Standardizing Labor Rates in the Auto Repair Business

Standardizing Labor Rates in the Auto Repair Business

If state legislators and industry interest groups have their way this year, Massachusetts automotive repair shops and other automotive service shops will have standardized hourly wage rates in force soon. The Auto Body Labor Rate Bill, which was first introduced in 2007, aims to raise the minimum wage rates for auto repair service workers in the state of Massachusetts, based on average industry wage rates across the rest of the United States.

The stagnation in the state of low wage rates for auto body repair workers has resulted in a discrepancy of up to 10 dollars per hour between the national average rate and what workers in the state of Massachusetts earn. This is according to the Alliance of Automotive Service Providers (AASP), which has lobbied for years for the passage of the proposed legislation. It goes without saying that low rates make it very difficult to keep talented individuals from moving across states in order to get top dollar for their skills. The reason this bill has not been moving forward is because of resistance from the insurance industry, which claims that the proposed legislation will increase their costs considerably. They say that artificial (read legislated) minimum wages does not reflect what markets should dictate. Proponents counter that this has resulted in auto body repair shops resorting to various strategies to bring their costs down. This is the only way to attract business from insurance companies who tend to seek auto body repair shops with the lowest hourly wage rates. The end result is less than excellent workmanship and even the use of substitution parts in order to keep profit margins in the black. According to lobbyists for the proposal, administration of the bill would be undertaken by a commission that would be funded by fees paid by auto body shops. The projected collection would be enough to cover the costs of the commission and would require no additional funding from the taxpayer.

The Labor Rate Bill calls for the establishment of a three-tiered system of grading for auto body and collision repair shops. Each shop would be evaluated, presumably by the commission, and be given a designation of A, B or C, with A being the designation for a top-level shop. The A-level auto body repair shops would then be subject to on-site inspections and be required to comply with the highest industry standards. Those shops would then be endorsed by the commission overseeing the bill as qualified to earn the proposed full hourly rate.

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