Now, I'm not in the business whatsoever, beyond being a customer.
As it was explained to me by a mechanic friend, at least in CA, was that mechanics are effectively paid by the job, and the pay for the job is the number of hours some book says the job should take. That there's some standard that says "shock replacement for Ford Pinto, N hours". Whether the number comes from the factory, or a 3rd party, or what, I don't know.
Then, the mechanic is paid for the job, effectively regardless of how long the task takes them. If book says 2 hours, the mechanic is paid for 2 hours, whether it took the mechanic 1 hour or 4 hours. This aligns with the complaints of 2005JGC of not being compensated for tasks that go over due to circumstances beyond his control.
My friend always liked some particular job that everyone else hated, simply because he was experienced with and was able to do the job far under the estimated time. So, as a contrived example, if it was a 1 hour job, and he was able to do it in 45 minutes, he would be able to do 10 jobs in 8 hrs, rather than the normal 8. So, he would get paid 10 hours for 8 hours of actual work on his part.
As an outsider, I appreciated this system on several levels.
One, it potentially gives the consumer a base line for a task no matter where you took the car. "Book says X hours, we charge D dollars per hour for labor". Versus shop A says "Oh, that's Q hours" while B says "That's Z hours". Obviously this relies on the idea that each shop is proposing the same procedure. But if the shops routinely work from this standard, then that helps level the playing field even for a naive consumer. (All based on the ethics of the shop, naturally.)
Two, I felt is was a clever way for mechanics of different skill levels to be fairly compensated. By being paid for the job, not counting clock time, a skilled mechanic would cost the same as a novice mechanic. If normally a novice mechanic took longer, then, dollars earned per hour of clock time would be less than a skilled mechanic that was able to work faster. To a point this allowed mechanics to work to their potential. It also helps motivate employers to hire novice mechanics in the first place, since their exposure is the same, at least financially. It also gives "unbiased" benchmark to help rate the performance of a mechanic.
The down side for mechanics, naturally, they have no control over what tasks are assigned to them. This also speaks to the point about "getting the good jobs". That may be a benefit of seniority at a shop: first pick of open work orders.
But, overall, on paper, it sounds like a good system.
The downside, is that barring consequences, it favors time over quality. My mechanic friend mentioned specifically about a BMW 8 cylinder, where 4 of the cylinders were very difficult to reach. So, for a spark plug replacement job, one mechanic simply didn't replace the other 4. Unsupervised, he's motivated to lower his time to increase his pay. So, safe guards need to be put in place to police the mechanics.
Finally, what are the barriers for skilled mechanics to open their own shops? Spend 5-10 years at a couple of dealerships, and then go independent? Obviously there's the costs incurred for going independent (building, location, regulations, etc.), as well as the motivation and aptitude to manage all of the business parts as well as the mechanic duties (not all folks are suited to it).
But everyone wants to know "a good mechanic", and "good mechanics" are basically at independent shops because you can go and know that Frank is going to work on the car, and stand there in his blue overalls, listening to you, following along and nodding as he wipes his greasy hands off on one of those red shop rags.
So, it always seemed to me that the next step for a "good mechanic" was to break free, start doing work on the side, and open their own place. Do shops work like hair salons? Hair salons have stations, but the hair dressers are effectively independent. They can get random walk ins or they can drive their own business, working with referrals, repeat business, whatever. I don't know if they pay a flat rent per month or a percentage of the work as well. But I can see an independent shop sort of working like that.
One thing's for sure, dealership or independent, we're going to be needing mechanics for some time.