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Returns to compensation in trucking: Does safety pay?

Published online by Cambridge University Press:  01 January 2023

Michael R Faulkiner  and
Michael H Belzer
Michael R Faulkiner
Affiliation:
Wayne State University, USA
Michael H Belzer*
Affiliation:
Wayne State University, USA
*
Michael H Belzer, Department of Economics, Wayne State University, 2127 Faculty Administration Building, 656 W. Kirby Street, Detroit, MI 48202, USA. Email: michael.h.belzer@wayne.edu
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Abstract

Large truck crashes remain a significant problem in the truckload sector of the US motor carrier industry. Employing a unique firm-level data set from a large US truckload motor carrier, we identified two different driver groups hired during two distinct pay regimes. Before-and-after data on wages and safety outcomes created a natural experiment. Higher wages paid to experienced drivers in the new pay regime led to higher driver retention rates. Experienced drivers had lower average crash costs and were more productive during each tenure month. Experienced drivers had a much larger expected discounted net present value when compared with inexperienced drivers. As the previously inexperienced drivers gained additional experience, their crash probabilities and their value began to mirror those of the experienced drivers, demonstrating the value of greater tenure. This research supports ‘safe rates’ public policy because safety pays – for trucking companies, for cargo owners and for society.

Keywords

J24J28J33Compensation systemsefficiency wagesemployment experiencelabour productivitypieceworksafetytruck driverstrucking industrywage policywages

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