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Despite Biased Reporting, Deregulated Trucking has been a Resounding Success

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Despite Biased Reporting, Deregulated Trucking has been a Resounding Success

September 12, 2017

With red tape relentlessly on the rise over the past four decades, it is easy to forget that trucking has benefited from broad deregulation signed into law by President Carter in 1980. But there is trouble in paradise, according to Slate writer Benjamin Snyder.

Snyder alleges that deregulation has effectively shifted the burden of rules from the firm level to the individual level, resulting in a plethora of federal rules targeting drivers that are ineffective in reversing destructive market forces. By Snyder’s telling, deregulation enabled a “dog-eat-dog industry that made it difficult for small companies to thrive” and increased market concentration. Meanwhile, drivers “saw a steep drop in earnings” and watched their working standards take a nosedive.

While Snyder’s story is another chapter in the “capitalism in crisis” canon fueling demand for new regulation, the premise is shaky at best. A thorough accounting reveals that trucker wages and living standards have climbed, while industry competition increased dramatically. Productivity has never been higher, with unprecedented volumes of goods crisscrossing the nation.  

To Snyder, the plummeting wages of the American truck driver is a byproduct of unfettered market forces. While making passing mention of declining driver living standards, though, no attempt is made to actually crunch the numbers. A cursory glance of the wage figures over the past forty years supplied by the Bureau of Labor Statistics appears to back up Snyder. In real terms, yearly wages fell from around $78,000 in 1976 (prior to deregulation) to $41,000 in 2016.

But relying on this average wage fails to take into account the bifurcation of the industry post-deregulation.

Prior to the passage of the Motor Carrier Act of 1980, long-haul truck driver jobs were not all that different from one another. Private companies maintained large fleets, and compensated drivers according to rigid, union-dictated schedules. A 1976 BLS report describes pay as, “fairly uniform because this field is highly unionized, and union contracts generally are master agreements covering all employers within a multi-state region.” The elimination of barriers to entry in the MCA, however, led to a large influx of independent drivers who contracted out to different firms.

While a majority of independent truck drivers can and do enjoy not being shackled to a company, there’s a pay-tradeoff; employees make around a-third more than contractors. For drivers hired by large companies like Amazon, pay is only a bit lower since deregulation. According to the latest (2015) estimate from the American Trucking Association (ATA), truckers in exclusive private arrangements make $73,000 a year. Given that trucking is considerably safer than it used to be, and employers tend to pay hazard premiums for more dangerous jobs, trucking today is hardly less lucrative than yesteryear. Purportedly exploited independent contractors seem to have higher pay satisfaction than their employee counterparts. It is hard to put a price on “going your own way,” especially when independent contractors have the potential to make more than $100,000  a year.

These dreams are easily discounted as unrealistic for the vast majority of truck drivers, but the upward wage potential is a powerful motivator that exists more now than ever before.  For drivers who value stability over going into business for themselves, traditional employee gigs are just as plentiful as in the past. Roughly half of the 1.5 million truck drivers in the United States opt for salaried positions instead of contract work, around a 50 percent jump from 1976. While this increase has not quite kept up with the 70 percent increase in overall labor force participation over the same period, pay hikes are increasing entry into the industry.

Americans, apparently, are not thrilled with the long required hours behind the wheel. Perceptions of poor safety continue to dog the industry. While trucker fatalities are high compared to most other occupations, drivers are clearly far safer behind the wheel than ever before. Adjusting for the number of miles driven and excluding alcohol-related deaths, truck drivers are 22 percent less likely to die in a crash than they were in 1995. While commentators have pointed to a raw increase in the number of truck driver deaths since the Great Recession, fatality increases during recoveries are to be expected. As economic activity climbs, the number of miles- and correspondingly, the number of accidents- climb.  Once controlling for distance, this statistical artifact all but disappears.

The economic landscape for truckers since the dreary days of regulations has, on the whole, been a positive one. That’s not to say the industry is free of challenges. In the decade after deregulation, a flurry of bankruptcies punished unprofitable trucking models—and employees paid the price. Now, however, truckers can choose between the stable, well-paid jobs or high-risk, high-reward contracting. Total employment in the industry has tripled over the past 40 years, with recent wage increases leading to more positions being filled. Increasingly, drivers do not have to put their lives on the line to get an honest day’s wages. This may not conform to the “deregulation kills” narrative that is in vogue on the left, but it is more accurate. Opening markets makes lives better, whether in the rice fields of China or the open roads of America. 

Ross Marchand is a policy analyst at the Taxpayers Protection Alliance.

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