Driver turnover in the trucking industry: What's the cost of reducing driver quit rates?

Abstract

This paper empirically examines the personal characteristics of truck drivers that are associated with a greater probability of driver turnover. Exploration of this phenomenon is significant in part because knowing who is likely to leave a trucking company helps decision makers in trucking firms identify effective measures needed to reduce driver turnover. Estimation results of a discrete driver quit choice model along with findings from estimating a driver wage equation, are used to predict the driver compensation needed to mitigate high driver turnover. These findings show that at the mean, drivers who stay on the job receive $54.25 (2018 dollars) more per week than drivers who leave, which translates to $2836.20 annually and is 6.02% percent above the mean wage of drivers who leave their job. The value of this annual wage differential is less than the mean value of the conservatively low estimate of $3654.72 (2018 dollars) computed in past research as the per driver cost of truck driver turnover. We interpret these results to suggest that it is cost effective for trucking companies to increase driver compensation. Indeed, truck driver wage trends do show a recent pattern of wage gains.