State panel calls for increasing auto body labor rates | News
BOSTON — Labor rates at Massachusetts auto body shops have been stagnant for years, according to a new report, which calls on Beacon Hill to increase how much private insurers pay for repairs to help support the struggling industry.
The report released by the Legislature’s Commission on Auto Body Labor Rates lays out a series of options that would ultimately increase labor rates for auto body shops and urges lawmakers to consider several recommendations.
The 13-member panel, which included lawmakers, auto body repair shop owners, car dealers and insurance industry representatives, was created by the Legislature in 2021 to study the impact of insurance deregulation in the auto body industry and determine if rates paid by insurers should be increased.
The panel adopted the report by a vote of 10-3, with the three representatives from the insurance industry registering an “unfavorable” vote on its recommendations.
A majority of the commission concluded that the auto body rates need to be increased, but suggested there are several different options to getting there — including passage of bills pending before the state Legislature.
One recommendation, offered by a representative of the Alliance of Automotive Service Providers of Massachusetts, called for a tiered approach to increasing the rates that would require approval of pending legislation.
It suggested an increase of $33 in the minimum reimbursement rate and yearly adjustments based on the consumer price index, among other changes.
The report cites federal labor data showing that the average collision repair salary in Massachusetts is $47,400, while the annual wage for all industries is $72,940.
Likewise, the average labor rate paid through insurance companies is $40 per hour, which lags behind New Hampshire, New York and other neighboring states.
Alliance of Automotive Service Providers of Massachusetts issued a scathing statement along with the report criticizing insurers for opposing the changes and “failing to offer viable alternatives or solutions.”
“It is evident that, as far as they are concerned, they are quite content with a system that artificially suppresses the labor rate reimbursement amount in a manner that can best boost their profits while keeping overhead costs as low as possible,” the group wrote. “Unfortunately, those who operate auto body repair facilities do not have that luxury of suppressing other cost factors in their businesses in order to ensure large profit margins.”
Proposed legislation offered by the Massachusetts State Automobile Dealers Association, which was also among the recommendations, would authorize the state Division of Insurance to establish minimum auto body labor rates.
In 2008, the state Division of Insurance rolled back regulations that had set labor rates for auto body shops since the late-1980s after determining that there was sufficient competition in the auto insurance market. The move essentially allowed auto insurance companies to set their own labor rates.
But the commission’s report noted that those rates have remained largely unchanged in the past 14 years, and have not kept pace with increases in similar industries.
The report found that the number of auto body shops operating in Massachusetts has declined by 6.5% since 2018, when there were about 1,800 shops statewide. As of 2020 there were 1,686 auto shops.
Meanwhile, vocational schools have seen a drop in enrollment in auto body repair programs with students choosing other trades, the report’s authors pointed out.
“There has been a continuous concern about the auto body industry’s workforce, especially for collision repair technicians,” the report’s authors wrote. “This sentiment has been repeated by auto body shop owners, dealerships, and vocational school representatives.”
Panelist Evangelos “Lucky” Papageorg, executive director of the Massachusetts Alliance of Automotive Service Providers, said the recommendations, if implemented, would institute a “reimbursement rate which reflects the expertise, investment and liability associated with collision repairs performed in Massachusetts.”
The panel’s report has been sent to the House Ways and Means Committee for consideration.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at firstname.lastname@example.org.