The recentNEWS'2005 "Salary and Service Rates Editorial Study" (see related story "Survey Reveals Decrease In Employee Benefits" in this issue) shows a disturbing trend - at least in my view, which is supported by some statistics in black and white. Before I lament, let me explain the purpose of the study.

We like to ask our readers on a regular basis what they pay their employees, what they charge their customers, and what various business practices they use, flat-rate pricing, service agreements, dispatch options, etc. These statistics give us a pulse for what some of our readers are doing and is also a barometer for what the entire trade is doing.

Prior to 2005, the last study was conducted in 2002. Three years should arguably be a good timeline to notice some changes in business practices among HVAC contractors and one would assume that these changes would reflect changing technologies and cost of living structures. Notice that I said assume. And we all know what happens when we assume things.

If We Don't Pay ‘Em, They Won't Come

It would be easy for me to sit back in my chair and criticize business owners for not paying their techs enough and making the trade even more unattractive to new people in the job market. But I'd prefer to let the statistics speak for themselves and allow our readers to draw conclusions.

For example, in 2002, 88 percent of respondents offered medical insurance. That figure dropped to 74 percent in 2005. In 2002, 59 percent offered a 401k plan while the number dropped to 46 percent in 2005. Maybe the cost of doing business has increased so much that labor expenses have taken a big leap and employers have to make cutbacks somewhere.

But have labor costs really gone up that much in three years?

In 2002, 28 percent of respondents said that labor expenses ran between less than $10 per hour up to $18 per hour. In 2005, that figure rose to 33 percent of respondents. That means that labor expenses are taking less of a chunk out of some contractors' expenses in 2005. Now, to be fair, in 2002 18 percent of respondents said labor expenses were $35 to $45 an hour compared to 20 percent in 2005. Still, there is no marked increase in labor costs over the past three years.

Keeping Up With Technology

It is no secret that our trade has been trying to shed the "mom-and-pop" image that has been depicted in unflattering news stories and tales of business owners who are disciples of the "low-tech" world. When comparing the two studies, not much has been done to improve that image, technically speaking.

In 2002, 91 percent of respondents said they purchased less than 10 percent of their parts from wholesalers over the Internet. The figure modestly dropped to 86 percent in 2005.

Do customers have the option of scheduling service appointments via the Web? In 2002, 67 percent of respondents said that their Web site generated 0 percent to 10 percent of service work. In 2005, the number modestly dropped to 65 percent.

Here's the clincher. In 2002, 21 percent of respondents didn't have a Web site. In 2005, the number rose to 30 percent. Feel free to draw your own conclusions - I already have.

At least we are using cellular technology more abundantly in 2005, where 88 percent of respondents say they contact techs via cell phones compared to 79 percent in 2002. However, the frequency of contacting techs via e-mail only rose slightly from 2002 to 2005, increasing from 5 percent to 7 percent of respondents.

But - the good news is that charge-out rates are higher in 2005. In 2002, only 17 percent of respondents were charging over $80 an hour. In 2005, 31 percent are charging $80 or higher.

So tell me this: Where is the money going? I'd like your thoughts.

John R. Hall is business management editor. He can be reached at 734-464-1970, 248-786-1390 (fax), or

Publication date: 10/17/2005