A Problem Is Brewing Among Delivery Drivers

According to a new study¹ by last-mile delivery software company Circuit, Google searches for “delivery driver jobs” have increased by 479% in the past two years.

It’s an indication that as home delivery has grown, the number of people who want the job has grown as well.

But once they have the job, drivers don’t seem so happy in it. Of the drivers surveyed that drive for Amazon
AMZN
, DHL, DoorDash, FedEx
FDX
, Grubhub, Postmates, UPS, Uber Eats and USPS, an average of 84% said they are underpaid. 77% of all drivers surveyed said they are planning to get a second job to keep up with inflation and 15% already have one. Almost three-quarters would go on strike to fight for higher wages.

Geography Makes A Difference

Adjusted for population, searches for “delivery driver jobs” are highest in Georgia, Texas, Arizona, California and Maryland.

But that’s not where the highest pay for delivery drivers is. Drivers in North Dakota are the highest paid, at $46,225 and no other state is higher than $43,000. California is second followed by Massachusetts, Oregon and New Jersey.

The lowest paid are in Arkansas, followed by Louisiana, New Mexico, North Carolina and Nevada.

The highest percentage of state population that are delivery drivers is in Tennessee.

Why This Matters to Retailers

The delivery economy can only exist if “last-mile drivers” are on the job. There is a tension in the data that says on the one hand, how many people want the job and, on the other hand, how unhappy drivers are with their pay.

For now, that tension will keep wages and delivery costs in check. But over time, drivers’ unhappiness with their compensation will inevitably cause costs to rise.

Technology to make delivery more efficient will help. But there’s a limit to how much technology can do and, as with self-driving cars, takes longer to implement than planners count on.

The situation has the potential to upend the trend to home delivery.

If costs rise dramatically, it has to be passed through to consumers. Once they have to pay for it, consumers may find less expensive alternatives than the fast home deliveries they’ve become accustomed to. Retailers will also have to find better solutions, like consolidating shipments from different vendors.

Working on reducing returns will also help. If retailers can get consumers to buy more of the products they keep and fewer of the ones they return, fewer items will need to be shipped and shipments back to the store will be reduced. All of that will reduce delivery costs.

As the saying goes, an ounce of prevention is worth a pound of cure. Retailers that address these problems now will find themselves in a much better position when the problem explodes.

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Footnote 1: How the survey was conducted: Circuit used data from the US Bureau of Labor Statistics (BLS), Indeed.com, Google Trends search volume data, and a survey of 988 delivery drivers to explore delivery driver employment. 2021 wage and employment per 1,000 jobs data was obtained from BLS. Indeed was scraped for over 12,000 recent delivery driver job postings around the United States. Salaries were normalized using the 2,000 hours per year standard to estimate average hourly salaries. Of survey respondents, 67% were male, and 33% were female.