Why Are Labor Prices So High? Part II

CLICK HERE to sign up for weekly Exhibitor Lounge tips and training!

Welcome to “Exhibitor Lounge” sponsored by Exhibit Edge.com.  I am your host and Trade Show Mixologist, Michael Gray. Here, each week, you receive simple, practical, and proven tips to improve your trade show marketing strategy and get better results while maximizing your budget.

Ok, so last week we scratched the surface listing the costs that companies pay that are directly related to labor costs. These overhead costs are added on top of hourly union pay rates to create a labor rate charged to the customer.

So let’s go down the list again and dig a little deeper. Last week we started with:

FUTA – It is a Federal Unemployment tax the company’s pays to fund the federal government’s role in State unemployment. The three main components of FUTA are extended benefits, a borrowing fund for states to use, and the government’s administrative costs.

Next is: SUTA – It is the State Unemployment tax which funds the state agency where people go to file for unemployment claims.

Workman’s Compensation is a required insurance to help cover workplace Injuries.

Social Security – which everyone knows is the Federal Retirement Fund. Now this is where you say “hey wait a minute – I pay that tax with payroll deductions”.  What you may not know is that companies are required to match the amount that you pay.

Medicare – A federal system of health insurance for people over 65 years of age and for certain younger people with disabilities. Again, companies are required to match the amount that you pay.

Health Insurance, training, retirement and vacation costs are all paid by companies to the union directly. It is a fee assessed by the union, per hour, on top of the union employees hourly pay rate. This fee can be as much as 50% of the hourly pay rate.

Full time company employee costs can also include sick leave, bereavement leave, maternity leave, holidays, continuing education credits, bonuses, incentives, and raises. These are all additional costs that add to the labor rates you pay on the show floor for services.

Well hopefully that gives you a little more insight as to what goes into trade show labor rates. In reality, it is in line with many other service industries like auto repairs or heating and air conditioning companies that rely on their labor rates for revenues. They need to charge these labor rates to cover all their costs and eke out a small profit. Oh yeah, the list of costs that companies pay – you know – the stuff we just went over; those are only the costs directly related to labor. Then you add all the other stuff like building leases, equipment, business insurances, and utilities and you can start to see how these labor rates grow.

As always, please respond with your questions or comments and let others know about EXHIBITOR LOUNGE.COM. We will see you next week. Until then, I am your host Michael Gray telling you to RELAX in the Exhibitor Lounge.