Find out what shops in your state are charging, and how to set a labor rate that keeps your shop profitable
In the automotive repair industry, your labor rate is more than just a number on an invoice — it is one of the key metrics that drives your business's profitability and overall growth. For shop owners, staying competitive while maintaining healthy margins requires a clear understanding of how labor costs fluctuate across the country. But knowing the national average is only half the picture. The more important question is: how does your shop compare?
Whether you are running a small independent shop or a high-volume operation, knowing where you stand relative to the average labor rate in your state — and against top-performing shops in your market — is essential.
This guide covers the current landscape of automotive repair labor rates across all 50 states, the factors that drive those numbers, and a step-by-step roadmap for setting a rate that supports your shop's long-term success.
Methodology and Key Terms
Tekmetric built this auto repair shop index as a community resource, backed by data from more than 10,000 shops across North America. Shops can use this tool to benchmark themselves and see how they compare state by state.
Key Terms to Know
Labor rate: The retail price per hour charged to the customer for repair services.
Flat-rate: A pricing model where a job is billed based on a predetermined number of hours from a labor guide, regardless of how long the actual repair takes.
Effective labor rate (ELR): The actual amount of labor revenue earned per billed hour after accounting for discounts, menu pricing, and unbilled time.
Understanding these terms will help you interpret the data below and apply it to your specific situation.
Mechanic Labor Rates by State
The average labor rate across the United States is $132 per hour, with the lowest state at $85 per hour and the highest at $197 per hour. Labor rates vary significantly by state, primarily driven by local cost of living and competition.
📊 See How Your Shop Compares — Free
The data below tells you what shops in your state are charging. But the labor rate is only one piece of the picture. The Tekmetric Shop Index lets you benchmark your shop across the four metrics that actually drive profitability — ARO, car count, parts margin, and effective labor rate — against thousands of real shops nationwide.
It's free, takes less than two minutes, and requires no Tekmetric account.
➡ Benchmark Your Shop Now →
Labor Rates by State (per hour)
- Alabama $124
- Alaska $161
- Arizona $145
- Arkansas $116
- California $156
- Colorado $151
- Connecticut $141
- Delaware $141
- Florida $138
- Georgia $137
- Hawaii $142
- Idaho $136
- Illinois $135
- Indiana $123
- Iowa $123
- Kansas $120
- Kentucky $126
- Louisiana $132
- Maine $110
- Maryland $141
- Massachusetts $133
- Michigan $130
- Minnesota $137
- Mississippi $125
- Missouri $120
- Montana $135
- Nebraska $127
- Nevada $152
- New Hampshire $128
- New Jersey $140
- New Mexico $141
- New York $125
- North Carolina $123
- North Dakota $135
- Ohio $125
- Oklahoma $129
- Oregon $150
- Pennsylvania $115
- Rhode Island $134
- South Carolina $130
- South Dakota $120
- Tennessee $127
- Texas $141
- Utah $135
- Vermont $110
- Virginia $136
- Washington $152
- West Virginia $100
- Wisconsin $125
- Wyoming $134
Factors That Impact Automotive Labor Rates
Why do auto repair labor rates vary so widely from state to state? A few key factors drive the differences.
Cost of Living
In states with a higher cost of living, shop owners face higher wages to attract technicians, more expensive rent, and elevated utility and supply costs. Those overhead realities push labor rates up — not because shops are padding their margins, but because the math demands it.
Shop Type and Specialization
Dealerships typically carry the highest labor rates because of their overhead, factory-trained technicians, and reliance on OEM parts. Independent shops often have more pricing flexibility, particularly for routine services like oil changes. Specialty shops — focused on European vehicles, diesel, or performance — tend to command higher rates as well.
➡ Benchmark Your Shop Now →
Technician Expertise and Certifications
A diagnostic job requires a different skill set than a brake job. Shops that employ ASE-certified technicians or master technicians can and should charge accordingly. The rate reflects the expertise required to do the work correctly.
How to Set Your Labor Rate (Step by Step)
Setting your rate shouldn't be based on what the shop down the street is charging. It should be a data-driven decision grounded in your actual costs and performance targets.
Step 1: Calculate Your "Loaded" Labor Cost
Start with what it actually costs you to have a technician on the floor. This includes:
- Wages and overtime
- Payroll taxes
- Benefits (health insurance, 401k)
- Workers' comp and liability insurance
- Training and certifications
Divide that total annual cost by the number of billable hours that technician produces in a year. That's your loaded cost — and it doesn't include any profit margin yet.
Step 2: Account for Overhead
Your labor revenue also needs to cover the cost of running the business:
- Rent
- Utilities and shop supplies
- Marketing and software
- Taxes
Step 3: Determine Your Target Profit Margin
Tekmetric shops average 65% labor profit margins. If your loaded cost for a technician is $45 per hour and you want a 65% margin, your base labor rate should be at least $128 per hour.
Step 4: Benchmark Against Your Market
Your internal numbers come first, but you can't ignore the local market. If your rate is $128 and every comparable independent in your area is at $100, you need to either clearly justify your value — through better inspections, faster turnaround, stronger communication — or find ways to reduce overhead. Benchmark against shops of similar size, service mix, and geography.
Step 5: Implement a Labor Matrix
Not every repair order is equal. Shops that implement a labor matrix can automatically adjust rates based on job complexity — billing more appropriately for diagnostic work or specialty repairs without manually recalculating every estimate.
➡ Benchmark Your Shop Now →
How Tekmetric Helps Your Shop Stay Profitable
Managing labor rates manually is a recipe for inconsistency and missed revenue. Here's how Tekmetric gives you the tools and data to stay ahead.
Know Where You Stand with the Tekmetric Shop Index
Before you can optimize your labor rate, you need to know how your performance compares to other shops. The Tekmetric Shop Index gives you free, instant benchmarking across four metrics: ARO, car count, parts margin, and effective labor rate. Enter your shop's numbers and see exactly where you rank against thousands of shops nationwide — no account required, no sales call, no commitment.
You can't improve what you don't measure. This is where that work starts.
➡ Benchmark Your Shop Now →
Real-Time Profitability Tracking
Tekmetric's reporting features give you live visibility into ARO, car count, revenue, and technician productivity — so you always know how your shop is performing, not just at the end of the month.
Custom Labor and Parts Matrices
Tekmetric lets you build a labor matrix that automatically adjusts rates by job type. A custom parts matrix works the same way on the parts side, protecting your margins consistently across every repair order.
Digital Inspections That Justify Your Rate
Tekmetric's digital vehicle inspections let your team send photos and videos of needed repairs directly to a customer's phone. When a customer can see the worn brake pad or the leaking gasket for themselves, they're far more likely to approve the work — and far more comfortable with the rate attached to it.
Accurate Labor Guide Integration
Tekmetric integrates with industry-standard labor guides so your estimates are based on real, accurate times — not guesswork or memory. That means technicians get credited fairly under a flat-rate system, and your service advisers spend less time on paperwork and more time with customers.
Benchmark Your Insights Now
Knowing the average labor rate in your state gives you a useful reference point. But the shops that stay profitable long-term don't stop at state averages — they benchmark continuously, track the right metrics, and make adjustments based on data instead of instinct.
Your labor rate should reflect your actual overhead, your team's capabilities, and the quality of service your customers experience. Use the state data above as a starting point, then go deeper with the Tekmetric Shop Index to see how your shop compares across every metric that drives profitability.
Ready to see where you stand? Benchmark your shop free with the Tekmetric Shop Index →
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