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Free Trade, Globalization and Job Off-Shoring - The Potential Effect on U.S. Truck-Driving Jobs

By Dave McIrvin

Recently the U.S. government announced a pilot program whereby a select number of Mexican trucking companies will be allowed to operate in the United States. This pilot program is the much-delayed first step in implementing the transportation related provisions of the North American Free Trade Agreement (NAFTA) negotiated in 1993. Ultimately it is anticipated that trucking companies in Canada, the United States and Mexico will be allowed to operate throughout the three countries.
The prospect of Mexican trucking companies operating freely in the United States causes great concern among parties in the United States with a vested interest in U.S. truck-driving jobs, including, of course, U.S.-based truck drivers. The concern arises because Mexican truck drivers reportedly average 30 percent to 40 percent lower average annual income compared to U.S. truck drivers. In addition to the concern about maintaining the current level of truck-driving wages, truck drivers in the United States are accustom to readily available truck-driving jobs due to the lack of qualified drivers available to fill truck-driving positions. A significant influx of Mexican trucks and drivers into the United States could reduce or eliminate that regular availability of U.S. truck-driving jobs.

The concern various parties express about the effect Mexican trucks operating in the United States may have on trucking driving jobs and wage levels is probably valid. But that concern is shortsighted because it focuses only on maintaining driving wages and job availability by denying Mexican trucks access to the United States. Denying Mexican trucks and drivers from operating in the United States probably won’t protect the current level of truck-driving jobs and wages.

Over the next five years, other factors may have an additional, and possibly larger impact on truck-driving wages and the persistent imbalance of too few quality drivers chasing a large quantity of truck-driving jobs. Think global free trade, information technology infrastructure and businesses moving jobs around the world to their most cost-effective location.

How can globalization and free trade among countries possibly affect U.S. truck-driving jobs and wages? After all, driving a truck can’t be “off-shored.” Someone physically located in the United States must drive the truck. Exactly, and that is potentially what makes truck-driving jobs very attractive to U.S. workers in the future.

Over the last 15 to 20 years, it has not been unusual for U.S. manufacturing jobs to be off-shored to a lower-wage country. Most businesses have been forced to lower their operating costs, including cost of wages, because most of us as consumers demand low-cost products. Businesses that don’t properly manage the cost of producing their product go out of business because no one will purchase their higher-cost product. That same impact is now happening to U.S. service-based jobs.
Until a few years ago almost all U.S. service-based jobs had to be performed by someone physically located in the United States. It was impractical to send that job overseas. The development of the global high-speed fiber-optic network now makes it relatively easy, and cost-effective, to move service-based jobs to anywhere in the world.

Therefore, with so many jobs relatively easily transferred around the world, jobs that are “anchored” in the United States because they must be physically performed here may become highly sought. Driving a truck could very well become one of those highly attractive jobs, generating an abundance of workers to the occupation.

Dave McIrvin is the president and CEO of West Side Transport of Cedar Rapids, IA.

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