The Real Cost of Doing Business in California

A Call to Action for Fair, Regional Pricing by 2026

For more than a decade, California businesses have operated under a cost structure unlike anywhere else in the country. In the repossession and asset recovery industry, that gap has now become impossible to ignore. At the California Association of Licensed Repossessors (CALR), we represent agencies that operate under the highest labor costs, insurance premiums, fuel prices, and commercial real estate expenses in the nation. Yet despite these realities, many lenders and forwarders continue to rely on flat, nationwide pricing models that fail to account for regional economic conditions.

That model is no longer sustainable—and the data proves it.

The Data Is Clear: California Operates on a Different Cost Curve

Fuel Costs

California consistently maintains the highest gasoline prices in the United States, averaging $4.45–$4.70 per gallon, compared to a national average near $3.00, and $2.30–$2.60 in many Midwest and Southern states.

For agencies that move vehicles daily, this represents a 40–60% cost premium compared to peers in lower-cost states.

Labor Costs

California’s statewide minimum wage of approximately $16.50 per hour, with many metro areas exceeding $17–$19 per hour, stands in sharp contrast to the $7.25 federal minimum wage still in effect across much of the country.

When payroll taxes, overtime rules, and compliance requirements are added, California agencies face labor costs that are often two to three times higher than those in states receiving identical repossession fees.

Insurance & Workers’ Compensation

California consistently ranks among the most expensive states for workers’ compensation, averaging nearly $2.00 per $100 of payroll, compared to $0.55–$0.75 in states like Texas.

Commercial insurance premiums—auto, liability, and property—are likewise elevated due to higher insured values, regulatory exposure, and litigation risk. These are not discretionary costs; they are mandatory to operate legally and responsibly.

Commercial & Yard Space

Nowhere is the disparity more striking than in real estate.

Industrial and commercial lease rates in major California markets routinely exceed $15–$20 per square foot annually
Paved yard space commonly rents for $0.50–$0.75 per square foot per month
A 3-acre paved yard with a 30,000-square-foot facility can cost $75,000 per month or more

Comparable facilities in Texas or Midwest markets often lease for $8,000–$10,000 per month—a 7–10× difference for the same operational footprint.

Yet the compensation paid to California agencies frequently mirrors those lower-cost regions.

Flat Pricing Is Not Fair Pricing

Applying uniform national rates across vastly different cost environments is no longer equitable. A $300–$350 assignment fee may still function in low-cost states—but in California and other high-cost regions, it no longer reflects economic reality.

This practice places California agencies in an untenable position:

Absorb rising costs indefinitely
Reduce service quality
Or exit the industry altogether

None of these outcomes serve lenders, forwarders, or consumers.

A Path Forward: CALR’s 2026 Industry Goal

CALR is not simply highlighting a problem, we are proposing a solution.

Our Goal for 2026

By the start of 2026, CALR is calling for the industry-wide adoption of regional pricing models that:

Reflect local labor, fuel, insurance, and real estate costs
Establish California and other high-cost regions as distinct pricing tiers
Provide transparent, data-driven rate structures that adjust as costs change

Regional pricing already exists in many other service industries. Asset recovery should be no different.

Call to Action

We call on:

Lenders to review regional cost data and reassess compensation models
Forwarders to advocate upward rather than push risk downward
Industry partners to engage in good-faith discussions on sustainable pricing
Agencies nationwide to support regional pricing frameworks that protect the long-term health of the industry

California agencies move a tremendous volume of assets and operate under some of the strictest regulatory standards in the country. We do this professionally, compliantly, and efficiently.

All we are asking for is fair pay for real costs.

The Time Is Now

California agencies have absorbed these pressures for years. Inflation and wage increases have only accelerated the strain. Continuing with outdated pricing models into 2026 will result in fewer agencies, reduced capacity, and higher systemic risk for everyone involved.