Legislature(2023 - 2024)BELTZ 105 (TSBldg)
05/08/2024 01:30 PM Senate LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB88 | |
| HB203 | |
| HB226 | |
| HB189 | |
| HB233 | |
| HB146 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 88 | TELECONFERENCED | |
| += | HB 203 | TELECONFERENCED | |
| += | HB 226 | TELECONFERENCED | |
| *+ | HB 189 | TELECONFERENCED | |
| * | HB 233 | ||
| + | HB 146 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 233-RATES: MOTOR VEHICLE WARRANTY WORK
3:10:16 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of CS FOR HOUSE BILL NO. 233(TRA) am "An Act
relating to rates and time allowances for motor vehicle warranty
work; and relating to unfair practices by manufacturers."
3:10:55 PM
DAVID GOFF, Staff, Representative Frank Tomaszewski, Alaska
State Legislature, Juneau, Alaska, gave a brief overview of
changes to HB 233 by the House:
• Clarification that the guides for [repair] times were
independent time guides, not the manufacturer [prescribed]
time guides.
• Provision for dealers to be protected from penalties for
doing manufacturers' warranty work. He said HB 233, section
four prohibited surcharges to recoup costs for warranty
work, similar to protections provided in 22 other states.
• Change in wording to allow [charging for] fractions of
hours and not just [full or whole] hours.
3:13:15 PM
CHAIR BJORKMAN announced invited testimony for HB 233.
3:13:45 PM
LESTER NICHOLS, President, Alaska Auto Dealers Association,
Fairbanks, Alaska, introduced himself and referred to an
economic impact study of an Illinois law [similar to HB 233]
that went into effect January 1, 2022. The report was titled
"Improving the Motor Vehicle Franchise Act" [by the Illinois
Economics Policy Institute and the Illinois Project for Middle
Class Renewal]. He read from the report's Executive Summary:
[Original punctuation provided.]
By bringing pay for warranty work up to competitive
local area standards, the Multiplier Act has generated
positive economic impacts in Illinois. The Act:
• Boosts worker earnings at Illinois' auto dealers by
between three percent and seven percent relative to
similar workers, resulting in $143 million annually
for skilled mechanics in middle-class jobs that
cannot be outsourced.
• Reduces employee turnover at Illinois' auto dealers
by nine percent, helping to combat labor shortages.
• Increases hours worked per week at auto dealers by
as much as six percent compared to other private
industry workers in Illinois.
• Grows the state's economy by $302 million, a $2.11
economic multiplier per dollar in wage gains.
• Generates $21 million in state tax revenues and $21
million in local tax revenues every year.
• Promotes safety and reliability by ensuring that
skilled mechanics can devote the proper time needed
to correctly diagnose and fix vehicle problems.
3:14:41 PM
MR. NICHOLS highlighted several points from the summary,
including that all auto dealer employees received pay increases
of three to seven percent and skilled mechanics received $143
million annually. He emphasized that employee turnover [in
Illinois] was reduced by nine percent and pointed out that HB
233 is meant to combat labor shortages [in Alaska], pay
mechanics better and hang on to mechanics [already employed]. He
also highlighted the growth in the [Illinois] state economy and
that safety and reliability were improved by correctly
diagnosing and fixing vehicle problems. He stated this was in
the best interests of everybody: consumers, manufacturers,
mechanics and [auto dealership] business owners.
3:16:05 PM
MR. NICHOLS mentioned opposition to HB 233 which pointed out
that chart eight on page eight of the report, "Improving the
Motor Vehicle Franchise Act in Illinois" notes a wage increase
of only 2.9 percent. He said the opposition pointed out that the
increase in wages was less than the rate of inflation in the
area. He contested that characterization by quoting the study,
reading from the paragraph preceding figure eight, page eight:
[Original punctuation provided.]
A 2.9 percent net increase in monthly earnings
translates into a $180 gain ($2,166 per year) for the
46,212 employees who were already employed at car
dealerships prior to the law, or $100.1 million
annually. Moreover, higher earnings attracting and
retaining 1.2 percent more employees relative to
neighboring states means that an additional 543
workers were directly employed due to the law. At the
average monthly earnings of $6,549 (or annual earnings
of $78,588), these workers account for another $42.7
million in labor income. Adding the earnings effect
and the employment effect together produce a $142.7
million total boost to employees at auto dealerships
in Illinois in the first year of the law (Figure 8).
3:17:39 PM
MR. NICHOLS continued to read from the report, "Improving the
Motor Vehicle Franchise Act in Illinois', page eight, final
paragraph to support the expectation that HB 233 will
significantly improve wages and opportunities, directly and
indirectly related to auto dealerships in Alaska:
[Original punctuation provided.]
The $142.7 million expansion of mechanics' pay creates
more than 1,500 jobs across Illinois, including the
543 jobs directly at car dealerships themselves
(Figure 9). Over 200 indirect jobs are created
throughout the supply chain as auto dealers are
reimbursed the correct amount for work performed,
their bottom lines are improved, and they can make
additional purchases for their establishments.
Finally, nearly 800 jobs are created as the skilled
auto mechanics and techniciansand indirectly employed
workers as well have more money to spend at local
stores, restaurants, and other small businesses.
3:18:14 PM
MR. NICHOLS read from the report, "Improving the Motor Vehicle
Franchise Act in Illinois", page nine:
[Original punctuation provided.]
ADDITIONAL IMPLICATIONS OF THE LAW
The Multiplier Act ended the practice of underpaying
certified mechanics and technicians for completing
warranty repairs. By promoting equal pay for equal
work, the law reduced employee turnover at car
dealerships and helped combat labor shortages. Instead
of being expected to earn below-market rates for tasks
completed at unrealistic time allotments mandated by
out-of-state and foreign corporations, skilled
mechanics can now devote the proper time to correctly
diagnose vehicle problems to meet reliability
standards and repair manufacturing defects that are
the fault of the automakers. This improvement in
safety for drivers has occurred at no cost to Illinois
consumers, with warranty work remaining free to car
owners (McMahon, Alfirevich, & Marquardt, 2023).
3:19:05 PM
MR. NICHOLS countered the arguments of auto manufacturers
against HB 233 that the bill would not really change anything
except to line the pockets of [auto dealership] businesses,
charging that the manufacturers would prefer to line their own
pockets. He said the [manufacturers'] comments that HB 233 would
raise prices [for warranty repairs] were a threat. He noted that
the manufacturers' response to changes in franchise law in 22
states was to introduce surcharges. He said the surcharges were
not a punishment to the dealers as much as to the entire state
economy, to consumers and to everybody.
3:20:28 PM
CHAIR BJORKMAN expressed appreciation for the testimony and the
committee's support for HB 233.
3:21:00 PM
MR. GOFF highlighted that, according to Mr. Nichols' testimony,
$14-15 million additional revenue would come into the state
through the pockets of auto dealership [mechanics and other]
employees as a result of HB 233 and that would be a great
benefit to the state. He advocated for the potential of HB 233
to keep mechanics in dealerships in Alaska and keep the
dealerships businesses healthy.
3:21:36 PM
CHAIR BJORKMAN held HB 233 in committee.