How far does $40 go?
Not far enough, according to more than 300 collision repair shop owners and technicians who took to the steps of the Massachusetts State House Wednesday morning. The group gathered to demand the passage of House Bill 1111 and Senate Bill 709; measures that would increase the rate of reimbursement paid by insurance companies to car bodybuilders.
The current rate: $40 an hour paid at the store, has stagnated for decades, says Evangelos “Lucky” Papageorg, executive director of the Massachusetts Alliance of Automotive Service Providersbased in Braintree, one of the groups that organized the rally.
“We need to get insurance companies to increase reimbursement rates; Massachusetts has the lowest rate in the country, but it’s the second most expensive state to live in,” Papageorg said. “New Hampshire earns nearly $50 an hour.”
The bills, currently at the Joint Committee on Financial Services, would raise the rate to about $73 an hour, using a calculation of the base rate in 1988 multiplied by the increase in the Consumer Price Index. over the past 34 years.
At least up to $73 over 2 years
“We know $73 would be a shock to the insurance industry system,” Papageorg said, adding that the industry suggested a two-year implementation period with a third-year adjustment based on on the consumer price index. “If the index goes down, the labor rate will also go down.”
To be clear, the refund rate is paid at the store, Papageorg said. The shop then pays its technicians and must allocate funds to pay for equipment, technician training, technician safety measures, software, office staff, insurance, workers compensation, l mortgage/rent and benefits which can include a salary of almost $40 an hour, health care and a 401K.
At the end of the list, body shop owners say there isn’t much left.
Jason Louf, of Swampscott Collision Center, says shops make a profit on parts and paint, but lose money on labor costs.
“It’s been going on since the 1990s,” Louf said.
He noted that auto mechanics can earn between $120 and $150 an hour. However, the car body rate is much lower.
Arguments that much of the work today is removal and replacement, and not actual body work, don’t fly with Louf. Technicians still need training and skills.
“Cars are more complicated, they’re basically computers that drive themselves,” Louf said. Technicians need to know how to remove parts, replace them without getting electrocuted, reconnect sensors and monitoring systems.
Not much left after payments
Mark Millman, owner of Stoughton bodyworkclosed his shop for the day to bring his crew to the State House.
“I’ve been in the business for 65 years, and without hyperbole, I’m almost ready to close,” Millman said, most of his techs earn close to $40 an hour, and he’s cut where he can. , but must maintain a high level of quality in repairs.
Papageorg believes that the rate increase is also a safety issue. A big expense is training and buying the equipment needed to maintain modern vehicles.
“With advanced driver assistance systems, the only way for a shop owner to keep up is to invest in training and equipment,” Papageorg said. “If a store agrees to work for $40 or less, something is sacrificed.”
Consumers are also exploited; says Papageorg. Insurance companies now dictate where cars can be repaired based on contracts between companies and stores. To make sure they don’t lose money, some stores ask consumers to split the cost beyond the $40 refund rate.
“It’s a problem for the consumer,” said Papageorg,
Former Worcester-area state senator Guy Glodis, now Worcester County sheriff, spoke in favour: the consumer price index rose 137%; insurance premiums 254%, inflation 127%,” Glodis said, pointing out that the reimbursement rate is still at 1980s levels.
“Insurance companies have lined their pockets with record profits, even during the COVID-19 pandemic,” Glodis said, adding that it was time to increase the reimbursement rate for collision adjusters.
Compounding the problem of low wages and stagnant reimbursement rates is the lack of young people choosing to become auto body repair specialists.
Medford Vocational and Technical High School closed its body shop program in 2018 after a steady decline in enrollment.
Little interest in the store in some Vo-Tech programs
“We looked at the enrollment numbers and saw that three freshmen enrolled in the 2013-2014 school year,” said Jeff Allen of Medford.
Medford’s numbers dropped to one person steadily over the next five years, ending in 2017 when no students were interested in the field. the Greater Lowell Technical High School and Northeast Metro Technology still have robust programs, however.
Cayden Watts, 15, with the Assabat Valley Auto Carrosserie Vo-Tech, was at the rally with a small group of classmates. They all enter the field despite the inconveniences because “I love cars,” Watts said. “I love the paint shop.”
But despite the love felt by young people, “loving it and having a cool job doesn’t pay the bills,” said Papageorg, who believes increased reimbursement would bring more young people into the industry as technicians. .
Keith Els, owner of Auto body shops in Middletonwas pleased with the turnout, which included a fleet of flatbed trucks all carrying damaged cars, which rang the State House for hours in the morning.
“We’re all very attached,” Ells said. He hopes that an increase in the reimbursement rate will attract more young people to the business. “The average age of technicians is over 60. We are in a dying industry.
“The training needed to make sure the cars are fixed properly is a huge, huge expense,” Ells said.
That and the equipment.
“Good work doesn’t come cheap,” Millman said.