Pay per Mile vs. Pay per Hour

This post appears in the March 2011 edition of Truck News

At the time of writing this column diesel prices have been on the rise for seven straight weeks and the Federal Motor Carrier Safety Administration (FMCSA) has newly proposed rules for hours-of-service (HoS) and for Electronic On Board Recorders (EOBR) . In broad terms the trucking industry's response has been that all of the added restrictions will reduce productivity. Drivers have responded with the feeling that reduced hours and added restrictions equal reduced miles which in turn equals reduced income. So in a nutshell we're looking at escalating costs, increased regulation, and reduced productivity for both carriers and drivers. Not a very rosy picture is it?

The business of trucking has changed but the method of compensating drivers for their investment of time and effort has not. If the movers and shakers within the trucking industry are concerned with an overall loss in productivity why not pay drivers for their time plus a bonus for increased productivity where it counts – in each and every power unit. Perhaps it's time for a different paradigm that does away with the piece rate form of compensation most of us in this industry currently live and die by. Trucking as a whole needs to take a serious look at paying drivers a fair and equitable hourly rate with the ability to earn additional income through productivity bonuses.

Think of our current pay per mile model for a moment. It encourages the driver to run the maximum number of miles in the shortest period of time, a holdover from the days of cheap fuel and loose or non existent HoS rules, but that's not today’s reality. In today’s world 'pay per mile' sandwiches the drivers need to generate income between the business' need to control costs and the enforcement of the HoS rules. Drivers are stuck between a rock and a hard place. In a highly competitive market where drivers are asked to invest more of their time in the name of efficiency but are governed by rules giving them less time in the name of safety a pay per mile method of compensation no longer makes sense.

I know that pay per mile versus pay per hour has the potential to be very contentious and I'm not coming down on one side or the other but my 'paid by the mile' income has not kept up with the rate of inflation and the HoS debate has shown no sign of being resolved since I started driving 12 years ago. I'm ready to take a look at ideas that may put more money in my pocket, improve my quality of life, add to a carrier's bottom line, and aid in compliance with the rules & safety policies that govern our industry.

There is no possible way that I can address all the pros and cons of hourly pay versus pay per mile in a single column but we need to start somewhere and the first thing an hourly rate would do is recognize commercial truck drivers as the professional journeymen that they are. The industry now has available to it through the technology of EOBR's the ability not just to enforce rules but to capture a vast amount of information that relates to a driver's performance. This technology also captures the inefficiencies in the system that are beyond the drivers control such as dock delays. Paying a driver for their time on duty as well as driving would motivate carriers to work closer with their customers to eliminate delays at the dock and all the other time wasters that have worked their way into the system over the years. This would be a big win for the driver but the argument could be made that it would be a huge cost for the carrier.

On the contrary eliminating that wasted time puts the driver back on the road keeping the freight moving. More importantly giving carriers the ability to capture hard data to measure performance provides fertile ground to develop incentive programs for drivers. A study by the Technology and Maintenance Council (TMC) of American Trucking Associations established that a truck driven using poor driving habits can consume up to 26 percent more fuel than a truck driven using fuel-efficient driving techniques. An hourly rate of pay along with incentive bonuses is an excellent way of tapping into these potential savings and its win-win. It also speaks to the need of ongoing driver training, driver recruitment, and driver retention. The time is ripe for carriers to develop and use these new technologies to empower their drivers and recognize them as business partners not just employees. Maybe I'm a dreamer. But it is possible.

Some people may be of the opinion that the golden age of trucking is past, buried by burdensome regulations and escalating costs. The freedom and joy we find in trucking down the open road is still there but the culture is changing. That's not easy to deal with.