An Overview of the Trucking Industry

by:   Sara Saulcy, Economist

"Because transportation-related issues often factor into the broader discussions of Wyoming’s economy, having knowledge about the trucking industry contributes to an overall understanding of how Wyoming’s economy functions."

In advance of the Wyoming Department of Employment’s participation in the annual convention of the Wyoming Trucking Association held May 19-20, 2001 in Cheyenne, Wyoming, Research & Planning prepared an industry profile for trucking and related industries in Wyoming.¹ Because transportation-related issues often factor into broader discussions of Wyoming’s economy, having knowledge about the trucking industry contributes to an overall understanding of how Wyoming’s economy functions. 

Trucking has a unique role in Wyoming’s economy compared to the U.S. economy as a whole. Some of the highlights of our study of trucking are

    • as a share of all employees, trucking in Wyoming makes up about two percent; nationally, trucking comprises only about one percent; 

    • average annual wages per employee in trucking ranked higher than  other industries (except oil & gas extraction); nationally, trucking wages ranked third; and

    • trucking and two related industries were dominated by males in Wyoming; gas stations were the exception.

Using the industry profile we developed for the Wyoming Trucking Association as a foundation, we provide an overview of trucking and related industries. We discuss wages, employment, turnover, demographics, and occupations by industry. We also compare Wyoming and U.S. wages and employment.

Defining Trucking and Related Industries

To start the process of examining the trucking industry, we sought out a definition of the trucking industry based on a subset of Standard Industrial Classification (SIC) codes² that was consistent with how others thought about the industry. We consulted the Wyoming Business Council, the Wyoming Oil & Gas Commission, and several oil and gas and transportation-related websites³ to identify a composite definition of the trucking industry; no definitions were found. In order to capture all ground-based shipping services (except railroads⁴), we defined trucking as SIC 421, which includes local trucking with and without storage, long distance trucking, and private ground courier services. Three other industries complementary to trucking were considered as well:

    • oil & gas extraction (SIC 13): includes extraction of crude petroleum, natural gas, and natural gas liquids, drilling oil and gas wells, oil and gas field exploration services, and oil and gas field services not elsewhere classified;

    • public warehousing & storage (SIC 422): includes farm product, refrigerated, and general warehousing and storage, and special warehousing and storage not elsewhere classified; and

    • gas stations (SIC 554): includes all gasoline service stations (including truck stops).

Our expectation is that, over the long run and possibly the short run, employment and wages in these industries would follow trends similar to that of the trucking industry. 

To demonstrate how the trucking industry compares to industries as a whole, we included data for total industries and for other industries. For purposes of this article, the industry total (or the total of all industries) refers to all industries defined by SIC.⁵ To provide an additional means of comparison, the “other industries” category refers to all industries less trucking, oil & gas extraction, public warehousing & storage, and gas stations.⁶ A list of other frequently used terms and their definitions are provided.

Average Wage Per Employee

The average wage per employee⁷ in Wyoming and the U.S. are shown in Table 1. Of the four industries (trucking, oil & gas extraction, public warehousing & storage, and gas stations), in Wyoming the average annual wage per employee in trucking ranked second behind oil & gas extraction, but ahead of the other industries category. Average annual wages per employee in the trucking industry in Wyoming were also higher than the total for all industries in 1999. In contrast, U.S. wages paid for trucking were somewhat lower than for the total for all industries. Gas station wages ranked lowest of all industries examined for both Wyoming and the U.S. 

The average annual wage per employee in the U.S. ranged from $1,856 to $18,898 higher than the average annual wage per job in Wyoming. The largest difference between wages per employee paid nationally and Wyoming wages was in oil & gas extraction. Nationally, wages in this industry were from $12,698 to $18,416 higher than Wyoming wages for the 1995-1999 time period.

Employment and Payroll

The proportion all of employment in Wyoming committed to trucking, gas stations, oil & gas extraction, and public warehousing & storage (see Figure 1) were larger than they were nationally. Trucking comprised approximately two percent of the all jobs worked in Wyoming, but consisted of approximately one percent of national jobs. Oil & gas extraction represented a substantially larger fraction of all jobs worked in 1999 in Wyoming than it did nationally (4.0% in Wyoming compared to 0.2% nationally).

Industry job shares of all employment often contrast with industry wages as shares of total payroll. When an industry’s share of wages are higher than the share of employees, the implication is that an employee earns more money relative to other industries. Conversely, when an industry’s share of wages are lower than the share of all jobs, employees earn less relative to other industries. For instance, while trucking made up 1.6 percent of all employment in Wyoming in 1999 (see Table 2), wages as a percentage of total payroll made up slightly more of the total wages (see Table 1). In contrast, in 1999, while gas stations made up 1.9 percent of all employment, wages represented only 1.0 percent of the total wages paid in Wyoming.

Of the industries we assessed, the biggest difference between the percent of employees and the percent of wages paid in Wyoming was in oil & gas extraction. In 1999, although oil & gas extraction employees worked made up only 3.5 percent of all employees, wages paid consisted of 5.8 percent of total payroll.

On a national level, oil & gas extraction and gas stations made up a much smaller share of both employment and average annual wages. Wyoming and the U.S. were most similar with regard to the percentage of wages and employment devoted to public warehousing & storage.

A word of caution about interpreting the variation between U.S. and Wyoming wages: although wage differences were sometimes substantial, a number of factors have not been controlled for in our description, such as

    • Prices: lower prices for goods and services in Wyoming could mean that while the nominal wage is lower, the real wage may be higher.⁸

    • Degree of unionization: compared to most other states, Wyoming has few labor unions to affect wages.⁹ Wages in industries in states with greater labor union activity are usually higher.

    • Differences in industry composition: a different mix of the types of firms within the industries may impact wage rates. For example, in Wyoming, Idaho, and Montana, there are more long-distance trucking establishments than local trucking establishments. In more urbanized areas the reverse is true, as it is for the U.S. as a whole. In general, average weekly wages for long-distance trucking are higher than they are for local trucking.¹⁰ Consequently, wages in the trucking industry as a whole will probably be higher if long-distance trucking comprises a larger share of the industry in a state.

    • Skill differences: if the labor force in a particular area has an especially desirable, useful set of skills for an industry, then firms will tend to compete more fiercely for individuals in the available pool of labor, resulting in higher wages.

The wage differences between Wyoming and the U.S. should be viewed in light of these and other factors.

Wyoming and U.S. Average Annual Wages

Figures 2 and 3 show Wyoming and U.S. average wages respectively. Notice in Figure 2 that wages declined in Wyoming from 1995 to 1996 for oil & gas extraction, trucking, and public warehousing & storage, while wages in gas stations and in the other industries category exhibited slight increases. In the following period (1996-1997), wages rebounded at least somewhat for trucking, and rebounded dramatically for oil & gas extraction; public warehousing & storage did not follow this trend. 

In contrast to the industry pattern in Wyoming, U.S. average annual wages in the 1995-1999 period steadily increased. Because Wyoming’s economy represents a small piece of the U.S. economy, variation in Wyoming’s economy would have relatively little impact on the U.S. economy. Alternatively, a larger state economy would have more impact on the U.S. economy. California’s energy crisis is an example of how a large state economy can impact the U.S. economy as a whole.¹¹

It is logical that trucking and oil & gas extraction followed roughly the same wage pattern in Wyoming, as oil & gas extraction depends a great deal on trucking. The lack of substitutes for trucking to move equipment and supplies to and from the oil and gas fields drives the similar wage pattern. The longer term trend of wages of the four industries moving together is what we would expect of industries that are related to one another. 

Although wages in trucking and oil & gas extraction followed a very similar path from 1995 to 1999, the same was not true of public warehousing & storage or gas stations. Even though public warehousing & storage and gas stations complement the trucking industry, they are not operationally connected to trucking in the same way. Economic phenomena that impacts one industry may help or hinder that industry, but not others.

1999 Wyoming Industry Turnover

Figure 4 shows turnover¹² in 1999 in oil & gas extraction, gas stations, trucking, public warehousing & storage, and other industries for 1999. In oil & gas extraction, turnover was highest in the fourth quarter (30.9%), and lowest in the second quarter (21.9%). In gas stations, the highest level of turnover was in the third quarter (46.0%), and lowest in the first quarter of 1999 (32.5%). The trucking industry saw its highest levels of turnover in the fourth quarter (34.2%), and lowest level in the second quarter (26.7%). Public warehousing & storage saw its highest turnover level in the first quarter (47.4%), and lowest level in the second quarter (24.7%). Turnover levels for the industry total were at their highest in the third quarter (35.9%) and their lowest in the first quarter (23.3%).

Except in the first quarter of 1999, oil & gas extraction had the lowest turnover of the four related industries and the total of all industries for the year: 29.9 percent in the first quarter, 21.9 percent in the second quarter, and 25.5 percent in the third quarter. Turnover rates in oil & gas extraction in 1999 were generally comparable to 1998 levels.¹³ In the first quarter of 1998, turnover was 29.6 percent, 25.4 percent in the second quarter, and 28.3 percent in the third quarter. The exception was in the fourth quarter of 1998 where turnover was 40.5 percent, while in the fourth quarter of 1999, turnover was 30.9 percent. 

The decline in turnover in oil & gas extraction can be attributed, at least in part, to a combination of factors, including stable prices, new technology, and high demand for oil and gas products.¹⁴ These factors, in turn have contributed to increasing average annual wages from 1995 to 1999. Higher average annual wages may have been the incentive to maintain employment in the industry, resulting in lower turnover in 1999. Because wages in oil & gas extraction were among the highest of any industry in Wyoming, it would be costly for oil & gas extraction workers to seek out alternative employment opportunities, to be unemployed, or out of the labor force.¹⁵ Conversely, higher levels of turnover in related industries and the total for all industries may be less of a reflection of a substitution effect¹⁶ and more of a reflection of the entry and exit of temporary or seasonal employees.¹⁷

While the overall turnover rate declined, turnover rates by certain demographic groups may contribute to the turnover rate more than others. In Table 4 of the article “Demographic Analysis of Employee Turnover in the Transportation Industry, Fourth Quarter, 1999,” notice that turnover for males was substantially higher than that of females for the Transportation industry.¹⁸ Consequently occupations that require a substantial investment in training in the trucking industry that are comprised mostly of males may not be able to absorb as easily the costs associated with turnover (see “Demographic Analysis of Employee Turnover in the Transportation Industry, Fourth Quarter, 1999,” by Sylvia Jones, for additional discussion of turnover in the Transportation industry).

Demographics of Trucking and Related Industries

Table 3 shows demographics for trucking, gas stations, oil & gas extraction, and public warehousing & storage. Table 1 and Table 2 had the unit of analysis as the employee. In contrast, the unit of analysis is the individual worker: data in Table 4 use wage records data in which characterizes individuals who worked at any time.¹⁹ 

In Table 1, notice that the average annual wage per employee in the trucking industry in 1999 was $27,227 in Wyoming. However, in Table 3, the average annual wage per person is $20,906. It appears that the two numbers are in conflict with one another. The difference is explained by the divisor of the total wages. Recall that the wages computed in Table 1 are based on the number of employees in a firm. The number of employees in a firm is determined as of the 12th of each month, and does not take into account individuals who are not employed all year, or may work for more than one employer. In contrast, the wage computed in Table 3 are based on the number of people working at any given time (see also Frequently Used Terms). Consequently the total wages in Table 1 are divided by a smaller number of individuals than the wages that are computed in Table 3. The result is that the wages in Table 3 are smaller than the wages reported in Table 1.

Gender

Males comprised the majority of all persons in three of the four industries; gas stations were the only industry that females made up a larger share of employment. In all four industries, females’ wages were less than proportionate to their share of employment. Wages for males, on the other hand, were more than proportionate to their share of employment for all four industries, from 10 percent more in oil & gas extraction to 14 percent more in gas stations. 

The appearance is that females have hit a “glass ceiling”²⁰ in terms of wages in these industries. However, the more likely possibility is a mix of market and non-market factors that drive the differences.²¹ Among the factors are

• differences in the occupations that females worked in as compared to males;²²

• more females may have worked part-time in the industries,²³ thereby contributing a smaller share of wages to total wages; and

• personal choices (i.e. willingness to travel, occupational risk aversion) that resulted in females in the aggregate preferring certain occupations over others.²⁴

In light of these factors, while there may be the presence of a glass ceiling, it is also possible that females make occupational choices that are different than males.

Age 

Those aged 35-44 years of age dominated employment in each industry in 1999 (Table 3). The exception was public warehousing & storage, with individuals 45-54 making up the largest age group share. In two of the industries, trucking and gas stations, the highest average annual wage per person was for the age group 55-64 ($25,215 for trucking and $15,348 for gas stations). In oil & gas extraction the highest average annual wage was for those aged 45-54 ($42,675), while for public warehousing & storage, the highest average annual wage per person was for those aged 35-44 ($16,184). 

Average annual wages per person were lower for those at the tails of the age spectrum. In the trucking industry, wages for those aged 16-19, 20-24, and 25-34 earned $4,202, $12,174, and $18,255 per person respectively; those aged 65 and older earned $11,405 per person. Individuals employed in gas stations who were 16-19, 20-24, and 25-34 earned $4,403, $6,136, and $9,734 per person respectively. The average annual wage person for individuals 65 and older earned $13,071 per person. Individuals who were 16-19, 20-24, and 25-34 and employed in oil & gas extraction earned $7,495, $15,467, and $23,759 per person; those aged 65 and older earned $20,026. In public warehousing & storage, persons 16-19, 20-24, and 25-34 of age earned $8,138, $6,904, and $10,635 per person. Earnings for persons 65 and older were $8,637 per person.

While the demographics here represent only a snapshot in time, they are generally consistent with economic predictions about income for different age groups: “When people are young and starting their careers, their earnings are usually low, whereas at middle age most people are at the peak of their earning power...When people are old and retired, their earnings fall sharply.”²⁵


Ten Occupations with Highest Employment by Industry

Table 4 shows the ten occupations with the highest employment in the four related industries in Wyoming in 1998. The information was derived from the source data of the Wyoming Occupational Employment Statistics survey (national staffing patterns by industry are available from http://lmi.state.wy.us).²⁶

Notice that, in 1998, occupations in Wyoming in the trucking industry were dominated by drivers. Truck drivers of heavy or tractor-trailer units in Wyoming earned $29,290 annually per job, while truck drivers of light units earned $25,520 annually per job. The two occupations consisted of 63 percent of all employment in the industry. None of the other three industries were dominated by a similar combination of two occupations. 

Comparing average annual wages for male trucking employees aged 35 to 64 in Table 3 to the wages reported in Table 4 of Truck Drivers, Heavy or Tractor-Trailer, and Truck Drivers, Light, Include Delivery and Route Workers in the trucking industry, we see that the wages of the two were very similar. Based on that comparison, it can be inferred that it was males aged 35 to 64 comprised the bulk of employees in these two occupations.

We saw earlier that average annual wages by industry were all higher by industry in the U.S. compared to Wyoming from 1995 to 1999. However, when comparing 1998 U.S. and Wyoming industry average annual wages by the ten occupations with highest employment in Table 4, we see that the pattern is by no means universal. Of the 40 occupations, 32 had average annual wages in Wyoming that were higher than the national average. Factors such as those discussed in relation to employment and payroll on page 10 provide some indication as to the divergence in wages by occupation between Wyoming and the U.S.

Summary

Trucking has a unique place in Wyoming, as it is the primary transportation service for goods in the state. On average, trucking wages per job and per person were higher than other occupations, except for oil & gas extraction. This is in contrast to wages per job in trucking nationally, which are lower on average than other industries. Trucking complements oil & gas extraction in that it provides the necessary equipment hauling services to and from the production fields. If oil & gas exploration continues its expansion, trucking will likely continue to expand as well.

¹ ”Wyoming Trucking Association Holds Convention,” Casper Star- Tribune, May 27, 2001. 
² See frequently used terms and U.S. Office of Management and Budget, Standard Industrial Classification Manual, 1987.
³ Among the websites searched were the website for American Petroleum Institute and the Petroleum Association of Wyoming. We also looked at several transportation-related websites.
⁴ Railroads were not included in the analysis because railroad employees are covered under the Railroad Retirement Board and are not required to report employment or wages to the State of Wyoming. Information reported is nondisclosable due to confidentiality of the information.
⁵ See Endnote 2.
⁶ The years 1995-1999 are used for most Tables and Figures, with 1999 data being the most current available. Two exceptions to using the time series data are Table 3  on industry demographics, which includes 1999 data, and Table 4  on occupations by industry, which includes 1998 data.
⁷ Wyoming Dept. of Employment, Research & Planning, Annual Covered Employment and Wages, 1995-1999.
⁸ See frequently used terms and Michael Parkin, Macroeconomics, Fourth Edition, 1998, p. G-5; and Graham Bannock et al., Dictionary of Economics, 1987, p. 347.
⁹ U.S. Dept. of Labor, Bureau of Labor Statistics, Employment and Wages Annual Averages, 1999, Bulletin 2534, January 2001, p. 513.
¹⁰ See Endnote 8, pp. 325-326.
¹¹ Laura D’Andrea Tyson, “Ignoring California’s Energy Crisis Imperils the Economy,” Business Week Online, June 4, 2001.
¹² See frequently used terms, and Mike Evans, “Job Turnover and Hire Rates in Wyoming,” Wyoming Labor Force Trends, June 1999. For additional discussion of using wage records, see Tony Glover, “Enhancing the Quality of Wage Records Through Imputation: Part One,” Wyoming Labor Force Trends, April 2001.
¹³ Wyoming Dept. of Employment, Research & Planning, Outlook 2000: Detailed Occupational Projections and Labor Supply, October 2000.
¹⁴ Gregg Detweiler and Xiaohong (Sherry) Yu, “Wyoming Mining Industry.” An In-Depth Analysis,” Wyoming Labor Force Trends, April 1998, p.6.
¹⁵ See frequently used terms and Sara Saulcy, “Implementing the Workforce Investment Act: Results from an Employer Survey Follow-Up of Casper College Graduates,” Wyoming Labor Force Trends, July 2001.
¹⁶ See frequently used terms and William J. Baumol and Alan S. Blinder, Microeconomics: Principles and Policy, 1997, p. 379.
¹⁷ See Endnote 11.
¹⁸ Transportation is defined by the following 2-digit SIC groups: 40, 41, 42, 43, 44, 45, 46, and 47.
¹⁹ Wyoming Wage Records, data compiled by Tony Glover, Research Analyst, March 30, 2001. For further discussion of wage records data, see endnote 12.
²⁰ See frequently used terms and Beverly Woods, “Towards Equality in the High Tech Workplace,” Low End Mac, June 20, 2001.
²¹ For a more complete discussion gender differences in pay, see Rich Peters, “The Importance of Major Industry to Wyoming’s Gender Pay Gap, Part One,” Wyoming Labor Force Trends, July 2000.
²² Mary Beth O’Loughlin, “Gender, Tenure and Wages,” Wyoming Labor Force Trends, August 1997.
²³ Gregg Detweiler and Brett Judd, “The Relation of Age and Gender to Employment in Wyoming: Part Two of a New Analysis Utilizing Wage Records,” Wyoming Labor Force Trends, June 1996.
²⁴ The observation that more unpleasant or risky jobs often command a competing wage differential dates back to early economic theory (W. Kip Viscusi, “The Value of Risks to Life and Health,” Journal of Economic Literature, December 1993, p. 1913). The automobile insurance industry, for example, notes that on average females are involved in fewer car accidents than males ( “Reviewing Your Auto Insurance,” September 2, 1996). The statistic implies that on average females tend to be more risk averse than their male counterparts. Because of this tendency in females, they may opt not to work in occupations that pay higher wages because of the actual or perceived risk.
²⁵ Neil Bruce, Public Finance and the American Economy, 1998, p. 261.
²⁶ Occupational Employment Statistics Survey source data, data compiled by Tony Glover, Research Analyst, March 30, 2001.

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