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57 would actually cost more, in the long run, than a contractor charging $51 per hour but providing a workforce that could Pressure to Keep Costs Low operate at 1.5 trips per hour. Important Inter-Relationships Pressure to Keep Paratransit Limited Wages Low Service Figure 4-5 illustrates how certain factors impact vehicle Resources Demand operator recruitment, retention, and performance. There are also a number of important inter-relationships between fac- Increased Turnover tors. The literature, focus groups, and surveys suggest certain relationships, but there is little hard research data that details these key inter-relationships. Key relationships between factors Lower Productivity that may be useful to research are described in more detail in the and Service Quality following sections. Figure 4-5. Underlying pressures that impact Compensation, Turnover, Productivity, paratransit costs and performance. and Total Cost Information from the national survey indicates that there is a strong relationship between compensation paid to vehicle ing wages for paratransit operators range from $7.00 per hour operators and the annual turnover of the operator workforce. to $15.77 per hour. The average wage varies depending on the It is also believed that lower turnover can improve productiv- type of operation, with operators employed by public agen- ity. A more experienced workforce is more familiar with the cies receiving an average of $12.06 per hour but operators of service area, riders, and pick-up locations. This should trans- private contractors receiving only $10.47 on average. Wages late into an ability to run schedules more efficiently. Increased also vary depending on union representation, with non- productivity reduces the total number of service hours that union operators at public agencies receiving an average wage must be operated to meet a given demand, which in turn low- of $11.30 per hour and non-union operators at private con- ers the total cost of service. tractors receiving an average wage of only $9.03 per hour. As At the same time, since wages and fringe benefits account for a result, contracted service providers report that it is difficult 6070% of total service cost, an increase in compensation has to attract and keep vehicle operators. Annual post-training a direct impact on the unit cost of service (cost per vehicle- turnover rates for private paratransit contractors average hour). An increase in the unit cost of service in turn has a direct 30% per year and range as high as 80% per year. This, in turn, impact on total service costs. These impacts of compensation is reported to impact vehicle operator performance and over- levels are illustrated in Figure 4-6. all system performance and cost. As shown in Figure 4-6, there is a direct relationship between In some ways, though, pressures to minimize costs can have wages and benefits paid and unit cost of service (increased the opposite impact. Lower cost proposals, which are lower wages and benefits result in increased unit costs). There is an mainly because of lower wages and benefits, may be accepted. inverse relationship between wages and compensation paid The lower wages and benefits may then result in higher vehicle and turnover (increased wages and benefits lower turnover). operator turnover, which in turn can result in a less productive Case studies presented in Chapter 6 also suggest an inverse service. If productivity is lower than planned, this means that relationship between turnover and productivity (all else being more vehicle-hours must be operated to meet the same level of equal, lower turnover and a more experienced workforce result demand. Since many public transit agencies pay contractors on in higher productivity). Productivity has an inverse relation- a per vehicle-hour of service basis, more vehicle-hours of ser- ship to the number of hours of service that must be operated vice raises the total cost. The extra cost of added vehicle-hours (the higher the productivity, the fewer the number of vehicle- could be more than the cost of paying for a provider with hours needed for a given level of demand). All of these inter- slightly higher bid costs but with a more productive workforce. relationships suggest that while an increase in compensation For example, in a system where the demand is for 100,000 will raise the unit cost per hour of service, it also should trips a year, operating at a productivity of 1.3 trips per increase productivity and decrease the number of vehicle- vehicle hour rather than 1.5 trips per vehicle-hour would hours of service needed, which will tend to lower the total cost. require 76,923 hours of service rather than 66,667 hours of A better understanding of the magnitude of these direct service (a 15% increase in the hours needed). A contractor and inverse inter-relationships could be very helpful to para- with a $45 per hour rate operating at 1.3 trips per hour transit managers and public transit agencies. Knowing the