Everyone agrees it has been a difficult couple of years. In the face of dwindling job opportunities, some remodelers have changed their businesses to focus on smaller projects. Most remodeling companies have become leaner by making cuts in staffing and other overhead items. Some are prospering while others have shut their doors.
This year’s Wage + Benefit Survey, which REMODELING conducts every two years, sheds some light on how remodelers have faced the questions of compensation in a down economy.
The 379 respondents — mostly full-service remodelers, but also handymen, trade contractors, insurance restoration businesses, and custom home builders — answered questions about everything from total payroll and hourly pay rates to raise frequency, overtime, bonuses, profit sharing, vehicle use, health and other insurances, vacation time, and holidays. Company revenue ranged from more than $5 million to less than $150,000.
In comparing the 2010 survey — which covers 2009 data — to the 2007 and 2008 data (recorded in the 2008 survey), what emerges is a picture of an industry that has taken a lot of hits and has trimmed its workforce and spending habits to the bare bones.
There are more sole proprietors (38% of the companies responding in 2010, only 23% in 2008) — either new entrants into the industry or, possibly, larger companies that have pared back. The types of benefits that have been cut — such as overtime pay, bonuses, and paid vacation for first-year employees — suggests not only that there are fewer dollars to spread around, but that some of the larger companies with more corporate-type policies may have disappeared entirely. Yet 27% of respondents reported that nothing has changed since 2008.
Specpan (www.specpan.com) programmed and hosted the Web-based survey, collected and compiled the data, and provided pre- and post-survey analysis. Specpan is a business-to-business data collection provider that services the construction and home improvement markets. Specpan is owned and operated by The Farnsworth Group, an Indianapolisbased full-service research consultancy.
Twenty-six percent of survey respondents reduced pay for most positions. The 2009 data shows that office managers and bookkeepers took the biggest hit, down nearly 25%; salaries for sales personnel were down about 10%.
It appears that laborers’ median hourly wage rose slightly and that laborers and helpers earn the same amount. Possibly, companies with few employees don’t differentiate between the positions. It is also possible that with layoffs, those employees left in place took on more tasks and earn more.
While IT/Systems people look to have nearly doubled their income, this anomaly is likely due to do the low number of respondents that actually employ full-time IT staff.
Since large jobs were few and far between, it is no surprise that production specialist salaries have decreased. And, for many companies, the marketing budget is often one of the first things cut. Hence the big decrease in marketing managers’ salaries.
Sixty-one percent of remodelers do not expect to give pay raises during the next 12 months. “Salaries have pretty much been stagnant across the board,” says Chris Kamis, owner of Absolute Roofing and Construction, in Parma, Ohio, a Cleveland suburb.
Seventy-one percent of respondents said they did not distribute a bonus in 2009. Of the 26% that did give bonuses, the median bonus was $2,500. Those same owners project the median in 2010 being less than half of that, $1,100.
The larger the company the more likely it was to give a bonus. Since 64% said that their bonuses were based on net profit, it’s not surprising that bonuses have declined or disappeared altogether.
In comparing bonus delivery with 2008, Grant Farnsworth, owner of Specpan, a business-to-business data collection provider that services the construction and home improvement markets (read more about Specpan above), notes that 53% of respondents said that they did not distribute bonuses in 2007, while 71% said they did not in 2009. “That’s almost a 20% difference — a [sizeable] chunk,” Farnsworth points out.
Most of the dozen or so people interviewed for this article had a response similar to this one from Alan Lutes, owner of Alpha Remodeling, in Ann Arbor, Mich., who says, “I haven’t given bonuses in three years — or something very minimal where they’d been sizeable before.”
This area shows some of the biggest changes since 2008. First, many more companies are not offering any type of retirement savings program in 2010: 80% of respondents this year said they offer none, compared with 66% who said the same in 2008.
Only 29% of respondents offer either individual or family insurance plans, down from 43% who responded positively in our 2008 survey. Of those who offer health insurance, 46% have done so for more than 10 years and 50% of those offering health insurance pay the full 100% of the costs for an individual plan.
While health insurance is an important part of any benefits package, and 60% of respondents claim they neither increased nor decreased the portion the company pays for health insurance between 2009 and 2010, new federal regulations have created a scare. Few employers can continue to pay at past levels.
Alan Lutes, owner of Alpha Remodeling in Ann Arbor, will keep his company’s high-deductible insurance program but will terminate the health savings account. Chris Kamis, owner of Absolute Roofing and Construction, pays 50% of medical and dental plans but says that will change. Jim Basnett, owner of Basnett Design Build Remodel, in Littleton, Mass., who paid 50% for family and individual plans, removed all health insurance benefits. However, his state, Massachusetts, partnered with a private-sector company to offer group health insurance administered through employers and paid by the employee.
Changing health care benefits is not an easy decision. Many employers feel as Neil Kristianson, owner of Crimson Design & Construction, in Naperville, Ill., does: “The kind of guys I like in the field are family guys. If you want to take care of your family, you’ve got to have health insurance and other benefits.”
Financial & Retirement Benefits
For those that offer these benefits, each individual category shows that more companies have dropped their participation during the past two years. For example, in 2008, 15% of companies offered a 401(k) and in 2010 just 6% do; 8% offered a SEP IRA, now 2% do.
The only category showing an increase is the SIMPLE IRA option: 8% offered it in 2008; in 2010, 12% did. The SIMPLE IRA has easier and less-costly administrative rules than the other forms of retirement savings.
Remodelers who offer these types of benefits do so because they feel it’s important to “help people help themselves,” as Jim Basnett, owner of Basnett Design Build Remodel, in Littleton, Mass., puts it. “I want to help my employees to a better future and a better life.” Basnett had to drop his company match from 3% to 1%, but still, six of his seven employees participate.
Although it takes effort to engage employees — explaining the value of benefits, for example — it’s worth it, says Absolute Roofing and Construction owner Chris Kamis, who offers employees a 401(k) with a 1%, 2%, or 3% match (depending on employee longevity). Once a year Kamis has a benefits specialist talk with employees. “About half take us up on it,” he says.
Kamis offers the plan, he says, because “a lot of the guys have been with us a long time. They are all valuable pieces of the puzzle. They’re family to us and they have families of their own. Once you find a good person, you want to keep them, and it’s worth every penny to offer these things to retain good talent.”