GREEN BAY, Wis.— Schneider National's announcement that it will raise pay rates next month for both its own drivers and owner-operators could trigger a new round of wage and rate hikes as motor carriers scramble to compete for drivers in a tough labor market. The truckload carrier says the pay hike will be the largest in its 70-year history.

Schneider will raise rates for its 3,000 independent owner-operators to 90 cents per mile plus fuel surcharges. Owner-operators' compensation packages will also include discounts for business expenses, such as fuel and equipment.

The carrier says its in-house workforce of more than 12,500 non-union drivers will receive an average pay increase of $4,000 per year as well as new shorthaul premiums and higher rates for such non-driving items as detention time. With that increase, Schneider says, new drivers will earn an average of $33,500—$44,500 in their first year, while those with four years of employment experience will average $47,500–$59,500.

With those changes, Schneider will be "at or near" the top of the truckload wage scale, says Gordon Klemp, co-founder and managing partner of the National Driver Wage Survey, which tracks pay at 400 fleets. By Klemp's calculation, the current pay for Schneider's drivers (prior to the increase) averages $40,000 per year. "Schneider has made a bold move to raise compensation to a level that will attract people who weren't interested in a driving career," he says.

Schneider did not announce a per-mile rate for company drivers, but Klemp says the company has been paying an average of 33 cents a mile. He expects the carrier to raise that rate to 36 cents per mile in February. Last year, the truckload industry paid drivers an average of 32.7 cents per mile. (See chart, at right.)

Klemp believes that Schneider's decision to hike pay will prompt other motor carriers to do likewise this year. With demand for capacity outstripping supply in the truckload market, he notes, carriers have little choice but to raise pay levels to get more people into the cabs of their trucks.

David Goodson, co-founder of the National Driver Wage Survey and now a consultant with KPMG, points out that wages for truckload drivers had been flat for some time. This year, however, the adoption by the federal government of new hours-of-service regulations restricting drivers' time behind the wheel, plus the nationwide reduction in freight capacity, have set the stage for wage hikes.

"This is the start of wage increases that will occur until the average truck driver makes $50,000 (a year)," says Goodson. The average U.S.-based truckload driver today earns $40,000 annually, he adds.

Others, though, believe that wages will have to climb even higher before the industry solves its driver shortage. "You're still below the $60,000 or $70,000 (annual salary) you need to solve the problem in the long term," says Thomas S. Albrecht, managing director of equity research firm BB&T Capital Markets. "Schneider is just trying to stay ahead of the curve."

Although higher pay is good news for drivers, it's a good news-bad news situation for shippers. On the one hand, higher wages mean more drivers—and that means more capacity. On the other hand, increased labor costs eventually will translate into higher freight rates. "The cost of the wage increases will be passed on to shippers who are requesting additional capacity," says Klemp. "It's impossible to get that capacity without attracting new candidates into the driver pool."