2010 Wage and Benefit Survey

Despite cutbacks, remodeling company owners remain positive

12 MIN READ

Benefits

Paid Time Off

While paid time off is a nice, relatively inexpensive perk, more than half, 57%, of respondents said that they don’t pay for any holidays, and 56% do not offer company-paid vacation days even after 15 years of service. The same is true for company-paid sick days — 80% do not offer it even after 15 years of service. No surprise, the smaller the company, the fewer that offer paid time off.

Chris Kamis, owner of Absolute Roofing and Construction, in Parma, Ohio, who has been able to grow his company these past two years, continues to support paid vacation and government holidays for his 50 employees. “And we require that they take those [government holidays] off because we value family,” he says. Vacation is dependent on how long employees have been with the company. “Once you’re fully vested, you get a week’s paid vacation.”

Jim Basnett, in Littleton, Mass., who admittedly has struggled since 2008, still believes that “paid time off is really important.” He offers holiday and sick leave pay, and says, “If they don’t use it, I pay them for it at the end of the year. They take ownership of their jobs. Even project supervisors are out there selling us.”

Some remodelers, such as John Price, whose company is in Merced, Calif., the foreclosure capital of the country, have a different view, allowing their employees to choose. Price was able to save his company by turning to government work, for which he must pay employees the prevailing wage. “I don’t offer vacation days,” he says. “It’s in [employees’] pay already. If [they] want to take it they can; it’s already paid for.” Because work has not been steady, most employees don’t take vacation.

Determining Benefits

What makes some companies offer benefits and others not? It’s not that remodeling company owners don’t care about their employees, but there are a lot of mitigating factors, especially in this economy.

In the 2010 survey, the top three factors that respondents said have the most impact on the amount of benefits they offer are insurance rate increases/decreases (56%); previous year’s sales/revenue (50%); and projected sales revenue (46%). The same three factors were given in 2008, with projected sales revenue coming in second and previous year’s sales coming in fourth behind gas price increase/decrease.

“I’m hearing [from remodeling company owners] that things are tight: we’re not doing parties, we don’t pay out bonuses, we’re not giving raises, we’re not hiring,” says Grant Farnsworth, owner of Specpan, the business-to-business data collection provider that services the construction and home improvement markets. “It’s consistent with the data [over the past two years]. Things are tighter now and people don’t anticipate it loosening up soon.”

But those who have offered and continue to offer benefits see them as an important part of running a professional business, as a differentiator, and as a way to attract and keep the best and brightest employees. Many also feel a moral obligation to support their employees so they, in turn, can support their families.

Benefits are important “if you want to be a stable employer and retain employees,” says Alan Lutes, owner of Alpha Remodeling, in Ann Arbor, Mich. “They’re important for operating a proper business. And [we should] provide people with the things they need to take care of their families properly.”

Owners

The number of sole proprietors has increased in the past two years; 77% of respondents in 2010 are sole proprietors (64% in 2008).

About one-quarter have reduced pay for all employees, including themselves.

The average salary for owners with companies under $500,000 in revenue is $28,044. Those whose company revenue is between $1.1 million and $2.5 million have the highest salaries, averaging $123,277. But those owners of companies with revenue over $2.5 million are taking a smaller salary, $89,727, and are making up for it in bonus or profit sharing, $40,833, and in a higher yearly allowance for company vehicles, $8,644.

The past two years have been particularly difficult for the owners of small companies who don’t pay themselves a salary — who take only what’s left if there’s any profit. Survey respondent Chantal Devane, an interior designer who works closely with remodeling contractors, is one such small-business owner. “I pay myself based on profit, which changes depending on the jobs I do year to year,” Devane says. “It was a matter of just getting by in the past couple of years.”

But even remodelers who have more mature businesses and who always take a salary off the top have cut their own pay (along with that of their employees) or have gone without. “Many of us have gone through periods of not paying ourselves” in the past two years, says Michael McCutcheon, owner of McCutcheon Construction, in Berkeley, Calif., a highly successful 30-year-old design/build company. He took a nearly 60% pay cut and, at the advice of his accountant, is gradually ramping up and paying himself back. “So now it’s more of a 50% pay cut,” he says.

Devane says that her market has improved since early 2010. “This year I have tripled what I did all of last year,” she says, and she is beginning to pay herself again.

Jim Basnett, in Littleton, Mass., has cut his own pay almost 50%. Yet he says he’s optimistic and sees change as the way of the future. “Smaller projects are what we’ll be dealing with for a long time. We’ll use those as a differentiator. And social media is moving at such a fast clip. Basically, we just can’t do things the way we did in the past.”

Survival Mode

There’s a lot of doom-and-gloom talk and speculation about the year ahead. Everyone is waiting to see what will happen — with election outcomes, with health care, with a possible stimulus package. Yet most of the remodelers interviewed here are hopeful about the future.

To survive, remodeling companies have scaled back to bare bones — 39% reduced hours; 32% laid off employees; 26% reduced pay; and 24% eliminated bonuses. And yet, 50% of those with revenue under $299,000 said they have not been affected. They are likely doing smaller jobs and have lower overhead, which possibly put them in a better position than those companies with revenue between $500,000 and $999,000, and $1 million and $1.99 million. Only 6.2% and 10% of those companies, respectively, felt they have not been affected by the current economy.

Yet no one is truly immune to economic change; everyone has learned something these past two years. Brook Rush, owner of David Brook Rush Builders, in Perkasie, Pa., says he’ll hire more people when things turn around, but he still won’t allow himself to grow too big. “We’ll survive and be around and do whatever it takes to be in business. I’m very optimistic; it’s just going to take a little time.”

—Stacey Freed, senior editor, REMODELING.

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About the Author

Stacey Freed

Formerly a senior editor for REMODELING, Stacey Freed is now a contributing editor based in Rochester, N.Y.

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