Walmart is causing a stir by promising to pay its truck drivers up to $110,000 a year for the first year. That’s twice the salary of some other drivers.
At a time when the job market is tight and consumer demand is high – CPI hit 7.9% in February – the announcement of Walmart WMT, +0.56% is another sign of how long employers will struggle to attracting and retaining workers.
More specifically, this is another strong sign of increased demand for labor in the transportation sector. The question is how many potential workers will ride along at Walmart and elsewhere.
Walmart drivers have previously made as much as $87,500 in their first year, a Walmart spokesman told MarketWatch. Drivers for the big box store with more than a year on the job now have the potential to earn more than $110,000, the company added.
“We’re seeing historic pay rises like this across the industry as truckers look to hire new drivers amid a nationwide shortage exacerbated by the pandemic,” said Jeremy Kirkpatrick, spokesman for the American Trucking Associations, in response to the Walmart news. “Trucking represents one of the clearest routes to the middle class in today’s economy without the costly requirements of a college degree,” he added.
Wages chase inflation
Drivers with an irregular route earned an average salary of more than $53,000 per year, while drivers of a private fleet — like Walmart’s operation — made an average of $86,000 per year, according to a 2020 American Trucking Associations Compensation Survey.
Recent data from employment reports show that transport and warehouse work are some of the rare sectors where wage growth has kept pace with inflation. Average hourly earnings for all jobs rose a strong 5.6%, the March jobs report showed.
Wages for the country’s 5.6 million transportation and warehousing jobs rose 7.9% year over year, the Bureau of Labor Statistics showed. Leisure and hospitality jobs were the only jobs where hourly wage growth was higher, at 11.8%.
Overall, general freight transport employs 940,600 people, according to preliminary data from the Bureau of Labor Statistics. This includes short- and long-haul drivers, with the sector adding around 40,000 new workers compared to the same point last year.
demand for drivers
Here’s the rub: According to Chris Spear, president and CEO of the American Trucking Associations, the American trucking industry needs another 80,000 drivers if it is to meet consumer demand.
The industry struggles with high turnover, but the trade association said it’s not because drivers are leaving the industry altogether; They jump from one company to another looking for better pay, ways and benefits. This job hopping is happening throughout the economy.
“We’re seeing unprecedented wage increases across the industry,” according to the American Trucking Associations in a blog post. Weekly earnings are five times the historical average, and fleets dangle “substantial five-figure sign-up bonuses and full benefits as they all compete for the same limited pool of drivers.”
Walmart creates a training program for prospective drivers and pays for the commercial driver’s license in some areas.
There are already about 12,000 drivers in Walmart’s fleet. Though Walmart didn’t say how many more employees it plans to hire, the announcement makes it clear that the company is in hiring mode.
“Our transportation team will continue to grow with our business, and we will continue to invest in them along the way,” the company said.
Walmart shares are up nearly 9% year-to-date. The Dow Jones Industrial Average DJIA, +0.40%, is down 4%, while the S&P 500 SPX, -0.27%, is down about 5%.