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Tuesday, 23 July 2019 16:08

AASP-MA Educates Members on Labor Rate Survey

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AASP-MA Executive Director Lucky Papageorg said the idea that the insurance industry pays shops based on a “prevailing rate” is a myth. AASP-MA Executive Director Lucky Papageorg said the idea that the insurance industry pays shops based on a “prevailing rate” is a myth. AASP-MA

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Several months ago, AASP-MA hosted National Auto Body Research (NABR) for an informative presentation on their Variable Rate Survey (VRS), and as a result, the association launched NABR’s Standardized Labor Rate Survey in Massachusetts.

Since then, AASP-MA’s leadership team has stressed the urgency of this matter during chapter meetings around the state, inviting students and instructors to participate in the conversation at well.

 

According to a 2018 Mitchell Industry Trends Report, Massachusetts’s average labor rate of $38.28 is the lowest in the country. AASP-MA Executive Director Lucky Papageorg stressed to meeting attendees that the idea that the insurance industry pays shops based on a “prevailing rate” is merely a myth: “We are a retail business, just like the mechanical industry. The mechanical industry gets paid based on their competitive rates among themselves. The [real] ‘prevailing rate’ is what a customer is willing to pay before they’re going to walk out your door and try to go somewhere else. [Our average rate of] $38.28 is an abomination; it’s not a ‘prevailing rate’ by any stretch.”

 

Association members Jack Lamborghini and Brian Bernard of Total Care Accident Repair in Raynham, MA, have taken an active role in this discussion and joined Papageorg in presenting at AASP-MA’s chapter meetings to share important information pertaining to the need for labor rate reform in Massachusetts.

 

Lamborghini explained, “In 1989, the labor rate was $30 an hour. Fast-forward to 2019 and the average rate is $38.28. If you do the math on this, that’s about a 24 percent increase over a 30-year period. With the consumer price index rising a whopping 119 percent since 1989, the average Massachusetts labor rate would need to be nearly double its present amount to simply keep pace with the amount of inflation. That’s not even taking into account all the technology changes, equipment upgrades and everything else.”

 

Regarding his battle to remain profitable for the past three decades, Lamborghini said, “There’s obviously waste in every business. The question becomes, ‘How much waste can you take out of the system and your processes to allow you to fit more vehicles in quicker and be more profitable?’


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