Truckers Have a Tech Problem, Not a Labor Problem
(Bloomberg Opinion) -- As expected, the tight U.S. labor market is leading to higher wages — at least in some sectors, such as leisure and hospitality. But there are more fundamental forces at play in other parts of the economy, and they help explain why labor shortages aren’t leading to wage increases — at least not yet.
If Congress had been too quick to respond to activist demands for a higher minimum wage last winter, it could have cut short growth in the leisure and hospitality sector. By the same reasoning, if Washington is too solicitous to the transportation industry’s complaints about a labor shortage now, it risks undercutting crucial productivity-enhancing reforms.
Since early this year, businesses have been complaining of labor shortages. They often hear a common retort: “Try raising wages.” Sometimes, it is as simple as that.
In the restaurant industry, for example, wage growth had been heating up before the pandemic hit, suggesting that competition for workers has been rising for some time. So the recent sharp upward spike should be seen as mostly as the free market doing what it does best: allocating scarce resources according to where they are most in demand.
In the trucking industry, by contrast, employment growth seems to be no faster than it was before the pandemic — despite both a huge decline early last year and heavy demand during the recovery. This represents a deeper structural problem.
In an economy where job prospects are improving for workers generally, it’s is becoming harder for trucking companies to find drivers willing to put in long hours away from their homes and their families. Estimates by the chief economist for the American Trucking Association suggest that well before the pandemic began, the U.S. was facing a shortage of 60,000 truckers, which is projected to grow to 100,000 by 2023. And that may be an underestimate given how the job market has evolved over the last 12 months.
Trucking companies are lobbying for two major remedies: to lower the minimum age of drivers from 21 to 18, and to exempt the trucking industry from some regulations regarding the use of immigrant labor.
The first makes sense, in that the age requirement was more than anything an occupational hurdle that served to protect the jobs of senior truckers. On the second, however, a more thoughtful approach is called for.
I’ve long been supportive of more immigration, but critics rightfully point out that too often it’s been used as a tool to hold down wages in lower-skilled industries. The trucking industry should join the overall fight for comprehensive immigration reform while recognizing that a long-term solution will involve increasing productivity. That means investing in thing like improved dispatching technology and, more important, a shift to autonomous or semi-autonomous vehicles for some portion of the journey.
Crucially, there is nothing that the government needs to do to spur these types of changes — except refrain from quick fixes like a temporary boost in foreign workers. Again, there is nothing wrong with increasing the number of foreign workers in the U.S., and immigration will be a central part of ensuring U.S. economic dominance in the 21st century. But the effort must be transparent and carried out in way that increases opportunities for Americans, at all skill levels.
Last winter, President Joe Biden faced pressure from labor activists to raise the minimum wage. Now he faces pressure from a business lobby to change the rules for an industry that is facing an acute worker shortage.
Biden and Congress were right to resist last winter, and they should resist now. Market forces helped drive rapid growth in both wages and employment in leisure and hospitality sector, and they can also help the transportation industry go through the difficult process of restructuring and deploying technology to meet demand. Allowing the market to work requires patience and discipline, but the end result is a stronger economy that benefits all Americans.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Karl W. Smith is a Bloomberg Opinion columnist. He was formerly vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina. He is also co-founder of the economics blog Modeled Behavior.
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