Labor Rate Special Commission Explores Connection Between Labor Rate and Tech Shortage

Could fixing the Labor Rate issue in Massachusetts help attract more new talent to the industry? Several members of the Labor Rate Special Commission (LRSC) seem to think so!

Established pursuant to Chapter 24, Section 130 of the Acts of 2021, the LRSC was created to review issues related to auto body rates and the auto body industry. In addition to government representatives, the commission includes three insurance representatives, three members of the auto repair industry appointed by AASP/MA, a vo-tech school/program representative and a licensed motor vehicle dealer appointed by the Massachusetts State Automobile Dealers Association (MSADA).

“When collision students hear about the wages that previous program graduates make in comparison to what they could make as an electrician, carpenter or mechanic, it’s a tough sell because the difference is significant,” said Ken Stukonis, collision instructor at Assabet Valley High School (Marlborough) and the appointed vo-tech school representative for the LRSC. “It’s tough to stay in the trade when their friends are making more money doing easier work; kids entering the collision industry are up against the wall from the beginning, and that trickle down effect comes from shops not making enough money.”

While the average Labor Rate for collision repair in the Commonwealth is the lowest in the country, mechanical shops often make three times as much. This disparity is especially apparent to shops and dealerships offering both types of repairs, such as Bill DeLuca III, president of Bill DeLuca Family of Dealerships and the MSADA vehicle dealer appointee.

“Our retail price on the services side is $129.95 per hour, but in our body shop, we’re lucky to get $38 to $40 per hour. Our mechanics make more than twice what body techs do in terms of pay, and the body techs are leaving the field as a result. It’s a dying field! A lot of other dealerships rent their body shops to independents since it’s not a profitable business. I know it doesn’t make money and only operate our body shop as a matter of convenience.”

“Body shops need and deserve to receive a reasonable Labor Rate, but every year, this gets shoved under the table,” DeLuca continued. “If you don’t get paid to do the job correctly, it’s going to become increasingly harder for shops to repair these cars properly. Long-term, this is going to dramatically affect consumers. I hope the insurance representatives appointed for the LRSC will realize this is a grave injustice and that they meet us halfway.”

One of the three AASP/MA appointees to the LRSC is Ray Belsito (Arnie’s Auto Body; Charlton).

“Labor Rate suppression impacts every stakeholder within the collision repair industry, ranging from apprentices to extremely high pricing pressure among vendor suppliers. With the LRSC, I’m hoping for an open and honest dialogue about the dysfunctional Labor Rate setting system they have now. We need insight into their current system of establishing a ‘market’ rate in Massachusetts, how it compares to other states and how they ensure their processes are up-to-date (how often they review Labor Rate and what reports are generated). We really need to put our finger on the extreme disconnect between insurers and shops in terms of Labor Rate.”

Belsito also hopes for “some truthful testimony on behalf of the insurance industry. All too often, they speak in generalities and make statements about body shops’ motives, rather than justifying theirs. If their system is fair, it should stand on its own.”

“It’s a shame that the insurance companies are controlling this by hiring lobbyists to contribute to the right campaigns to ensure this gets tabled year after year,” DeLuca agreed.

Suppressing the Labor Rate makes it difficult for the industry to attract young talent and ensure that the future generation is equipped to deal with the increasingly complex vehicles that need to be repaired.

“I don’t think [insurers] acknowledge enough how much training is involved, and the Labor Rate certainly doesn’t take that into consideration,” Stukonis pointed out. “If cars aren’t fixed correctly by certified, trained technicians, people can get injured in accidents that they shouldn’t be injured in. On the school side, we work hard to make sure students reach industry standards by teaching I-CAR curriculum. We have one of the best states in the country as far as high school vo-tech schools; our students graduate as Level 1 technicians in nonstructural and refinishing, but once they graduate, they have to be able to earn a living for doing the trade they’ve invested time and energy into learning.”

“All of that is held back by what the owners are taking in hourly due to Labor Rate suppression,” Stukonis continued. “If we want to attract students into the trade, we have to be able to pay

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