NEWS survey shows contractor pay rates

June 1, 2000
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The hvacr industry confronts a paradox: This multi-billion dollar business is growing 2% to 3% each year, yet the number of qualified service technicians needed to install, service, and replace the millions of pieces of equipment has stayed flat — or even declined.

Despite the best efforts of manufacturers and contractors to make the service business more attractive, many graduates of vocational schools continue to enter other sectors, like computers, aerospace, and automotive.

What role do wages play in this trend? The newest information on contractor pay scales is now available from a survey conducted earlier this year by The News.

More than 600 News contractor-subscribers responded to our survey. Of these, 28% reported annual sales volumes between $1.1 million and $3 million. Another 24% said sales are between $500,000 and $1 million. About 31% sell less than $500,000 annually, and 17% sell more than $3 million.

Most of the contractors (59%) tap the residential-light commercial business, with 31% of them doing large commercial-industrial jobs.

The contractors balance between installation work (54%) and service (46%).

Salaries, benefits

The pay for most service technicians is between $25,000 and $35,000, with one-tenth of them earning $50,000 and up. Many installers earn less than service techs.

According to one contractor-respondent, “The hourly rates we pay our technicians, both for service and installation, are too low. For the valued services they bring, they should have an hourly rate $4 to $6 higher than they now have, as well as a retirement plan.”

Not everyone agrees, at least in the case of new hires. In fact, 70% of respondents said their own company’s entry-level salaries are high enough to attract quality applicants, compared with salaries in other companies and industries. Only 7% said entry salaries were not high enough, and 23% answered “don’t know.”

Some 35% of respondents pay technicians up to $18 per hour, including fringe benefits. At the top end, only 12% of owners pay between $35 per hour or more.

Naturally, the presidents and owners of contracting firms usually take home the highest salaries, though perhaps not as high as techs might think. As many presidents (21%) earn between $35,000 and $50,000 as those who earn more than $100,000 (21%). The same percentage earn between $70,000 and $100,000.

News contractor-subscribers are relatively generous with some employee benefits. More than eight in 10 offer medical insurance programs, and half offer life insurance plans. The perks decline after that, with 39% offering dental insurance, 29% profit sharing, and 5% stock options.

Reasons for firing

Why do contractors fire employees? The reasons follow, in declining order, with multiple answers allowed.

  • Incompetence — 52%

  • Productivity problems — 51%

  • Poor customer service — 29%

  • Dishonesty/theft — 27%

  • Substance abuse — 21%

  • Poor business conditions — 10%

Of course, firing is a last resort. Usually contractors go to great lengths to keep their employees.

For example, the survey asked respondents, “Have you ever paid an employee more than you thought he was worth, primarily to prevent him from leaving to join a competitor?”

Of those who answered, 49% said they had, and 44% said they had not. The rest weren’t sure.

Varied responses

Opinions of the respondents are varied, but many say candidly that they cannot — or have not — kept up with salary demands from their techs.

“Construction workers are underpaid, and young people think it is hard work to get into the trade,” said one respondent.

Said another: “I would be happy to raise salaries and benefits to attract employees if they were available in my area. Employee turnover is usually high because of working conditions in our field (customer-caused stress, heat, cold, etc.). Not a lot of young people are willing to work hard or think on their own.”

Other comments:

  • “Due to a lack of ‘educated’ technicians, we’re paying more than they are actually worth.”

  • “If you do not have medical insurance for your workers, you are not really in business.”

  • “Installers see what the customer is charged and want higher wages.”

  • “Pay what your employees are worth and charge enough for everyone to make an honest living.”

  • “Salaries and service rates are set by your community.”

Next week: Results of The News’ service rates survey.

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