Surging Gas Prices Take a Bigger Bite out of Workers' Wages

Some can no longer afford the drive to work

Stephen Miller, CEBS By Stephen Miller, CEBS March 14, 2022
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Surging Gas Prices Take a Bigger Bite out of Workers Wages

As gas prices hit record levels in the U.S., many low- and moderate-income workers are finding that their wages no longer cover basic expenses. Some say they may not be able to afford driving to their worksite much longer. While mass transit or biking may be an option for some, for others commuting by car is the only practical way to get to work.

SHRM Online has gathered articles that look at how employees are dealing with surging fuel costs.

A Full Tank for a Full Day's Wages

On March 10, gasoline at U.S. pumps hit a record for highest average price, with regular gas costing $4.32 a gallon and diesel $5.06 a gallon, according to the American Automobile Association. If a worker earning minimum wage were to fill a 12-gallon tank of gas today, it would cost them almost an entire day's pay.

(Newsweek)

An Extra $2,500 per Year for Gas

Assume you live in Fargo, N.D., have a seven-mile commute and your car gets 26 miles per gallon. A week of driving to work would have cost $3.74 in May of 2020, $7.50 in May 2021 and $10.25 with average prices as of March 8. If you live 30 miles away from work, a week of driving would have cost $16.04 in May 2020, $32.20 the year after and $43.97 on March 8.

A typical family in the Fargo area will spend about $2,500 more on gas this year, based on how the price trends look.

(InForum, Fargo, N.D.)

Jobs at Risk

Domonic Graham, a cook in New Bern, N.C., is looking at transportation options other than driving, such as an electric scooter, which he said would cost him only $200. Otherwise, he risks not being able to afford gas to get to work.

"My fear is losing my job from not being able to make it to work because of the high gas prices," Graham said.

(ABC News Channel 12, Bern, N.C.)

Reimbursing Fuel Costs for Personal Vehicles' Business Use

Some employers use a Fixed and Variable Rate (FAVR) allowance plan, in which employees who drive their own vehicles to conduct business can receive tax-free reimbursements from their employers for fixed vehicle costs (such as insurance) and variable vehicle expenses (such as fuel), instead of the standard mileage rate.

Under a FAVR plan, the cost of the vehicle may not exceed a maximum amount set by the IRS each year. For 2022, vehicle costs may not exceed $56,100 for automobiles, trucks and vans, up from $51,100 in 2021.

Another way for employers to reimburse employees for their business-driving expenses is a flat car allowance, which is a set amount provided to employees over a given period to cover the costs of using their own car for business purposes—such as $400 per month for the cost of fuel and other expenses.

(SHRM Online)

Another Reason to Keep Working from Home

Sticker shock at the pump for Americans is sharpening already uneasy feelings about the impact of inflation. Why, then, are we in such a hurry to end pandemic-era work-from-home policies and force employees to commute to offices again?

(Bloomberg Opinion)

Promoting Mass Transit

New York City is trying to convince workers to return to the office as gas prices are going through the roof, and some believe that could lead to a change in commuting habits. Subway ridership is at about 55 percent of pre-pandemic levels. Metro-North Railroad and the Long Island Rail Road are at about 45 percent. With gas prices hitting record levels, this could be an opportunity for the Metropolitan Transit Authority to bring people back to transit. "The subway fare is not going up, the railroads are not going up," said traffic consultant Samuel Schwartz.

(WCBS NewsRadio 880, New York, N.Y.)

Bikes and Buses

Climate Smart Missoula (Montana) says investing in a bike, or maybe even an electric car, not only can save you some cash but also can help save the planet.

Amy Cilimburg, the group's executive director, said there are many options for transportation in Missoula, so it should be easy to find what works for you. "There's a lot of creative ways to get around that combine walking, biking and busing," she advised.

(Channel 8 KPAX, Missoula, Mont.)

A Two-Hour Bus Commute

Five days a week, David Gifford drives to work at an automotive-interior-parts manufacturer in metro Detroit, about 20 miles from his home. He most recently filled his gas tank for $4 a gallon.

"To add another $60 a week to our gas tanks suddenly starts eating into other things," he said.

If gasoline prices continue to climb, Gifford said he would consider taking buses to work rather than driving, despite a bus commute taking about two hours each way, compared with about 30 minutes by car.

"If I had to add on extra hours of commuting to my day, that would be a big loss for family time," he said.

(The Wall Street Journal)

Gig Drivers May Suffer Most

Rising prices are hitting gig workers particularly hard as fuel makes up a large part of their daily costs. Lyft drivers say they have to spend more time driving in order to achieve the same level of pay. Some say that without increased wages or other support from ride-hailing companies to help alleviate the burden of fuel costs, driving will no longer be worthwhile.

When asked if Lyft would offer additional support to drivers as fuel costs increase, a spokesperson said it had taken concrete steps to help, including a fuel cash-back program. The company's website says drivers can get 1 percent cashback on gas purchases through Mastercard Easy Savings at qualifying gas stations in their area.

Uber announced it is adding a surcharge on fares and deliveries in the U.S. and Canada in response to surging gas prices. The company said the fees will go to drivers, who are responsible for paying for gas they use.

(The GuardianLyft Direct Rewards and CNBC)


SHRM Express Requests Has Helpful Resources

The recent spike in gas prices is prompting workers to explore alternatives to their daily commutes. Many workers will turn to their employers for help in relieving the pain at the pump. For articles and resources, visit SHRM's Gasoline Prices Express Request.


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