Background: In the past drivers made by mileage between pick up and delivery poi
ID: 336118 • Letter: B
Question
Background: In the past drivers made by mileage between pick up and delivery points which gave drivers and incentive to maximize mileage, (i.e., drive from NYC to LA in two days in spite of safety rules limiting hours driven per day). Drivers previously recorded fake driving time data to show DOT, but now DOT requires Electronic Logging which operates while a truck is running and records miles and time. Electronic logging will reduce opportunity for drivers to maximize miles/income. Also, most drivers view time on the road away from home as work time. Trucking companies must bid against drivers opportunity costs of working elsewhere when unemployment is low.
Questions:
Pay based on mileage is a form of piece rate. Why have trucking companies preferred mileage based compensation?
What has changed that makes companies considering moving to hourly compensation? How will firms monitor drivers work effort?
Use the labor discipline model to show the effect on trucking companies of low unemployment and a tight market for workers in other industries.
Explanation / Answer
1) Truck drivers that are normally paid per mile, depending on their experience, the region they work in and the company they are employed with. Generally, truck drivers are expected to travel certain miles per week, with a restriction in the time.
Trucking companies pay based on the mileage based compensation because, that it is easier for them to track the number of miles they took in the stipulated time. Such type of compensation is also expected by drivers because they could know how much are they expected to receive and companies would be able to keep a tab on how much are they expected to pay.
Pay per mile is also the most common way that truck drivers are paid. Drivers that learn to take alternative routes to avoid traffic delays lead them to meeting their mileage goals and quotas. This is a positive aspect for drivers to achieve their goals and meet their targets.
2) Companies are moving to hourly compensation because, by mileage based compensation, drivers have a chance of cheating the companies by showing longer mileages by travelling in longer routes, and travelling without break and exhausing themselves. By doing so, drivers hardly take rest, just to get more compensations. This is ultimately leading to accidents and loss of material, lives and property.
With hourly compensation, drivers adhere to the number of hours they need to work and beyond that they dont work. Secondly, drivers try to take shorter routes to reach the destination more quickly.
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