Equipment Costs

Forecasting Hourly Mechanics Wage and their Impact on your Equipment Costs

EquipmentWatch examines the rising cost of mechanic wages with a pre-inflation forecast cost of nearly $60 per hour by 2020.
Equipment Costs

Senior Industry Analyst

EquipmentWatch examines the rising cost of mechanic wages with a pre-inflation forecast cost of nearly $60 per hour by 2020.

The last time we looked into mechanics wage we found that the hourly wage has been consistently rising from about 1999 to 2016.  We attributed much of the wage increases to the ever changing emissions standards which requires mechanics to peruse extra training, thus raising their hourly wage. Knowing that Tier 5 regulations are quickly approaching, we wanted to take a deeper dive and project hourly mechanics wage through January of 2021.

*Forecast in the graph above is based on data from the Engineering News-Record (ENR) from 1989 to present

Based on historical data from the ENR, it’s projected that the average hourly mechanics wage will be around $55.81 by the beginning of 2018. By the beginning of 2019, it is projected that wages will rise another 2.3% to $57.07 per hour. Looking forward another year to the beginning of 2020, average mechanics wage will rise yet again to $58.33 per hour. Forecasting to January 2021, it’s expected that hourly mechanics wage will continue to increase to $59.59 on average.

The increase in total equipment costs year over year as mechanic wages increase
Subtype Size Class Now – Jan 2018 Jan 2018 – Jan 2019 Jan 2019 – Jan 2020 Jan 2020 – Jan 2021
Skid Steer Loaders 701 – 975 lbs. .46% .75% 1.2% .79%
On-Highway Light Duty Trucks 100 – 199 HP 0% .41% .68% .41%

It’s no secret that your hourly mechanics wage has a direct impact on both your ownership and operating costs.  Taking a look at popular subtypes of equipment really shows the impact the forecasted mechanics wage will actually have on equipment costs from one year to the next.  By changing only hourly mechanics wage, the cost (ownership and operating included) of skid steers in the 701 – 975 lbs. size class could increase by about 3.3% between now and January 2021.  Looking at a second example, when mechanics wage is the only factor changed, equipment costs for On-Highway Light Duty Trucks between 100-199 HP are expected to increase by about 1.5% between now and January of 2021.  Increases in costs around 1% and 3% may not seem like much but when applied across an entire fleet, and taking other factors (like rising fuel costs) into account, these changes in hourly mechanics wage can have a large impact on a company’s equipment costs. Keep in mind that inflation is not accounted for in this analysis so it is likely that mechanics wage as well as equipment costs could be even higher in future years.

Key Takeaway for Decision Makers

Recognizing maintenance costs trends (as well as the reasons behind the increase) and being able to forecast those trends is key in being able to predict equipment costs months to years out. These forecasts can aid in generating more accurate project bids as well as help in managing ownership and operating costs for a fleet.

Interested in learning more about our products?  Visit EquipmentWatch.com.

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