US truck driver shortage points to bigger problems

Until recently, if you said the word “truck drivers” and “21st-century economy” in the same breath, most economists — and voters — would have guessed that the next words would be “job losses”. No wonder. A couple of years ago, auto experts started to warn that computers will soon be driving not just cars, but trucks, too. A 2017 trucking industry report, for example, predicts that by 2030 some 4.4m of the 6.4m trucker jobs in Europe and America could disappear, since robots will be driving. Unsurprisingly, that has sparked plenty of hand-wringing about the political economy, especially in America. After all, in recent decades truck driving has been one of the best-paying jobs for non-college American graduates, and the workforce is overwhelmingly male, middle-aged and lowly-educated. So the idea that truckers might suddenly be tossed out of the workforce has contributed to a fear that we are heading for a dystopian future — which, of course, is the type of alarming theme that Donald Trump played on in his presidential campaign.

But lately, something peculiar — and unexpected — has been going on with those trucks. Yes, in the long term, it is likely we will see automated vehicles on the roads. However, in the short term the really big problem is not a lack of trucker jobs, but a dire shortage of all-too-human truckers. The combination of a surging economy and a rise in internet shopping is creating rising demand for long-haul shipping, which trucking companies are struggling to meet. Demand is so high that capacity utilisation is now running at about 100 per cent according to consultants (compared with 85 per cent at the start of the decade). And the producer price index for trucking is 6 per cent higher than a year ago. That has hit margins for companies ranging from General Mills to Clorox, and executives say the problem could soon get even worse.

What should investors make of this? There are at least three important lessons. First, this tale shows that we should take futurist predictions about technology and jobs with a pinch of salt. A few years ago researchers at Oxford university sparked alarm by predicting that 47 per cent of American jobs were at risk from “computerisation” in the next decade or two. However, this week the OECD, the Paris-based club of mostly rich nations, did its own intensive study which estimated that “only” 14 per cent of jobs in the west are vulnerable to automation. That still might sound quite scary. But what is also becoming clear is that the spread of robots is likely to be uneven, and the timing uncertain. Second, the fact that automation and digitisation is happening at such an uneven pace makes it crucially important to have a very flexible training system — one that not only educates children for an uncertain job market, but can retrain adults, too. The US does not perform well on this front. Think again about truckers. Economic theory would normally suggest that a dire shortage of truckers should correct itself if wages rise. And salaries do indeed now seem to be heading up, with some trucking companies so desperate to entice qualified truckers that they are offering large bonuses. But would-be truckers are still often forced to pay for their own training (which can cost $5,000-10,000), and there is a thicket of bureaucracy to navigate. It is hard to entice younger people to do this when there is demand for workers in sectors such as construction — not to mention so much chatter about robots in trucks. The US will need to be proactive to fix the problem, perhaps by having companies combine with community colleges to subsidise training programmes. That is not taking place.

Finally, what is happening with trucking points to a bigger problem with structural bottlenecks that cause headaches for the Federal Reserve. For most of the past decade, wage growth and inflation have been surprisingly low. However, wages are now picking up. On Friday, US data showed annual wage growth of 2.7 per cent in March. By historical standards, this is nothing to panic about. But the squeeze we are seeing in transport is not an isolated case. Labour shortages are emerging in other areas, including construction, oil rigs and some pockets of manufacturing. It is perhaps little wonder that Jamie Dimon, chief executive of JPMorgan, now fears that “many people underestimate the possibility of higher inflation and wages, which means they might be underestimating the chance that the Federal Reserve may have to raise rates faster than we all think.” Of course, a cynic might argue that people like Mr Dimon are paid to point out future risks. Jay Powell, Federal Chairman, suggested on Friday that the Federal Reserve only expects modest growth in the next year. If so, demand for truckers — or bricklayers or oil drillers — may start to ease. And, yes, in the long term computers will arrive in truck cabs, on shop floors and oil rigs. But in the short term, the one thing that is clear is that Mr Trump’s dystopian picture of America’s labour market is increasingly at odds with the reality on the ground. Yes, America has a problem with jobs — but this is to do with a shortage of particular skills. That cannot be fixed with trade tariffs or tax cuts, let alone tougher immigration controls.

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