When work makes you drive, gas prices hurt moreby Tom Robertson, Minnesota Public Radio
A national survey out this week shows the top economic concern for Americans is not job security or rising health care costs. It's the price of gasoline. The average price in Minnesota is a record $3.44 a gallon, 60 cents higher than this time last year.
For some people, driving is a matter of choice, but for others it's not. Their job requires it and they're feeling the pressure even more.
Bemidji, Minn. — Rod Wentzel is at the gas pump again. Wentzel drives a lot for his job selling yellow page advertising for a Bemidji-based phone directory company called Pinnacle Publishing.
Wentzel's sales territory includes all of Minnesota, Wisconsin, Michigan, the Dakotas and as far away as Montana. Wentzel says even with his fuel-efficient Ford Focus, the rising gas prices are killing him.
"I'm getting about 31 to 39 miles per gallon, but still, when the gas prices go up, it isn't quite enough," he says, shaking his head. "With our business, we end up driving 30 to 35,000 miles a year."
Wentzel works on commission and says he makes decent money. But the compensation his company provides for travel expenses is no longer enough.
"We get a $25 dollar per day per diem, which used to be enough to cover a couple meals and gas," he explains. "But now it doesn't even cover the gas in many cases... You know, it really takes a chunk out of your paycheck every month to make it for gas... It eats into your salary."
Wentzel says he tries to plan ahead as best he can to minimize travel. But he says Pinnacle Publishing prides itself on offering face-to-face service to customers. So contacting his clients by phone isn't a good option.
According to CEO Shelly Geerdes, a survey of her 30 traveling sales staff shows gas prices are their number one concern. She says a few have even quit their jobs because of the cost. Geerdes says it puts Pinnacle in a tough position.
"It's a huge expense to our company to try to offset that. You know, $5 a day as an increase for per diem, with my sales force out there, it would cost our company $40,000 to do that," Geerdes says. "That doesn't even give them enough to offset the cost of fuel."
Most folks don't put as many work-related miles on their vehicle as traveling sales people. But construction workers have a different challenge.
Take Randy Kraft, for instance.
He builds houses for a living and pulls in from his day in a heavy-duty Chevy half-ton pickup.
Kraft says his truck is far from fuel efficient, but he needs it to haul his tools and sometimes a trailer.
"I get about 12 miles to the gallon, so I eat up gas pretty regularly," he says.
Kraft works for a contractor that bids on jobs all over north central Minnesota. That means Kraft's daily round trip commute to the work site is sometimes 100 miles or more. And Kraft says his employer doesn't reimburse him for his travel expenses.
"I spend about $800 a month on gas. It's pretty rough," Kraft says. "I'm almost thinking about down-sizing my vehicle, but I kind of need it, so it's kind of a hard choice to make."
People who have to travel for work using their own vehicle typically get some compensation from their employer.
Governments and many private companies use a mileage reimbursement rate that's established by the Internal Revenue Service. The rate is adjusted annually and is based on a complex formula. It considers not only the price of fuel, but also the cost of insurance, vehicle maintenance and depreciation. Right now, that rate is 50-and-a-half cents per mile.
So is that reimbursement enough to cover people's costs?
Steadily rising gas prices means probably not, according to Lee Czarapata, who is a senior consultant with Runzheimer International, a management consulting firm that tracks travel costs.
Czarapata says the IRS mileage rate is designed to calculate tax deductions. It's set each January and is always based on the previous year's prices.
"The IRS rate has never meant to be a fair reimbursement for drivers who use their vehicles for business," Czarapata explains. "It is not meant to be geographically sensitive or up to date with current fuel prices. If they're getting reimbursed from the IRS rate... they're not getting their operating costs and their fuel costs covered, because that rate is static."
Czarapata says rising gasoline prices are forcing employees and companies to change how they do business -- more e-mailing, more teleconferencing and better planning.
Czarapata says companies across the country tell him their traveling employees are complaining more frequently about gas prices. He says the pressure will increase as prices get closer to $4 dollars a gallon. Some analysts predict the U.S. could reach that milestone this summer.
- Morning Edition, 05/01/2008, 7:50 a.m.