Here is the number that should be on every restoration operator’s wall this quarter: 58% of restoration contractors are absorbing higher labor costs to keep pricing consistent.
That is from Contractor Connection — Crawford & Company’s managed repair network — in the first installment of its 2026 Managed Repair Market report, released October 8. The respondents are network contractors: program-work operators, the people whose pricing is set in the world of carrier agreements rather than the open market. And the majority of them are eating the increase.
The rest of the installment fills in the squeeze. The labor market is affecting 86% of respondents’ businesses. 73% report an operational impact — most often longer job cycle times. The leading concerns stack in the order you’d expect: rising material costs, economic uncertainty, labor shortages. Lance Malcolm, Crawford Network Solutions’ president, frames the absorption as contractors choosing “to protect strategic business relationships” while keeping service levels up. That is the generous reading, and it’s not wrong. It is also not the whole story.
Absorption is a loan you make to your pricing
Eating a labor increase is not a strategy; it is a bridge. You hold your pricing, you keep the relationship and the volume, and you buy time — time for the market to adjust, for the program to reprice, for your own productivity to catch up. Bridges are fine. The mistake is forgetting you’re on one.
Labor is the restoration business’s largest controllable cost, and the increase being absorbed is not a one-time step. Wages in a tight labor market ratchet: the raise you give a lead tech to keep him doesn’t come back down when the quarter softens. Absorbing a ratcheting cost against flat pricing means your margin funds the difference every month, indefinitely, until something moves. What usually moves first is the thing nobody budgeted: the experienced tech who leaves because the shop across town stopped absorbing and started paying.
The second bill: cycle time
The 73% figure is the quieter problem. Longer cycle times are what labor shortage looks like from inside the operation — fewer hands, same WIP, everything takes longer. And cycle time is not a soft metric in program work. It is scored. It drives overhead absorption on every open job, it stretches receivables, and it lands on the desk of the same carrier partners whose pricing you’re protecting by eating the labor increase.
Read the two numbers together and the picture sharpens: a majority of the network is paying more per hour and taking longer per job. That is paying twice for the same shortage. The absorption story, told honestly, isn’t “contractors are holding the line on price.” It’s “contractors are funding the labor market twice — once in wages, once in duration — while pricing stands still.”
The tell: 98%
The most useful number in the installment might be the last one. 98% of respondents use technology in their businesses — estimating and scoping, communications and documentation, project management, and field applications like moisture detection and damage assessment.
That near-universal adoption is how the absorption is being financed. When you can’t raise price and can’t find people, the remaining lever is output per person: faster scoping, cleaner documentation, fewer callbacks, tighter job management. The network has essentially finished adopting the tools. Which means the easy productivity gains — the ones that funded the first rounds of absorption — are largely taken. The next increment of labor cost has fewer places to hide.
How long can the hold last?
As long as three things stay true: volume holds, the productivity frontier keeps inching out, and competitors keep absorbing too, so nobody’s pricing breaks ranks first. None of those is a law of nature. Labor markets clear eventually, usually all at once — the tech shortage becomes the raise, the raise becomes the repricing conversation, and because everyone absorbed for the same reasons, the conversation happens industry-wide in the same season.
The operator’s move, made now rather than then, is unglamorous:
- Know your loaded labor cost per job, not per hour. Wages plus burden plus the cycle-time drag. If you can’t state it, you don’t know what you’re absorbing — you’re just absorbing.
- Track cycle time as a cost line. Every extra day a job sits open is labor’s second bill. The 73% are reporting it as an operational impact; price it like one.
- Document the absorption. When the repricing conversation comes — with a TPA, a carrier, a program — the operator who can show two years of absorbed increases with dates and numbers negotiates. The one who just says “costs are up” gets nodded at.
- Spend the tech you already bought. At 98% adoption, the edge isn’t the tool stack anymore. It’s utilization — whether the field apps and documentation systems are actually where the work happens, or shelfware with a login.
Contractor Connection’s series continues — installment two, on the value managed repair creates, is out (we covered its customer-experience findings), and the third, on contractor–carrier collaboration, lands November 11. Collaboration is the right word for what has to happen next. But collaboration starts with honest arithmetic, and this installment just published the industry’s: most of the network is holding its price and paying the difference itself. Bridges are for crossing. The operators who treat absorption that way — timed, measured, and documented — will be the ones still standing on the other side of it.
Source: Contractor Connection (Crawford & Company), “58% of Restoration Contractors Are Absorbing Higher Labor Costs,” first installment of the 2026 Managed Repair Market report, October 8, 2026, via Business Wire — survey of contractors across the Contractor Connection network. Figures quoted: 58% absorbing higher labor costs; 86% affected by the labor market; 73% reporting operational impact, most often longer job cycle times; 98% using technology in their businesses. Analysis is this desk’s operator read.