buy what you want at a price you can afford", even if it is used that way colloquially.
As the truck diver salaries go up cost of everything that relies on transportation also goes up marginally. Suddenly the struggling pistachio farmer will now find it even less economical to continue, Wallmart will have to raise prices of their goods and so on. All eventually leading up to poor people paying even more for their daily consumption items such as diapers and baby food.
The brighter side of this is that the Truck driving as an occupation would be pretty much extinct in next 20 years as self driving trucks, hyperloops, cargo drones etc. will replace them or make them really low skill jobs.
More short-term, Wallmart will either just discontinue that product or offer it elsewhere due to free movement of capital. We'll get just a couple brands of cereal at the supermarket, instead of 25.
But the truck driver's worth is determined by market too so whenever someone says there is a shortage they mean shortage at a viable price point.
Shareholders make less, consumers don't pay more, because you're still going to rather have your goods get to market versus not being in business.
As many others in this thread have mentioned, there is no shortage. This is a narrative pushed by actors attempting to keep trucking wages low.
For example, in rental markets, it's been shown that tax increases are almost entirely passed on to tenants.
I doubt it. Once off the highway trucks, given their size and ungainliness, have to perform maneuvers and general rule breaking to get around that I doubt any computer would be able to manage safely in 50 years at the very least.
I've said before that self driving vehicles will be a great boon to truck drivers in the immediate future. It will allow them to relax, relatively, on the most tedious and mind numbing part of the job. Navigating small roads and loading/unloading cargo will still be a human job for awhile to come.
You correct to say that a lot of things about truck driving might not get 100% automated in next 20 years but many aspects will reducing the truck driver's salary and skill expectation. For example Wallmart or Amazon could build warehouses where trucks will be loaded and unloaded in 100% automatic fashion. For majority of the interstate driving trucks might simply go with minimal supervision and driver will have to take control only in 10% of total time. All this will make trucking less lucrative and less productive occupation. That is as good as extinction.
They will only be helpers for the self driving truck, not the main drivers like today.
What, exactly, is the point of commerce in the first place? Is it measured by some abstract efficiency metric or do real life humans figure into your analysis at all? If so, which humans count and which ones don't?
Very good question. The point of commerce is that people be able to buy other people's time willingly for a rate they voluntarily negotiate. When you can buy someone else's time you save time for your own self to do something that interests you. Everyone time you fill gas in your car you are buying perhaps 0.5 seconds of a guy who chose to work on a Oil rig in Alaska and 1 second of a government servant in Washington DC working for Energy department.
As long as people have free time there is never a problem of mass unemployment unless government makes it a crime to work on voluntarily negotiated terms.
Except, of course, there often is.
Per wikipedia: https://en.wikipedia.org/wiki/Shortage#Causes
In a perfect market (one that matches a simple microeconomic model), an excess of demand will prompt sellers to increase prices until demand at that price matches the available supply, establishing market equilibrium. In economic terminology, a shortage occurs when for some reason (such as government intervention, or decisions by sellers not to raise prices) the price does not rise to reach equilibrium. In this circumstance, buyers want to purchase more at the market price than the quantity of the good or service that is available, and some non-price mechanism (such as "first come, first served" or a lottery) determines which buyers are served. So in a perfect market the only thing that can cause a shortage is price.
So while it can happen, 99% of the time these articles are just some company complaining about the cost of labour which they don't want to pay.
The concept of an anything shortage in an efficient market is outrageous.
There is likely a gap between the salary a current truck driver will take and the one a potential truck driver will take, because the people who are not already doing it not only need some training but are likely to view it as a dying industry due to publicity about self-driving vehicles. So it seems like there could be substantial inelasticity just above the typical wage.
But there are also existing truck drivers from whom you can poach from another company. If that other company cannot afford the new rate that you've offered, they're no longer in the market for a truck driver, and are no longer counted.
It's like of like software developers. At, let's say, $150,000 per year, there are only so many companies who can afford them. A place that can only afford $30,000 per year for a developer isn't in the market for developers in the first place, no matter how much they claim they are. So as price rises, the need for drivers also declines.
Technically speaking, the definition of shortage is a situation where an external mechanism, such as government intervention, prevents price from rising. That does not seem to be the case here.
Those shortages create opportunities and more people train to fill those gaps but it takes some amount of time before 3 new workers are available.
Here's one example of the guy in Stockton paying about 16000(?) versus the people in Napa paying 40000 for the same crop/work (the grapes in Napa are worth more), and Napa farm workers are commuting from the Central Valley.
There's actually no need for truck drivers. People could carry loads on their backs. The reason companies don't hire people for this is because they're much more expensive (ignoring speed/etc.) than truck drivers. So if you're saying there can be labor shortages (in a free market), you could also say there's a severe shortage of human thing-carriers, which is ridiculous.
Absolutely that could happen. But it's funny how you refuse to acknowledge that there may be a "labor shortage" and instead you present it as a "abundance of jobs", as if they aren't two sides of the same coin.
Your second point is just ridiculous, I agree.
If it's ridiculous to say there's a shortage of thing-carriers, how is the different from saying there's a shortage of truck drivers? What's the difference? If you just dismiss it as ridiculous, then you probably don't know what you're talking about.
It's really not a difficult concept to understand.
Should I be using the more economically correct phrase 'scarcity of human capital'?
The industry has labour problems that aren't related to pay. Nobody wants to sit outside a business for 6-8 hours, earning 0 dollars. Solution: Fine deliverees by the minute. Over-policing of truckers. Solution: Lower fines for commercial truckers, thus removing the incentive for police interaction. Long time away from family. Solution: Truckers have a maximum distance they may travel in a day, which includes the return trip.