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Comparing mileage vs percentage pay

How would you prefer to be paid? Higher is a given; not quite the answer I was looking for. For typical over-the-road drivers or owner/operators, the two most common methods are either mileage pay, or percentage pay.

How would you prefer to be paid? Higher is a given; not quite the answer I was looking for. For typical over-the-road drivers or owner/operators, the two most common methods are either mileage pay, or percentage pay.

With either system, don’t forget the adage that never gets tired: know your cost of doing business. If you work by the mile, there isn’t much to explain. Some carriers may pay by the odometer reading, although when the term practical routing is applied, pay disputes are frequent, so other than for dedicated runs, this can be risky business.

Pay by the “programmed mile” is a little more of an exact science, but still open to argument. I once heard of a Southern Ontario carrier that managed to shortchange its drivers 14 miles between Windsor and Kitchener.

Considering all but the last five miles were 401 driving, there was some real creativity involved. Even a carrier that plays fair with the mileage can have issues, usually relating to drivers who will drive extra distance due to routing preferences, even though company routing is over perfectly acceptable roads. Mileage pay is generally more popular with company drivers for most fleets, or owner/ops with large fleets.

A company driver on percentage pay can be a dangerous combination: someone with no financial investment knowing the rates. Loose lips can turn today’s $4 per mile freight into your competitor’s $3.50 per mile freight next week. Owner/ops working for large fleets are not normally paid percentage because, honestly, few would work for that rate. To be fair, in any large fleet, periodically loads will be hauled which make little financial sense, but are necessary in order to keep a customer happy. You can’t expect someone to be paid percentage for a “charity” load.

Smaller carriers often pay percentage, for several reasons. One of the more obvious is avoiding the disputes over mileage differences. We just really don’t have the administrative staff to dedicate to resolving these issues. As well, percentage pay makes for a more transparent, fair pay system. When dealing with smaller customers, human nature dictates that drivers will respond more favourably to those who they know are paying fair rates. If the owner/op happens to be one of those who drive excessive extra distances to use their favourite roads, we don’t have to pay for these inefficiencies. As well, periodically, a load paying full freight won’t use up the whole trailer. A percentage paid driver is more likely to be agreeable to the time spent filling the trailer, because more of the additional revenue goes to him.

Many owner/ops are understandably nervous about the percentage system. The common statement is “80% of nothing is nothing.” So true. So it becomes incumbent on the driver to practice due diligence. When job hunting, ask for copies of trip reports, with revenue. Study the revenue, involved mileage, and dates. If shipping/receiving conditions cause trips to take a day longer than they should, even a high revenue won’t add up to a good payday.

Averaging $2.40 per mile may sound good, but if your weekly mileage is 1,200, you haven’t found a very good job. Beware of trip reports showing too much mileage, a sign of a company that turns a blind eye to drivers running in gross excess of allowable hours of service, maybe even encouraging it.

Also, take note of where the primary travel areas are. Pennsylvania, Virginia, West Virginia, etc., should be higher revenue than, for example, Minnesota, Indiana and Ohio, because your fuel consumption will be higher.

With percentage pay, accessorial charges are sometimes included in the rate. Is your higher-paying job one where you are constantly tarping sharp, odd-shaped machinery, or hand-bombing a dry van? Are there a lot of overdimensional loads where restrictions limit your daily mileage?

All of these scenarios should pay more. Don’t take the paper trail as the last step of your homework either. Ask for phone numbers for current drivers and owner/ops; even better, try to catch up with one of them at a truck stop or rest area.

If the potential employer won’t give you phone numbers, move on. Obviously, they don’t want you talking to any driving staff. On that note, don’t take the word of former employees as gospel. Some people will never understand the financials.

Often, I hear drivers basing their opinion of acceptable rates/wages on the highest rate they read in the recruiting section. Sounds like a lazy way of doing business to me. Know what you’re worth as a driver.

As an owner/operator, again, know your costs, including a fair paycheque to yourself. If you need to reduce your pay for the privilege of ownership, stop fooling yourself; change jobs or sell the truck.

The more people that refuse to work for low wages, the quicker this problem will go away. Most of us have been in this industry long enough to have long ago “paid our dues.” Unless you’re one of the dying breed that loves the lifestyle, we are left with one reason to be here: money. And it will never appear until we start to realize how much we’re worth, and demand it.

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1 Comment » for Comparing mileage vs percentage pay
  1. maria says:

    How is it that my brother went from hourly to percentage without giving a denomination number as to what the percentage is based on? Should he contact Wage Act?

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