Trucking is Past Peak Hiring Constraint

The trucking labor market was resilient against the backdrop of a reaccelerating nationwide employment in October according to the Current Employment Situation Report published by the Bureau of Labor Statistics (BLS) this morning.

Non-farm payrolls increased by 531,000 jobs — better than the consensus forecast of 450,000 (as of Thursday evening). September’s initially disappointing non-farm job gains of 194,000 were revised substantially upward to 312,000, and August payrolls were also revised higher. The unemployment rate fell 0.2 percentage points to 4.6 percent and labor force participation remained stagnant. Economists will debate precisely how much labor market slack there might still remain hidden behind the headline metrics, but the fact is: The unemployment rate is now as low as it was at any point in the 27 years from 1970 to 1997.

General freight trucking firms added 7,900 jobs (seasonally adjusted) to payrolls last month — one of the best months for the past year (just shy of August’s 8,700 gain). Trucking industry employment is about 20,000 workers short of pre-pandemic highs in the BLS data; but, accounting for growth in the owner-operator (self-employed) segment — which is not included in the headline BLS numbers — industry employment is now slightly above where it stood on the eve of the pandemic. Among available drivers, capacity has clearly shifted toward the owner-operator segment.

Beyond headline employment, other metrics suggest trucking hiring constraints are past the fever pitch pace of this past summer. While many trucking firms continue to report hiring challenges, average weekly wage growth for trucking industry workers has slowed from nearly 7 percent per year in June to under 4 percent per year in August. 

Average weekly hours are up among trucking workers in general (touching their highest levels since at least the 1990s) — but most of that gain appears to be driven by specialized drivers and office/support workers. At long-haul and local trucking firms, hours are down. For carriers that focus on long-haul trucking, average weekly hours declined from 43.5 hours in April 2021 to 42.4 hours in August (provisional data). For carriers that focus on local/regional hauls, average weekly hours declined from 42.5 in May to 40.9 in the provisional August data. 

Labor market competition is not easing. Two closely related (and fast growing) industries have seen strong growth recently: Courier and messenger (parcel delivery) firms lost 4,900 jobs in October (though that appears mostly to be driven by large upward revisions to the September numbers and potentially distortions to normal seasonality) and warehousing/storage employers added 20,200 jobs (all seasonally adjusted). 

Courier and messenger jobs are up 20 percent since the start of the pandemic and warehousing/storage jobs are up 14 percent — with combined head counts up 330,000 over that period. A decade ago, there were two trucking industry workers for every one warehousing/storage industry worker; today, the ratio is nearly one-to-one. If recent trends continue, the number of warehousing/storage workers will surpass the number of trucking industry workers by the end of 2021.

Overall, today’s data paint a portrait of continued — if easing — labor constraints as the freight market moves towards year-end peak season. Over the past year, the primary constraint to trucking capacity growth has see-sawed between labor and equipment (truck and trailer) availability. With new truck and trailer production backlogs steadily lengthening, it will be increasingly logical for trucking companies to begin to push out hiring plans further and further into the future.

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Aaron Terrazas
Aaron Terrazas is Director of Economic Research at Convoy where he researches and comments on freight markets and what freight reveals about the broader economy. Prior to joining Convoy, Aaron was a Senior Economist and Director of Economic Research at Zillow. Before that, he was an Economist at the U.S. Treasury Department’s Office of Economic Policy in Washington, D.C. He was educated at Georgetown University and Johns Hopkins University. Aaron has been a runner since age 13 and is a sucker for all endurance sports.