Benefits

Health Insurance

Just 43% of respondents provide employees with health insurance, down from 51% in our 2006 survey. Whether this refl ects a sampling anomaly or a worrisome trend is debatable, but there’s no question that health insurance is an increasingly expensive benefit to offer.

The Kaiser Family Foundation says that average 2008 premiums for employer-sponsored insurance are $4,704 for single coverage and $12,680 for families, up about 5% from 2007. Our survey respondents cited median total premiums of $19,485, down from $24,000 in 2007, but those are per-company, not per-employee.

“We’ve had increases of 16% to 18% some years,” said a New Hampshire remodeler. He’s grateful that his rates didn’t climb this year, and that half his staff are insured through spouses, a saving grace for small firms, in particular.

Only 10% of remodelers offer this benefit on day one of employment; 79% have a waiting period of 60 days or longer.

Among those that extend health insurance to employees’ families, 30% pick up the entire tab. For an owner in Massachusetts, this comes to $900 per employee per month. “I think it’s a big part of why we have the staff we have,” he said. “They’re family people.” Just over half — 51% — of remodelers with insurance pay 100% of premiums for employees alone.

To control costs, many remodelers shop their plans each year. A Virginia firm took the creative risk of doubling deductibles, with the company paying the difference. A Minnesota staff voted in a lower-premium, higher-deductible health savings account, which unfortunately has left some struggling to cover their share.

Financial and Retirement Beenfits

Two-thirds of respondents reported offering no retirement benefits to employees, though — unsurprisingly — the larger the company, the more likely it is to provide them. Of companies with revenue above $2.5 million, 84% reported offering some type of retirement savings plan, compared to just 7% of companies with revenue below $500,000.

Remodelers that do offer retirement plans stress the importance of educating staff about the benefits of participating in such programs.

“Every year we bring in consultants to explain the tax benefits [of our plan],” said a Maryland remodeler. “But with the economy in the shape that it’s in, most [employees] are too short-sighted when it comes to retirement. They can’t let go of that extra [bit of income] every week.”

While some companies boast employee participation rates as high as 90%, most see just 25% to 50% enrollment.

To remedy this problem, a Charlotte company contributes to retirement accounts for employees of three years or more whether they contribute or not. Besides being advantageous for the owner (profits that are contributed are done so tax-free), he also feels he is performing a worthwhile service for its staff.

“This is a way to help my employees start a nest egg that they otherwise wouldn’t have,” he said.

Paid Time Off

“The cheapest benefit that our company offers is paid vacation, holiday, and sick time,” said a remodeler in Maryland. This is true for many remodeling companies—especially small firms—and it is refl ected in the majority of respondents overall who reported offering vacation and holiday pay to employees (63% and 62%, respectively).

“It’s a quality-of-life issue,” the same remodeler added. “We recognize the value of family time, and [paid time off] would be the last thing we’d want to cut.”

But plenty disagree. Just 36% of companies with under $500,000 in volume offer paid vacation, even to long-time staff. Thankfully, 95% of companies in the $2.5 million-and-up category do.

Notably less common are paid personal or sick days—just 31% of respondents overall reported offering the benefit to employees.

The Importance of Benefits

Remodelers who have built loyal teams have found that one of the best ways to do just that is to offer a comprehensive benefit package.

“A lot of companies in our area don’t offer the kind of benefits that we do,” said an Indiana remodeler. “We feel we need to offer them in order to attract the right kind of employee.”

Generous benefit packages (especially those with an emphasis on health insurance and retirement savings) tend to attract employees who are looking for long-term, stable positions. The importance of building a team of quality employees is not lost on successful remodelers—even those currently financially stretched by market conditions.

“We decided not to change our benefits at all,” said a Massachusetts remodeler who not only laid off staff but significantly cut his own pay. “Our health benefits are a big reason we’ve got the people we have.” Said a Virginia remodeler, “I want to make sure my team can take home a package that takes care of their family. I’ve got guys that have been with me 20 years, and I feel it’s my obligation as owner to take care of them.”

Our survey shows that many remodelers feel the same sense of duty to their employees. Nearly 60% said they would maintain all their current benefits even if none of their competition had benefits. (Conversely, 24% said they too would offer no benefits.)

And many owners want to provide top-notch benefits packages but simply can’t justify the expense.

“We’d love to offer at least twice as much as we do for health insurance,” said a Minnesota remodeler. “Right now though, our overhead is just too high.”

As shown at right, changes in insurance premiums and projected revenues have the biggest impact on many remodelers’ benefits.