Key Takeaways
- UAW's 2023 contract pushed top assembly wages at the Big Three to $42/hour by 2028, raising total labor costs per hour to an estimated $80-90 including benefits and overhead
- Battery electric vehicles require roughly 30-40% fewer assembly labor hours per unit than equivalent ICE vehicles, accelerating both cost pressure and displacement risk for production workers
- New-vehicle dealership employee turnover runs 60-67% annually for sales roles, with NADA data showing replacement cost averaging $10,000-$14,000 per departed sales associate
- Automotive service technician shortages cost dealerships an estimated $60,000-$100,000 per year per unfilled bay, according to Cox Automotive technician shortage research
- Administrative and back-office outsourcing in automotive companies reduces non-production labor costs by 40-60% compared to equivalent in-house U.S. roles
Automotive is one of the most labor-intensive industries in the U.S. economy. A single shift change at a large assembly plant moves thousands of workers whose wages, benefits, and total employment costs are set by long-cycle union contracts, volatile commodity pricing, and an EV transition that is changing the cost structure of vehicle production in ways the industry is still absorbing. In 2026, union wages are at their highest in decades following the 2023 UAW settlement. Dealerships are still short on technicians. Tier 1 and Tier 2 suppliers are under pressure to absorb cost increases that their contracts do not protect them from. And the training bill keeps growing as EV platforms replace ICE assembly lines. Here is what the numbers actually show.
Assembly worker wages and total labor costs
Production worker compensation at Detroit automakers is now governed by the contract the UAW signed following its fall 2023 strike against General Motors, Ford, and Stellantis.
Assembly wage benchmarks (Big Three, 2024-2026):
- Top-scale assembly workers at GM, Ford, and Stellantis reached $36 per hour in 2024, with contractual increases bringing that figure to $42 per hour by the end of the 2028 contract period, per UAW contract terms ratified in November 2023
- Entry-level temporary workers, who had previously been paid at a separate lower scale for up to eight years, now reach top scale in three years under the new agreement, cutting the path to top pay by more than half
- Total employer cost per assembly worker hour, including wages, benefits, payroll taxes, pension contributions, and retiree healthcare obligations, is estimated by the Center for Automotive Research (CAR) at $65-75 per hour for current Big Three production workers, rising toward $80-90 per hour as the 2028 wage ceiling is reached
- By comparison, foreign-nameplate plants in the U.S. (Toyota, Honda, BMW, Mercedes, Volkswagen) operate with total labor costs estimated at $45-58 per hour, reflecting non-union or lower-legacy-obligation workforce structures
- The BLS Occupational Employment and Wage Statistics program reported a median hourly wage of $22.85 for assemblers and fabricators in motor vehicle manufacturing in 2024, reflecting an industry-wide average across union and non-union facilities; Big Three workers are concentrated well above that median
The spread between Big Three total labor cost and transplant plants has been the main cost tension in domestic auto manufacturing for two decades. It narrowed after 2007-2008, when the spread exceeded $30 per hour, but the 2023 UAW contract pushed it back out.
Benefits load and legacy obligations
Wage rates do not capture the full employment cost in automotive. Benefits, particularly for legacy UAW employers, add a substantial premium.
Benefits cost benchmarks in automotive manufacturing:
- Health insurance contributions for Big Three hourly workers under the 2023 agreement average approximately $13,000-$16,000 per employee per year in employer premiums, roughly double the all-industry employer health premium average per the KFF Employer Health Benefits Survey 2024
- Defined benefit pension obligations for active and retired UAW members represent a long-term liability that the major OEMs carry on their balance sheets; GM's U.S. pension obligation exceeded $50 billion as of its 2023 10-K filing
- Employer FICA contributions, state and federal unemployment insurance, and workers' compensation add approximately 10-14% on top of base wages across the assembly workforce
- The BLS Employment Cost Index for durable goods manufacturing showed benefit costs growing at 4.8% annually from 2022 to 2025, outpacing the 3.9% wage growth rate over the same period
For Tier 1 and Tier 2 automotive suppliers, the benefit picture is less costly but still significant. Supplier workforces often include a larger share of non-union workers, but they face the same healthcare market and the same FICA obligations, plus workers' compensation rates that are elevated relative to office benchmarks given the physical nature of the work.
Skilled trades and engineering labor costs
Assembly workers are the most visible part of the automotive workforce, but skilled trades and engineering roles often carry higher per-seat costs and longer time-to-fill.
Technical and professional wage benchmarks (2024-2025):
| Role | Median Annual Compensation | Notes |
|---|---|---|
| UAW skilled trades (electricians, millwrights, tool and die) | $85,000-$95,000 | Top scale $41-$45/hr plus benefits under 2023 contract |
| Mechanical engineers (automotive) | $95,300 | BLS OES 2024 median; total comp 35-42% above base |
| Electrical/electronics engineers (automotive) | $103,000-$118,000 | Growing rapidly with EV platform complexity |
| Software engineers (in-vehicle systems) | $120,000-$165,000 | Competes directly with tech industry salaries |
| Quality and process engineers | $88,000-$110,000 | Across OEM and Tier 1 supplier settings |
| Manufacturing engineers | $90,000-$108,000 | Higher in facilities with complex automation |
OEM engineering headcounts have contracted at some Detroit facilities as development shifts toward software-defined vehicle platforms, but the unit cost per engineer has gone up in parallel. The talent pool for automotive software and EV battery systems engineering is constrained relative to demand and will stay that way through at least 2026. The pattern is the same one covered in manufacturing industry staffing costs: automation investment outpacing the supply of workers who can operate and maintain it.
Dealership staffing costs
New-vehicle franchised dealerships run on a different labor model than the manufacturing side. Their workforce includes service technicians, parts specialists, sales, finance and insurance, and administrative staff.
NADA dealership workforce and payroll data (2024):
- The National Automobile Dealers Association (NADA) reported that the average franchised dealership employed approximately 55-70 full- and part-time employees across all departments in 2024
- Total dealership payroll as a share of gross profit averaged 58-65% across franchise dealers in NADA's annual data composite, making labor the single largest use of gross profit in the business model
- Sales associate base pay across new-vehicle dealers averaged $54,000-$72,000 in total annual compensation (base plus commission) in 2024, varying by market size, brand, and deal volume
- Finance and insurance (F&I) managers averaged $110,000-$150,000 in total annual compensation at volume dealers; the role requires state licensing and specific product training that limits the available candidate pool
- Fixed operations (service and parts) managers earned $80,000-$120,000 in total compensation, depending on department revenue and market
Turnover and replacement costs:
- NADA's annual workforce survey consistently shows new-vehicle dealer sales staff turnover at 60-67% per year, one of the highest rates in any white-collar or retail sales function
- At a turnover cost of $10,000-$14,000 per departing sales associate, a dealer losing 12 sales associates per year carries an annual replacement cost of $120,000-$168,000 from that role category alone
- Service department turnover is lower, typically 25-35% annually for technicians, but technician replacement is more expensive because of certification and training requirements
Automotive service technician shortage and cost impact
The technician shortage at franchised and independent service facilities is as much a revenue problem as a cost problem.
Cox Automotive and TechForce Foundation data (2024-2025):
- Cox Automotive's 2024 Technician of the Future study estimated more than 25,000 unfilled automotive technician positions at franchised dealerships nationwide
- The TechForce Foundation estimated that the U.S. automotive, diesel, and collision repair sectors need approximately 80,000 new technicians per year to fill attrition and growth demand, but vocational programs are producing roughly 50,000-55,000 qualified completions annually, leaving a structural gap
- A fully productive flat-rate technician generating 45-50 hours of billed labor per week at a billing rate of $150-$185 per hour produces $350,000-$480,000 in annual service revenue for that dealer
- An unfilled technician bay costs the dealership an estimated $60,000-$100,000 per year in lost gross profit after accounting for partial coverage from other technicians and extended customer wait times
- Master technician wages at franchise dealers range from $75,000 to $110,000 annually in total compensation (flat rate at $28-$40 per book hour)
The shortage is structural. The vocational pipeline was underfunded for more than a decade, and the shift toward EV-specific service competencies has added a new credential layer that not all experienced technicians have acquired.
EV workforce costs versus ICE
EV production changes the underlying labor math in automotive manufacturing, and the industry is still working out where the numbers settle.
EV vs. ICE labor cost differentials:
| Vehicle Type | Assembly Hours Per Unit | Notes |
|---|---|---|
| Conventional ICE sedan | 18-24 hours | Baseline; includes drivetrain, exhaust, fuel system |
| ICE truck / SUV | 22-30 hours | Higher due to customization and trim complexity |
| Hybrid (HEV/PHEV) | 20-26 hours | Additive complexity; both drivetrains present |
| Battery electric vehicle (BEV) | 12-17 hours | 30-40% reduction; no transmission or exhaust assembly |
- A battery electric vehicle requires approximately 30-40% fewer assembly labor hours per unit than an equivalent internal combustion engine vehicle, according to Center for Automotive Research analysis published in 2024
- Ford's 2024 earnings commentary referenced the assembly labor content reduction in its EV models relative to comparable ICE vehicles, acknowledging the workforce transition implications
- Worker retraining for EV assembly and service functions costs an estimated $3,000-$8,000 per worker, per 2024 estimates from the BlueGreen Alliance, covering high-voltage system safety, battery handling, and updated process certifications
- EV service technicians require OEM-specific certification programs running $2,500-$6,000 per technician before they can perform certain high-voltage repairs
EV manufacturing creates pressure in two directions. Assembly hours per vehicle fall, which reduces cost. Required skill levels and training investment go up, which adds cost back. At current production volumes, those two largely cancel each other out. As BEV scale increases through 2027-2028, the net effect on labor cost per unit should tip favorable. Transportation and delivery functions face a parallel workforce cost shift; see logistics industry staffing costs for benchmarks on the distribution side.
Tier 1 and Tier 2 supplier workforce costs
The publicly reported Big Three compensation figures capture a fraction of the total automotive workforce. Most automotive parts workers are employed by suppliers, often under different wage structures.
Supplier workforce benchmarks (2024-2025):
- The Motor and Equipment Manufacturers Association (MEMA) reported approximately 900,000 workers employed in U.S. motor vehicle parts manufacturing as of 2024
- Median hourly wages for production workers at automotive parts suppliers were $19.80-$22.50 per hour in 2024, per BLS manufacturing wage data by subsector
- Many Tier 1 suppliers operate non-union plants. Total employer cost per production worker at these facilities, including benefits and overhead, typically runs $30-42 per hour, a 40-50% discount to Big Three total labor cost
- Tier 2 and Tier 3 suppliers paid production workers a median of $17.50-$20.00 per hour, with benefits packages that are often less comprehensive than OEM or Tier 1 equivalents
- Supplier workforce annual turnover rates of 25-40% are common at non-union parts manufacturing facilities, adding replacement and training cost on top of base wages
Training and development costs
Automotive has one of the higher mandatory training burdens in manufacturing, and that burden is growing as technology content in vehicles increases.
Training cost benchmarks:
- OEM dealer network training programs for service technicians cost dealers $2,000-$5,000 per technician per year in program fees, travel, and lost productive time, per Automotive News dealership operator surveys
- OSHA-required safety training for new production workers represents an estimated 20-30 hours of paid training time before an employee reaches full production, at a direct cost of $600-$1,200 per new hire in wages alone
- Advanced manufacturing skills programs, including robotics maintenance and CNC operations, cost $5,000-$15,000 per worker when delivered through community college partnerships or OEM-sponsored apprenticeships
- Across the automotive sector, average training spend runs approximately 2.5-3.5% of total payroll, above the all-industry average of 1.5-2%, driven by regulatory requirements and technology change pace
Administrative and back-office staffing costs
Production and technical roles get most of the attention in automotive labor discussions, but white-collar and administrative staffing represents a meaningful share of total workforce cost at OEM headquarters, regional offices, and large dealer groups.
Administrative workforce benchmarks:
| Function | In-House (U.S.) Annual Cost | Outsourced Annual Cost | Savings |
|---|---|---|---|
| Accounts payable / receivable | $50,000-$62,000 | $18,000-$26,000 | 50-60% |
| HR coordinators / payroll support | $55,000-$72,000 | $20,000-$30,000 | 45-55% |
| CRM and lead management support | $45,000-$58,000 | $16,000-$26,000 | 40-55% |
| Warranty claims processing | $46,000-$58,000 | $16,000-$22,000 | 50-60% |
| Executive and scheduling support | $65,000-$88,000 | $20,000-$32,000 | 45-60% |
A fully loaded administrative employee at an OEM or large dealer group, including salary, benefits, office space, and management overhead, typically costs the employer $95,000-$165,000 per year in total cost per seat. Outsourcing these functions to remote staffing providers reduces those costs by 40-60% for comparable output quality.
Dealer groups and automotive companies using virtual assistant or remote staffing models report the strongest returns on functions that are high-volume, rule-based, and do not require physical presence: lead follow-up and CRM data entry, service appointment scheduling, warranty documentation, vendor invoice processing, and customer satisfaction outreach.
The same cost pressures driving automotive back-office outsourcing apply across software-intensive functions; the technology industry staffing costs research covers the engineering and support role benchmarks relevant to OEM digital and software teams.
Key takeaways
UAW contract costs are locked in through 2028. Big Three manufacturers and any suppliers under UAW agreements are absorbing fixed wage increases through productivity gains, pricing, or volume. There is no near-term renegotiation path, and the 25% wage increase over the contract period is the largest the UAW has secured in two decades.
The technician shortage at dealerships is a revenue problem before it is a cost problem. An unfilled service bay loses more margin than it costs to fill. Paying above-market for experienced technicians costs money, but it returns more than it spends. The math is not complicated.
EV retraining costs real money now ($3,000-$8,000 per worker), but dealers that certify technicians for EV high-voltage work before demand peaks will have capacity when other dealers are still in training queues. Waiting until volume is obvious means waiting in line.
Administrative outsourcing is underused in automotive. The 40-60% cost reduction for non-production support functions does not go away. Dealer groups and OEM offices that have moved CRM management, accounts payable, and customer communication to remote staffing models report lower costs and, in most cases, faster turnaround than the in-house teams they replaced.
Sources
- UAW-GM, UAW-Ford, UAW-Stellantis Collective Bargaining Agreements (ratified November 2023)
- Center for Automotive Research (CAR), Labor Cost Benchmarking in U.S. Auto Assembly, 2024-2025
- Bureau of Labor Statistics, Occupational Employment and Wage Statistics (OEWS), May 2024
- Bureau of Labor Statistics, Employment Cost Index - Durable Goods Manufacturing, Q3 2025
- KFF Employer Health Benefits Survey, 2024
- General Motors 10-K Annual Report, 2023
- National Automobile Dealers Association (NADA), Annual Workforce Study, 2024
- Cox Automotive, Technician of the Future Study, 2024
- TechForce Foundation, Transportation Technician Supply & Demand Report, 2024
- Motor and Equipment Manufacturers Association (MEMA), U.S. Auto Parts Employment Report, 2024
- BlueGreen Alliance, EV Workforce Transition Cost Estimates, 2024
- Ford Motor Company 2024 Q1 Earnings Commentary on EV Labor Content
- McKinsey & Company, The Future of Mobility Workforce, 2024
- Deloitte, Electric Vehicle Manufacturing Workforce Transition Study, 2025
- Automotive News, Dealership Training Cost Survey, 2024
- Society of Automotive Engineers (SAE International), Engineering Compensation Survey, 2025