[anifow]

I disagree.

An hourly wage is a very special payment system which requires some kind of foreman to be sustainable. Otherwise, the labour industry tends to drift towards inefficiencies that allow them to claim money for less work. This is classic agency risk, where the incentives are not aligned, and heading down this path often entails major bureaucracies to try and keep everyone honest (like time clocks and punch cards, a "boss" looking over you, etc).

Simply paying more within the existing structure makes perfect sense. It will actually have a disproportionate effect on recruitment when some of the most efficient drivers start bragging about making $160,000 a year driving trucks (this is one of the big drivers of immigration by the way. Compared to poorer nations, the streets are paved in gold in the USA, and some lucky immigrants find shovels to dig it up. Unfortunately, most people who come never get a shovel so it remains but a dream...).

Paying more by the mile absorbs the costs of refuelling and traffic, without giving any driver an incentive to waste time when, for example refuelling the truck. So rational truckers will go to gas stations that are more efficient and will get out of there as soon as they can.

Where the trucker has no agency, however, it could make sense to pay by the hour. For example, since loading is in the hands of another group as soon as the truck docks in, and since it can vary quite a bit based on warehouse, better that the driver is paid for time sitting around. You could argue that the driver's incentive is to rush the loaders, but I doubt they have any coercion in that process. So better that the shipping company have an incentive to make loadings as fast possible through influence over choice of warehouse, penalties to warehouses for slow loadings, etc.

I've never really thought about this industry before, but thinking about it now makes it sound very interesting!

[crdoconnor]

>This is classic agency risk, where the incentives are not aligned

Paying by the mile is even worse. How much incentive does the company have to make unloading and loading more efficient when they get it for free?

[_yosefk]

If drivers spend much time loading and unloading, and not getting paid, the amount paid per mile required to attract drivers will rise.

[crdoconnor]

What seems more likely, actually, is that you will get Akerlof's classic lemon market - due to the information asymmetry of paying by the mile.

The employer knows how much value the driver's gonna contribute for the money they pay, but the potential drivers aren't at all sure how much income they'll get paid for their time/effort. They basically only have hearsay from other drivers/ex-drivers to go on. Furthermore, some are getting burned and leaving the industry (I know personally of one; and there's another in this very thread), and telling others about their experiences.

The number of confounding variables and risks (including but not limited to loading/unloading) are simply too high for them to be able to make an accurate judgment about their potential income.

The natural effect of a lemon market is that the market dries up because the buyers/sellers simply stop transacting when the problems caused by the information asymmetry are too much.

That actually seems to be exactly the situation we're getting here. The wages don't seem to be that bad actually, but the risk is all piled on to the driver, so new recruits are very reluctant to enter the industry after hearing a few horror stories.

Lots of startups have gone down for similar reasons - pricing that is too complex makes potential customers go 'fuck it' and go with the devil they know.

[judk]

The market for lemons doesn't really apply here, because a lemon market requires a supply that is heavily weighted toward worthless goods, to drag the average down to 0 as the "best" opportunities are withdrawn from market.

[anigbrowl]

Assume labor is the currency and the good is cash. If a majority of trucking employers give employees a mediocre or poor deal, then the supply of trucking jobs in the aggregate delivers poor value for the required labor input, in comparison to other lines of employment. Good firms either go out of business (due to being undercut) or retain their drivers, such that there are few openings at good firms.

In an ideal world good firms would increase their market share, but doing that requires satisfying trucking consumers and they want their goods shipped as cheaply and quickly as possible. So the interests of consumers and suppliers (of trucking services, ie drivers) are not very well aligned. I don't know what can be done about this; as a consumer I have absolutely no clue which hauling companies handle the goods I purchase, nor do I have any clue how much of a good's price consists of shipping costs. So I can't really vote with my dollars to let store owners know that I'm willing to pay a little more to support trucking companies that treat their employees well.

[crdoconnor]

Nope. It just requires information asymmetry, which IS the case here. Trucking companies know more about what income their potential workers will make than the potential workers will themselves.

Experienced truckers will have less information asymmetry, but experienced truckers need to be replenished as they retire. Apparently that's not happening.

[coldtea]

In the perfect world of the auto-correcting market.

In real life, in the case of coal miners and their "dead work" (necessary work that wasn't getting paid), it took bloody strikes and fights to get those rises, the amounts paid weren't automatically upgraded.

The "money required to attract X workers" only plays a role when those X workers are not destitute and starving to begin with. If they are, and the company can pay them less and still have a huge profit from their work, it'll do that.

[the_ancient]

In theory yes,.,, almost 100 years of history says no this is not the case

[erichocean]

> If drivers spend much time loading and unloading, and not getting paid, the amount paid per mile required to attract drivers will rise.

Actually, logic would indicate that it has already happened. Every industry pays people the least amount that it can reliably obtain labor and/or reliably profit from their employment. Trucking is no different.

[crdoconnor]

Not every industry tries to create such an opaque payment structure.

Industries that do that sort of thing tend to suffer in aggregate because you get a 'bad money drives out the good' effect, similar to used cars.

The same thing happened in finance (nobody touches the CDO market now - it would have disappeared entirely were it not for government life support).

[mcguire]

That has not been the case, historically. Time spent "on duty, not driving" has been a major complaint for decades and is one of the reasons duty schedules are ridiculous.

[the_ancient]

there are alot of factors here

1. Most companies use what is called "Book Miles" for payment and these books I believe were published in the 1940's or something, because most companies "Book Miles" are vastly different than the actual miles driven

2. "Foreman" problem can be solved with Technology, the DOT is planning on requiring all electronic logs in the near future, like 2015 I believe, most trucking outfits already have realtime GPS monitoring of their trucks, you can monitor these employees in a far more accurate manner than one can monitor factory workers.

3. Most company truckers do not have a choice of where they fuel, this is planned as part of the trip, and they are provided a fleet card that is only accepted at a chain the company has a contract with.

this is just a start but I think you believe truckers have more freedom then they do in reality. The technology and logistics that goes in to trucking does not allow for any independent thought, they are given a route, with preplanned fuel and rest stops, if they deviate from this route they must explain why (i.e mechanical failure, stopped by police, etc)

While they may not have a human foreman monitoring their time clock, they have electronic foreman's and government regulators acting as foreman's

[mcguire]

"Paying more by the mile absorbs the costs of refuelling and traffic, without giving any driver an incentive to waste time..."

It also gives the driver incentives to drive too long, too fast, to reduce maintenance, and to take other shortcuts that cause longer-term and safety problems. (Fortunately, the industry has done pretty well at pushing liability onto the drivers.)