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Author Topic: Costs of employing professional bus drivers  (Read 4297 times)
belfert
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« on: January 20, 2010, 09:32:07 AM »

Proably no use to you but Arrow leases their coaches for 500.00 a day for a 44 passenger coach with a 1.38 per mile for insurance and fuel plus if Arrow furnshes the driver it is 300.00 a day for him or her plus expenses.  

It seems that Arrow is making a decent profit on that driver.  What does a driver get, maybe $150 a day?  Arrow has overhead, but the daily and per mile costs help cover that too.
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Brian Elfert - 1995 Dina Viaggio 1000 Series 60/B500 - 75% done but usable - Minneapolis, MN
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« Reply #1 on: January 20, 2010, 10:01:17 AM »

Quote from: belfert
It seems that Arrow is making a decent profit on that driver.  What does a driver get, maybe $150 a day?  Arrow has overhead, but the daily and per mile costs help cover that too.

OK Brian,
Lets just say Arrow or you or I are in business for profit. (anyone want to let our president in on this!  Shocked Opps sorry I didn't mean to steer this off on a political rant!)

OK now again say $150 in payroll to the driver. Now let's add payroll taxes, workman's comp insurance, drug testing, training (updating, trainer and etc.), and any other hidden costs directly associated with that drivers pay. (WC ins is based on payroll amounts! Fed regs require drug testing before hire and random. Insurance companies require constant training updates of which the driver/trainer wants compensated for the time spent doing so!)

Now these are only the things directly associated with THAT driver. Not other overhead such as the payroll clerk, light bill, phone bill and yada yada yada!

So in the end how much of that $300 is really a profit?

OH wait we're just in this for fun not a profit right? I guess if yer real savy you can go online and find a Chinese driver cheaper! Wink
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Busted Knuckle aka Bryce Gaston
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cody
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« Reply #2 on: January 20, 2010, 10:04:41 AM »

There you go again bryce, letting facts cloud your vision of a brighter future. lol
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belfert
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« Reply #3 on: January 20, 2010, 10:21:59 AM »

I understand there are plenty of other expenses in employing anyone, but something would seem to be wrong if if additional payroll costs added up to 100% of the driver's pay.  Arrow certainly has other overhead, but Arrow is already getting $800 a day before the bus is driven anywhere.

I have run a business before and I do understand that employing workers costs more than their wages.  Now, I never made any profits running my business until I sold it.  The business grew so rapidly that every extra penny was put into expansion.
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« Reply #4 on: January 20, 2010, 11:08:35 AM »

Quote from: belfert
I understand there are plenty of other expenses in employing anyone, but something would seem to be wrong if if additional payroll costs added up to 100% of the driver's pay.  Arrow certainly has other overhead, but Arrow is already getting $800 a day before the bus is driven anywhere.

I have run a business before and I do understand that employing workers costs more than their wages.  Now, I never made any profits running my business until I sold it.  The business grew so rapidly that every extra penny was put into expansion.

OK Brian I didn't say those costs added up to 100% of the drivers pay.

What I did say is most of us in business are in it for a profit! And in order to make a profit, you have to charge more than something costs!

Arrow is one of the largest independent bus companies out there.
Any idea how they got to be one of the biggest out there? They made a PROFIT! 

If you don't make a profit while in businees it is best to sell it if you can! FWIW Wink
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Busted Knuckle aka Bryce Gaston
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bevans6
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« Reply #5 on: January 20, 2010, 11:17:41 AM »

When I was running a division of our business (granted, in telecom not transportation) I used 250% of salary as a guide line to gross employee cost, let alone the price I would charge for an employee.  200% seems reasonable to me.  As does $300 for a driver, if you think that could be up to 14 hours.  Unless you think that $15/hr or less is a good wage to drive a bus.  I have no idea, what does a professional highway coach driver get paid these days?

Brian
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Sean
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« Reply #6 on: January 20, 2010, 11:43:08 AM »

We're pretty far afield from the OP's question, but...

I understand there are plenty of other expenses in employing anyone, but something would seem to be wrong if if additional payroll costs added up to 100% of the driver's pay.


In fact, actual salary is almost always less than half of the "loaded cost" of an employee, in almost any industry.  IOTW, the cost of insurance, benefits, training, utilities, etc. etc. always adds up to more than what the employee is actually paid.  Many people who start businesses underestimate this payroll loading and find themselves in trouble in short order.

If you did it for less in your business, more power to you, but that is definitely not the norm.

When I was running a division of our business (granted, in telecom not transportation) I used 250% of salary as a guide line to gross employee cost ...


Q.E.D.

-Sean
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« Last Edit: January 20, 2010, 12:34:05 PM by Sean » Logged

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« Reply #7 on: January 20, 2010, 02:10:26 PM »

Sean and bevans6,
While I realize we did stray off the original posters question.
I was merely trying to make my point to Brian that $300 a day for driver charges were not that far out of line. And as both of you helped confirm it is NOT! Thank you for helping me make my point.

Point being when in business the object is to REMAIN in business by MAKING A PROFIT!
Wink

It was not and is not my intention to misdirect this thread any farther away than it already has.

Don & Sheila my sincere apologies to the both of you for stealing your thread! Wink
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belfert
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« Reply #8 on: January 20, 2010, 02:45:18 PM »

I never said Arrow should make no profit.  They are making profit on the driver, daily bus lease, and per mile fee.  My employer has given us pretty exact numbers on what it costs per employee above the actual wages (Not including office space, computers, etc.).  It costs them from approx 33% to approx 50% or more for payroll costs beyond wages.  The amount per employee is not the same across the board because health care is a fixed cost.

My own company never made any profits because we were way undercapitalized.  We got into Internet access just as the market was starting to explode.  We started with almost nothing in equipment and ended up spending something like $300,000 on equipment in a few years along with moving two times.  I did draw a relatively small salary just like my employees, but on paper there was never any profit.  My brother and I were co-owners and we decided to sell when we saw that Internet access would become a commodity offered by phone and cable companies.
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Brian Elfert - 1995 Dina Viaggio 1000 Series 60/B500 - 75% done but usable - Minneapolis, MN
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« Reply #9 on: January 20, 2010, 03:12:19 PM »

Bk, it was not your fault I just threw that out so the guy would have some idea on how it was figured my mistake sorry.  
Working 120 fulltime employees that I employed for years you factor everthing in like a 401 plan which they have Arrow is not getting rich on a driver.
500 or 800 bucks a day plus mileage on 450,000 dollar bus they are not getting rich there either not like the coach is running 7 days a week 365 days a year.

good luck
« Last Edit: January 20, 2010, 05:04:56 PM by luvrbus » Logged

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Sean
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« Reply #10 on: January 20, 2010, 03:32:59 PM »

Brian, I know you posted this in the other thread, but I am responding here in keeping with the wishes of the administrators.

...  My employer has given us pretty exact numbers on what it costs per employee above the actual wages (Not including office space, computers, etc.).  It costs them from approx 33% to approx 50% or more for payroll costs beyond wages.  The amount per employee is not the same across the board because health care is a fixed cost.


True loaded salary goes above and beyond payroll taxes.  You also have to include workers compensation insurance, the additional cost of liability insurance per employee,  the cost of initial and ongoing training, as well as sick time and other types of leave, and, yes -- office space and the utilities to support it are also included.  When you expand from five employees to ten, they need a place to sit -- that all becomes part of loaded salary.  If a company-supplied tool, such as a computer, is required for that person to work, the amortized cost of that asset and its maintenance can also become part of the load. As I said earlier, every business has this issue, although the specific factors change from industry to industry.  What goes into the loaded salary of an assembly line worker is different from an office worker which is different from a bus driver.  But you have to include all of it when you figure out what to charge for a person's time -- this is why the shop rate at Bob's Diesel is $90 per hour, when the mechanic might only be earning $18 per hour.

These sorts of issues are easily overlooked by the inexperienced, and sometimes even seasoned managers.  For example, it takes five full-time personnel to fill one chair 24 hours a day.  If you have a business, such as towing, that requires dispatchers, and you have at least one 24/7 need, that will require five employees to handle.  As dispatch requirements grow, you can grow incrementally from the five (you don't add five full people for each additional dispatch position), but this is a lower limit.

I don't know enough about Arrow to say definitively whether their costs are in line with their revenues, but experience tells me that it's hard to make a living in the bus business; I'm guessing they are not rolling in excess profits.  But I do know that what you said about their costs not being double the driver's pay just doesn't ring true -- I am willing to bet that their costs in fact exceed twice the driver's pay, which is consistent with most industries.

FWIW.

-Sean
http://OurOdyssey.BlogSpot.com
« Last Edit: January 20, 2010, 09:15:16 PM by Sean » Logged

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belfert
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« Reply #11 on: January 20, 2010, 04:28:01 PM »

When I had employees I never really considered office space, utilities, computers as a cost of an employee.  Thar stuff was part of the overheard of running a business.  Certainly, FICA, unemployment taxes, worker's comp, and other benefits are employee costs.
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Brian Elfert - 1995 Dina Viaggio 1000 Series 60/B500 - 75% done but usable - Minneapolis, MN
Sean
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« Reply #12 on: January 20, 2010, 04:57:28 PM »

When I had employees I never really considered office space, utilities, computers as a cost of an employee.


However, in accounting terms, that is exactly what they are.  Moreover, when billing someone else for an employee's time (which is what we were discussing), ALL of these costs must be figured into the bill.  Otherwise you'd lose money on every transaction.

Your original assertion was that Arrow could not possibly incur costs equal to or greater than the salary they paid the driver.  I (and apparently several others) would refute that assertion.  In addition to Arrow's direct payroll costs (taxes, unemployment insurance, etc.) they also must account for sick days, training, drug testing, and all the other items that a driver "costs" them each year but for which they do not directly bill.  Those costs must be apportioned over the entire set of work the driver completes; they don't come from some magic "overhead" account.  If they provide the driver with a locker, uniform, trip log, etc. those costs also must be recovered.

Again, I do not know enough about the specifics of Arrow to say one way or the other.  But your back-of-the-envelope math leaves a lot out of the equation and unfairly paints them as usurious.

I'm not trying to be argumentative, just fair.  I don't have a dog in this race, but Arrow is not here (I assume) to defend themselves.

-Sean
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« Reply #13 on: January 20, 2010, 05:19:22 PM »

And don't forget the cost of employee turnover.

The coach market sees a lot of turnover, and the ongoing costs of recruitment, advertising, interviewing, as well as the mentioned training, MUST be included, or you won't be in business for long!

Whether you apportion the costs to the driver availability, or bury them into a mileage cost, they have to be included someplace.

And what return on investment do we think is "fair" for this market segment, where the depreciating capital asset, (the motor coach) costs at least $7000 a month in payments, before you turn a wheel one inch or fill the fuel tank?

And how many days a month might the coach sit still, and how many competitors might undercut to unprofitable rates on their way to bankruptcy and leave yours sitting more?

Would you expose your finances to this kind of risk for the same return as a savings bond?

I think not.

happy coaching!
buswarrior
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« Reply #14 on: January 20, 2010, 05:54:30 PM »

Golleee, but you guys get so serious  Smiley.

And about what? How much the driver gets paid? Do we care what the mechanic gets paid? Nope... we just cough up the $85+ per hour to the 'repair' shop... and hope the mechanic actually did what we're getting billed for (in my limited experience, hardly ever).

If the drivers weren't happy, they wouldn't be driving. My trucker buddies have tons more worries (and out-of-pockets) than bus drivers. And do a LOT more labor.

C'mon guys, we drive these crates for free (and for fun)... how bad can it be?

Pardon my silly female take on the argument.

Nellie Wilson
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