Trucking Advice on Labor Costs

Trucking Advice on Labor Costs

Labor expenses are very involved and time consuming. It is also one of the most overlooked issues. Labor, for owner operators is your wage or salary, cost of hospitalization insurance, retirement insurance and disability insurance and hours worked on the truck or trailer. If you have drivers you employ all you need to do is add up your wage, employees wages, SSI, taxes and benefits. As I said before, I do not include meals because you have to eat whether on the road or at home. This isn't for taxes. It's for your cost per mile. To arrive at your cost per mile, first give yourself a wage for everything you do for your operation. You must be realistic. I like to use what other companies use the 25% of the gross rule or the cents per mile wage. Let's say our wage is $20,000 per year. This figure is fictitious and can vary. It is only a goal to achieve and can vary from your actual wage. You then need to add your insurances, if applicable. Take the total of those figures and add them together. You are not done yet. You must look at the labor paid to other facilities for work done on your equipment. Most repair bills have labor and parts separated, so it's not that difficult. If your repair shop doesn't do this, you should ask them to do so. Now add your wages or driver costs to the shop labor total. This gives us our real total for labor. We then divide it by the number of miles traveled for the year giving us our cost per mile for labor.

This is the formula for cost per mile.


Labor Costs Worksheet

TYPE                           COST              MILEAGE          COST YEARLY PER MILE

Wage                         ___________~____________=    ____________
Hospitalization            ___________~_____________=+____________
Retirement Insurance     ___________~____________=+____________
Disability Insurance      ___________~____________=+____________
Shop Labor                 ___________~_____________=+____________

           TOTAL LABOR COST PER MILE                        ____________

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