My dad bought a failing HVAC business 30+ years ago, then made it profitable over the years and sold it back to his employees last year. He had the option to take a few highly lucrative PE deals, but it was clear they would squeeze the life out of the employees and customers he had worked hard to support over many years. I can’t imagine how low quality this kind of trade work will become if PE owns them all. It will be similar to vet, dentist, and dermatology clinics which now feel like factories that don’t care about the humans on the other end - often employing fear tactics and sales quotas to incentivize upsells.
> often employing fear tactics and sales quotas to incentivize upsells
This already happens. The most common AC repair needed is a new capacitor. It's a $20 part.
Call your dad's business, you probably get a quote for $100-ish and it's fixed in ten minutes.
Call a PE owned shop and they are likely to tell you that your entire system needs replaced. Quote $5-$8k.
Reports like this are already common place, and the roll-ups of former small-businesses in industry like HVAC that the PE people celebrate will only make this worse for customers.
Try $250 for a capacitor here in Texas - they know you can’t afford to take a few days to shop around due to the heat. What I’ve found works over the years: get the phone number of a few HVAC guys as you encounter them and offer them $50 to come when you need them. They’ll never pull the “you should cal l my employer” because most are contractors who need to buy their own equipment.
I'm glad you mention dentists/vets. I make it a point to verify local businesses aren't PE owned before I will use them.
Of course one of the problems with PE is they hoover up _all_ the businesses in an area so you don't have a choice.
There really needs to be regulation in this area preventing a single beneficial entity/controlling entity from buying/owning more than a few percent of a certain type of business in an area.
Our vet graduated before I was born, and I'm really old. He still charges 1978 prices. Hoping he hangs on until our last batch of cats goes on to coyote heaven.
:(
Just curious, how do you verify this?
Hm what’s the best way to look up the owner of a business? I share this viewpoint on dentists and doctors
The fastest and simplest way is to ask them directly by calling or emailing. Searching for information about private legal entities, while possible, is inconvenient and usually incomplete/sparse.
I have thinking about doing this for a while. How does one go about verifying whether a business is PE owned or not?
you can kind of get an idea by looking up who owns it on your state's secretary of state website, if a personal name or an LLC with a local address is the owner it's probably local, but if it's an out of state address then you can probably google it and find out who's address that is associated with
There’s a PE cycle in several industries because economies of scales don’t help nearly as much as a skilled workforce. So PE companies can’t maintain customer service while maximizing profit and customers move to new small business which grows until owner wants out, and repeat.
I find it fascinating which industries are vulnerable and which aren’t. PE has been more successful with morticians because they can more effectively own an area and people only deal with so many funerals. Vets on the other hand seem to be easily taken over despite regular visits and skilled workers, presumably regulatory bodies play a major role? No really sure.
The model of PE in dentistry / veterinary clinics is to buy out all the private clinics in a region, then gradually raise prices. Small businesses would pop up, but the training horizon for new dentists / vets is quite long.
It isn't really about economies of scale so much as using local monopolies to set prices. They have a good moat because regulatory bodies have not regulated monopolies for 30 years, and professional organizations limit entry to each field.
"then gradually raise prices"
It's not exactly gradually. I would call it "aggressively". At least for vets.
In a way, our current system has similar kinds of incentives as Communism. The core incentive is to avoid suffering. There is no upside, only downside protection.
The secondary incentive is usually to sabotage every aspect of the work that the boss isn't paying attention to because 'hidden dirt' is the only way for an employee to gain leverage over their employer.
Unlike in communism, labor is not associated with any higher social ideals. There is literally zero reason for anyone to do things right.
This is why we have enshitification. The system needs goodwill in order to function well. Without goodwill, we get piles upon piles of hidden dirt which accumulate. We end up with products and experiences which seem great superficially, but only so long as you don't do anything unexpected like peeking under the carpet.
I wonder how this article was pitched. Strange messaging, turning the news of private equity hoovering up HVAC companies into plumbers getting rich? Surely private equity will do what it always does, drive up prices, drive down quality, and bail out leaving behind a mess if or when it suits them. It also seems pretty funny to call it a “class” when they’re referring to a few dozen business owners, not really trades workers.
Did the plumbers getting rich meme start with Joe the Plumber? My cynical hypothesis is that it’s a movement to steer people away from college fearing a hollowing out of the working class and higher wages if everyone’s university educated. Are there other reasons this talking point keeps circling? Googling multiple sources shows plumbers making an average of $60k/year which is lower than the average teacher salary in the US. Neither of those classes is getting rich and both are feeling the squeeze of inflation, no doubt being contributed to by private equity.
> Did the plumbers getting rich meme start with Joe the Plumber?
If you believe nothing happened before the year 2008, yes.
Otherwise, no, of course not. https://www.imdb.com/title/tt0582490/ aired 14 years before that.
There are several tradespeople I know (electricians, plumbers, carpenters) who make more money than I do. But I don't begrudge them that, electricians do work where a mistake can literally kill you, and all of these jobs have high injury rates and will wear your body down much faster than sitting at a keyboard.
Edit: and there are no "open source" tools. You have to buy them, and good ones are not cheap.
This general topic about trade workers pops up on HN periodically and there is always some discussion about high-earning people working in the trades. But I can't find any data that actually supports this statement - the BLS numbers tell a story that plumbers and electricians make almost exactly the median income that full-time, year-round workers in the US earn.
I don't doubt that someone who is running a business is earning more, this article in the WSJ says:
"At the time that they sold the company, it had 18 employees and was bringing in about $3 million in revenue a year. "
This was a plumbing business with two founders, founded in 2012. The article goes on to say that PE buys smaller businesses like the one above for:
"smaller outfits (such as Rice’s), which Redwood says it buys outright for an average of $1 million..."
The Occupational Outlook handbook says:
"The median annual wage for electricians was $61,590 in May 2023. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $38,470, and the highest 10 percent earned more than $104,180." The mean annual wage for all occupations in that resource is $65,470.
My nephew is a fifo sparky for some mines, his base is 200K AUD, I don't know how much he makes in allowances on top. He's on call 24 hours though and just has to fly somewhere at a moments notice.
What does “fifo” mean in this context? I’m thinking it is not “first in, first out”?
Fly In Fly Out.
Typically, the workers fly out from a capital city to work/live at a remote mine site for several weeks, then they fly back for a couple of weeks rest, repeat.
Fly in fly out. It's common in Australia for mining and oil & gas workers to live in a capital city but fly into the work site. Their roster might be a week on followed by a week off or similar.
I come from a small town that is dominated by chemical refineries. I know people who are electricians, HVAC repairmen, plumbers, pipefitters, and process operators. You know what scares them more than anything else in the world? A corporate policy against overtime. Many of them will pick up any extra shift they can get. They LIVE for plant turnarounds where they're basically paid 24/7 for a couple of months to essentially eat, breathe, and sleep at the plant to be on call because it's how they go financially from a lower middle class lifestyle to being solidly middle class. This is what pays their mortgages, their hunting leases, their bass boats, and the limited edition F-150 to do all that stuff with.
There's a number of reasons for that; although I'm not based in the US so it vary. The business/self employed earn significantly more than someone working under someone else where I live. There are also a number of benefits particularly tax wise which means you normally need to discount a white-collar wage significantly to compare blue-collar wages like for like (somewhat like 30-40% at least). Official statistics you quote are usually employment and/or tax statistics - none which are reflective of the actual money available to spend for the trade worker.
Talking to them the common threads are:
- Cash based jobs. e.g. I charge my materials to the business (tax expense) and give the customer a small discount (say 10%) if they pay in cash. Assuming a 30% tax rate it means I can make for tax purposes my income less and my expenses more. In the end however I'm significantly ahead - any savings I've given to the customer are more than offset by tax savings.
- Income splitting: Wife "does the books" after hours, I split the income two ways. This way I don't pay as much tax in a regressive tax system as I can push myself to a lower tax band. If you want a single income family, better to own a trade business than be a professional. NOTE: Some countries/places support this more than others, if a country has good income splitting laws this diminishes this advantage.
- Favors: A lot of money is earned by mutual favors rather than monetary transfers especially in renovations/etc. e.g. I will do the plumbing for your house, and mine, you can do the concrete slab for both houses and we will call it square. Trades people typically know other trades people and a lot of the property can be built that way. No money exchanged, no tax paid. But the capital gains from renovations can be substantial - and tax of them can be deferred till sale. I've seen people earn millions this way, completely dwarfing their business income. Capital gains in most countries is also taxed at a lower rate and there's a lot of exemptions (i.e. if you live in it, etc). The benefits of this over many renovations can add to millions in extra wealth, none of it reported as income and under taxed.
- Asset Depreciation/Write Off: Want that big pick up truck? But want to pay the same after tax price as a small hatch? Claim it on your business, write it off, and expense it. May not apply as strongly in the US, but I've seen workers with very expensive cars here for the same after tax price as I could buy a simple sedan for. This applies to other things like tools for the house, etc.
All of the above reduces the official statistics substantially as under reporting, and makes blue collar a lot more appealing than it may seem on the surface. I would argue a self employed blue collar worker on say $120k would be as good as a white collar worker on $200k where I live, maybe even more. If you have a family and are a single income earner in some countries it makes sense to jump straight into blue collar.
> I charge my materials to the business (tax expense) and give the customer a small discount (say 10%) if they pay in cash. Assuming a 30% tax rate it means I can make for tax purposes my income less and my expenses more.
> A lot of money is earned by mutual favors rather than monetary transfers especially in renovations/etc. e.g. I will do the plumbing for your house, and mine, you can do the concrete slab for both houses and we will call it square. Trades people typically know other trades people and a lot of the property can be built that way. No money exchanged, no tax paid.
Indeed, cheating on your taxes can leave you with extra after- (instead-of-?) tax cash in your pocket.
I left a snarky comment about OP providing evidence for the IRS, but realized he mentioned he's not in the USA, so maybe those things are not taxable income in his country. If these were done in the USA, you're right--those are taxable and he'd be risking fines and jail time.
To be clear I'm not suggesting I approve/condone this behavior. I'm just observing what people do/say they do. There's other things (e.g. phoenix companies, etc) that can boost this further. To be clear I'm not a blue collar worker myself and enjoy none of these advantages which makes it more stark when most workers around you are. With AI around the corner, at least for tech workers, they have more job security as well.
Some of the above is either not really taxable (friends doing favors), actually encouraged/legal (e.g business writeoffs), or really hard to prove especially if it is the odd job (cash). While I'm not based in the US, I imagine some/all of the above points equally apply to many countries.
The point is not one of approval/disapproval. It is one of saying that the "official statistics" are not really that useful often when it comes to blue collar work as anecdotally most blue collar workers do at least some of the above.
in the construction I saw, there were several big groups of electricians.. a) ratty, self-employed often with serious baggage or obvious deficits.. can be paid well or very badly.. insurance is a problem; b) big company that hires and fires frequently.. wears a uniform, clean tools and trucks.. do not expect anything different than the work order, and sometimes a pawn in some kind of low-ethics moves between developers and service company; c) career, union electricians.. involved in very large, slow moving, multi-part works.. by the book, can do industrial installation in large teams; all manner of insurance, and also health care and retirement benefits. Modern times? probably add non-English speaking versions of (a) and (b). The pay varies quite a lot between those situations.
Or the guy I use for stuff at my house when it exceeds my comfort level (i.e., live work on 240v in the panel, things requiring a big masonry drill and conduit, etc.): he's an in-house union electrician at a university by day and moonlights doing private jobs after hours.
It's really a fantastic deal. He does exquisitely good work at a reasonable price. Not the cheapest electrician, but the price/quality is great.
Carpenters too? I'm not from the US but this is a crowd I know and talked to quite a bit, at least in western Appalachia. It seemed to me they are shafted quite often, as big companies hire them as subcontractors 90% of the time and underpay them. The last 10% another tradesman/local architect get a contract and hire them directly and they earn almost twice their usual pay but that's a small minority of their contracts.
Something I've been thinking about recently is how much of the economy is basically just trust-peddling. Jobs and entire companies that essentially only exist to vouch for the people who do the actual work (and take a healthy cut of the pay in the process). In some cases, this is probably a useful service. In others, it's clearly preying on the trust deficits that certain people, who are otherwise hard-working, upstanding members of society, suffer from. That's parallel to how big corporations have convinced us to trust them and their representatives over independent workers. Sadly, a lot of the attempts to disrupt this status quo just end up with a new middleman.
Rough framers cutting and nailing together dimensional lumber, yes I agree that is entry-level work does not pay very well. Skilled carpenters who can do things like design and build a beautiful deck or flawless ornamental woodwork, built-in cabinets, or custom furniture, or solve a tricky framing issue in an expensive historic renovation earn much more.
I should add that all the people I know who are earning really good money in the trades put in some years, established a solid personal reputation in the area, and then started their own businesses.
All woodworkers are not carpenters. Also to make furniture you need tools, expensive ones. Some coop exists (i've seen one in Ohio) to help independant carpenters do "built-in" furniture (especially planning the wood), but most of the time it's company material they use.
Also, in the US (at least west appalachia, but it might be all of north america), it seems that the logging/milling industry has incestuous relationships with the building industry, and it seems to be pretty hard to find cheap wood from clearcuts if you're an independant. The person who hosted me and my familly for two weeks in WV used wood he logged himself for his home and dependencies (he was 70 btw), but even for a contract he got he couldn't use the wood from the nearby mill and imported it from Ohio/Canada. And it was in 2018 so there weren't as many pressure on wood availability as post-covid or right now.
If it was entry level work my house wouldn't have the bends in it that it has.
I'm not sure I follow. Perhaps your house has bends in it because rough framing is entry-level work.
Then it isn't entry level work. Entry level work is work you can do without experience and do it "right" in that the job gets done without errors. Shoveling concrete is entry level. Laying a proper concrete foundation is not. Operating a chop saw is entry level. Framing a house is not.
Agree. Carpenter is the lowest of the trade skills unless you are in a specific niche.
This article and a lot of the discussion fails to make clear that there is a big difference financially between being a plumber/electrician/hvac tech and owning a plumbing/electrical/hvac business
The whole article is about trades business owners selling for seven figures. When employees are discussed it’s to say they see a 20% pay bump after acquisition but that some owners worry about the fate of the workers post sale. What makes it seem to be conflating owners and non-owners to you?
Seems like every article that sings the financial praises of blue collar "tradesman" work fails to make this distinction. You don't become a millionaire being a plumber. You become a millionaire by owning a plumbing business. Those are two totally different things.
A similar problem with "farmers." A farm worker, and a person who owns a farm, are two totally different economic situations. Both work hard, but the economic outcomes are quite different.
One thing I've always been curious about is: How many trade business owners come from the working class and actually started out as grunt-work tradesmen, somehow ending up owning their company, and how many are from the business class and have never touched a pipe wrench or wire stripper? You never get the picture from these articles. My uninformed suspicion is that the majority of actual owners are not practitioners, and instead acquired or inherited their business. Would love to be proven wrong with data.
> a big difference financially between being a plumber/electrician/hvac tech and owning a plumbing/electrical/hvac business
It seems to cost about $10 to 50k to acquire the tools, vehicle and licenses to start a plumbing business. Is there something else that’s substantial beyond the normal attention to detail and savvy that every small businessperson must have?
It’s a grind to run this kind of business. You’re sometimes dealing with life and death situations (you’re liable for someone’s electricity or heating 24/7). Talent is really hard to come by at a reasonable rate, especially reliable master electricians or plumbers and the trades people that work under them. And then it’s an extremely cost and labor intensive business involving large machinery, equipment, and vehicles - inside people’s homes. (Watched my dad scale one of these businesses for 30+ years, his work was stressful and unending)
lol. 24/7 heat and electricity are not life and death situations. There are billions of people who live without either everyday
you’re not wrong. But on the other hand, there are events like this. https://www.npr.org/2022/01/03/1069974416/texas-winter-storm...
So at least sometimes, it is life or death.
In North American winter temperatures?
Well for one when someone’s AC is out during the summer, heat is out during the winter, their water doesn’t work, or worse yet is flooding, then that person has a pretty poor negotiating position. Plumbers and HVAC can basically name their price for emergency work.
And the licensing system ensures that everyone has slaved away so long to get into the "I can make the big bucks now" club that they won't compete on price once they're there.
The article seems pretty clear; it talks mainly about the two business owners, one is Aaron Rice and the other is Dana Spears, as well as the relationship with private equity over time.
Some local skilled trade companies have been recently bought out. From feedback I’ve heard from customers, quality has declined. Lots of car dealerships locally have consolidated lately and their service quality has declined while prices have shot up.
While private equity may be making some local business owners rich, they’re ruining the customer experience.
Honestly I can tell which ones they are. I've noticed it in our area, it's like some unlabeled class problem. The websites and advertising are different, they approach everything differently. Everything is very overpriced and there's lots of bs that goes on with proposed work, and you can tell the tradesmen and techs have a very different relationship with the rest of the company.
Finding a company that grew organically and is not PE owned is noticeably different, I can tell which ones they are and they often refer to each other.
Which opens up the door for the next generation.
Unless the megacorps everything consolidates into implement regulatory capture before that can happen.
With respect to car servicing, I'm getting a deja vu feeling. Like smartphones have made it almost impossible to get a phone repaired by third party companies, car makers are making it very hard to get their cars serviced anywhere other than their dealerships where they can overcharge everything. With so much (unnecessary?) technology in the cars these days, it's easy for them to slap more conditions on the owners and lock in services for years.
It’s not servicing so much as parts. A friend recently had a 4 year old car written off by insurance after a minor front end shunt. He was incredulous so bought the car back from the insurer as part of his settlement BUT the car is still off the road because the laserlight headlights are just over £5000 each from BMW and there’s no second hand ones of the right type available in the UK currently.
It’s quite a lot cheaper to rewire the car for the more common and cheaper Xenon HID headlight (it’s only £300 2nd hand) but a fairly big job with ZERO support from BMW for the conversion.
When I consider to purchase a car, I investigate the cost of spare parts and repairs. Also are their spare parts available from other than the original manufacturer?
One reason the most minor of collisions are so expensive to repair is that car designs no longer include bumpers.
Bumpers that left the car drivable (i.e. lights still worked and stuff) after an X mph impact were required in the US in the 80s.
People complained a ton about those and how they made cars look ugly.
To be honest, that's a very BMW problem. Good enough reason to stay away from BMW (or any German car really).
They might not have a choice but to do so.
UN Regulation 155 and ISO/SAE 21434 are going to require that intra-car communications require some sort of authentication system between computers. It's regulations attempting to get ahead of potential hacks for Vehicle to Everything (V2X) infrastructure.
Unfortunately this likely also means the ability to replace failed ECU's on a car will be only limited to car manufacturers willingness to explicitly authorize a part to be installed into a car, even genuinely OEM parts straight from the manufacturer. Don't know when it comes into force but it's on the way.
I have always assumed that as service (or products) get worse consumers will start looking for alternatives. This does not seam to be happening. It might be the alternatives are run out of business and are doing something else now. Maybe consumers have a hard time finding alternatives, as in independent contractors do not show up at the top of the search or are not in the app. Maybe it just cost to much and pays to little to be an alternative. I do not see a lot of open doors.
Good contractors are hard to find. My longtime one retired. For a bathroom refit a few years ago, I eventually booked through Lowe’s. He got the job done but communication was terrible and his plumber was awful. I live in a fairly small town and I can probably get decent recommendations through Facebook these days.
For recent remodeling though it turned out my housekeeper’s husband is a carpenter and I just coordinated a number of things myself.
People look for alternatives but they are increasingly hard to find. Seems most businesses raise prices in lockstep. Competition seems to be sooo yesterday.
It’s definitely harder to find the indy tradespeople now. My tactic has been to spend a bunch of time reading reviews. When the same first name of the tradesperson keeps showing up in the review then it becomes clear it’s a one person company and I’m much more likely to hire them.
If you are the business then you have incentive to do a good job. I have more faith in getting a quality job done by someone like that.
I used to have an HVAC guy like this. I currently have a plumber and a car repair shop like this. I can DIY the smaller things but I know my limits so it’s frustrating when finding good help is difficult.
My theory behind the big private equity play behind buying up all the HVAC companies is that some smart people on wall street realized that R22 refrigerant was banned, and basically any system using R22 that was installed before 2010 will have to be replaced in the coming years because you can’t find the refrigerant needed to charge your system.
The PE play is always "I see people getting good service at a fair price. That indicates I am not making enough money."
There's been a running joke about it since the R12 days.
The joke is usually some play on government being in bed with the chemical industry lobbyists and banning things as soon as the 3rd world starts being able to make them cheaply.
It seems like it’s changing every year. Why can’t we just settle on one standard and let us start lowering costs again? I shouldn’t have to pay 10k to replace my AC.
(I like the idea of using propane as a refrigerant. Surprisingly efficient. Very cheap. And I don’t think there’s enough to be more dangerous than a grill?)
I think you'll be able to buy R22 for at least another 6 (and probably another 11+) years, at which point that system will be 20 (or 25+) years old and replacing it won't be viewed as out of the ordinary, nor provide a particular bonanza of income/profits to HVAC companies.
My view is that someone just went over list of industries and asked can we afford to get regional monopoly here. That is do we yet have enough money to buy out enough of certain regional markets to extract enough value to make it worthwhile. Value of jobs don't even need to have anything big coming up see vetinary clinics.
I’m noticing HVAC systems (installed) are about 3x the price they were 10 years ago.
And they is from the cheaper companies that don’t advertise on the radio!
General inflation, competent techs are retiring/nearing retiring age, and the fact that new units seem to be more complicated internally/harder to work on (i.e. expensive) are probably why.
Observation. The charges of plumbers and HVAC entrepreneurs would also be influenced by the number/supply of such workers. If their are lots plumbers and the same customer demand then it is reasonable plumbers incomes/charges would decrease.
The 1996 book "The Millionaire Next Door" covered this a bit.
Lots of contrast between doctors and similar who spent all their income on expensive houses, cars, club memberships etc and people who owned blue collar businesses who bought in similar/more income but lived modestly.
Back in the early 90's when being a millionaire meant something, I believe it was the NYT that ran a piece about how there were a disproportionate amount of plumbers and electricians in that class. Essentially they outlined how it wasn't a huge leap to grow your own small business in that industry and retire well. As long as you didn't snort/drink/gamble your earnings away.
Millionaire class? The article describes a small business owner who wants to retire. Meanwhile, the private equity firms are going to monopolize the market and raise prices. Sadly, none of the 20 or 30 year olds who are actually doing the work will be able to buy out their owners business.
Any young tradespeople: form a coop and buy your bosses business. Better to be a 10% owner than 0%.
The private equity + consolidation part concerns me too. Bad for the customer and the next gen of small business owners.
I would expect those same PE companies to lobby for legislation to make it harder for new start up competitors to start.
We are stupid if we let this happen.
> Bad for the customer and the next gen of small business owners.
Another example of the previous generation pulling up the ladder once they've reached the top. Sell the business to Private Equity (who will squeeze both employees and customers), flip everyone the bird, and parachute off to Florida to suck down Pina Coladas for the rest of your life.
The real question is how do we get the next generation to realiie they can start their own business and take all the money the private equity is trying to get.
What we need are new antitrust laws, not only to breakup or tax megacorps, but also to breakup consolidation of control from investment firms (private equity but also others). Without this, there is no real fair playing field for competition.
Owners would never sell their business to young tradespeople for any less than twice the value. The hatred that the old have against the young is just too strongly ingrained.
They'll be fine with selling for much less to a "worthy" buyer though, such as a private equity firm.
That seems a very cynical view, and it doesn't ring true to me. Anecdotally, I know of multiple business that were built up by one person, and then practically gifted to the employees. Some people really care about the business, customers, and employees.
There is this joke that goes: "A surgeon calls a plumber to unclog his toilet, the plumber arrives and 30 minutes later it's all back up and running. He tells the surgeon 'That will be $500'. And the surgeon replies, 'Hey I'm a surgeon and even I don't make $500 for 30 minutes work!', and the plumber replies, 'I get it, I didn't make that much when I was doing surgery either!'" :-)
But the heart of this is that somehow we brainwashed kids into thinking that they had to be "scientists" or "executives" if they wanted a fulfilling life and a comfortable salary and that just isn't true. If you're unable to find a 'tech job' consider learning how to hang drywall or wire up an outlet and overhead light. There is both work that can be done right now that needs those skills and it can be more rewarding than writing some dark pattern web site that helps a schmuck trick seniors out their money. /endrant
Nice story but I make far more as an engineer than someone doing electric. The owner of the electric business does well but they need to do office work not the labor you see.
I am happy for you, I really am. It is important to recognize that your experience may not be the experience of others right? While I too had no issue making a good salary through the various tech "crashes" I also know many many people who, for a wide variety of reasons, were not (and are not!) able to. There are a lot of people looking for work right now and their resume is kind of thin. Even with 'big names' in their CV like Google and Meta they are finding it hard to get interviews, much less call backs. Easily a dozen people I've known over the last 5 years have moved "to be with family" which was exactly code for "moving back in with the parents because they can't find gainful employment in an expensive place like the SF Bay Area." When they have asked for my advice I have shared that they are not their "job", they have agency and it is just as meaningful to be in the trades as it is to be in "tech." When I read this story about folks in the trades doing well I thought of those conversations and realized that not everyone has someone to tell them this. Fortunately for you the question hasn't come up, and that is great.
- Buying an annuity with the same benefits as a good pension will cost over >$1M, so it's not much of a stretch to call anybody who was one of those a millionaire too.
- I think the keyword here in the title is "entrepreneur", not "plumbers & HVAC"
I wonder if that's the reason my HVAC guy tried to charge me $700 for running a thermostat cable less than 8 feet (that I later did myself in less than 30 minutes).
This is the typical trade tactic for rejecting a job that is too small to be worth your time. He still has to come out to your place, with his truck and tools, and install that 8 feet of cable. He could spend that same overhead doing an 8 hour, much more profitable job.
So he bid an outrageous amount. If you had said yes, he covers his overhead. If you reject it, he does something more profitable with his time.
RE ".... If you had said yes, he covers his overhead..." Really - a overhead of several hundred dollars. Seems far fetched to me.
It's not just the overhead of showing up, it's the opportunity cost of not doing contiguous hours at a bigger job. It's very difficult to fill up a day with 45-minute jobs all over town, so he's basically working part-time if he takes a small job.
Where I live , there is a "call out fee". that prevents tradesmen from not being paid for time costs driving to job investigations .... The customer also pays for the needed diagnosis time too. So I do not see a reason why not do small jobs.
It takes time (plus money) to drive all over the place giving quotes for simple jobs that people end up getting multiple bids for and/or end up not hiring anyone in the end. Those costs aren't provided as charity, but rather has to be baked into the price of the jobs that do get accepted.
Charging a callout fee ( charge for tradesman to just come to job site) solves this problem. Any diagnosis time is also charged.
Even easy job is probably going to take a few hours between scheduling overload, driving to and from the site, figuring out what needs to be done, and actually doing the work. Expensive? Possibly. But doesn’t seem out of bounds. How much would you charge to drive to an office to solve some problem even if it turned out to have an easy fix? I can’t imagine quoting much less than that.
Overhead which probably includes warranty of the work and materials, and liability in case he damages something doing the work along with the additional regular costs.
Not to mention there's the possible, "I don't like you," fee.
Let's say he can do two such jobs per day and has 50% overhead. That puts his hourly rate at $700/4/2 = $88. That's good money, but it's probably less than what you make.
How much would you charge to fix a what someone calls "15 minute bug" in office to new corporate customer on other side of the city? Considering that you would also take care of all paper work involved such as generating invoices and paying taxes.
Completely irrelevant, considering my private residence is not a corporation and doesn't generate anywhere near the same revenue. Nor does the "bug" involve having several months of context on how an IT system operates.
Nor does it entail the same amount of liability in case something goes wrong. The failure mode for running a cable is...there's no cable connecting the 2 points.
People who might not be so brilliant are down voting you when you're completely right. A business generating revenue can pay much more for help than a private customer, because that expense helps them making money.
The fact that a company has more money is what seems irrelevant. Messing with electrical wiring seems like more liability than messing with code in most situations. By all means do it yourself if hiring someone costs too much.
Trade quotes include opportunity cost. Driving to your house and doing the 30 minute job could easily eat 1/4 or more of their daily billable hours depending on travel time and schedule inefficiency. Opportunity costs can vary widely depending on lots of factors,
The other issue was in most jurisdictions homeowners get exceptions on licensure requirements for small jobs done in their own home, a pro has to cover this cost. Also I’m guessing you didn’t need to pull a permit for the low voltage line, very possible one was not required but not necessarily.
That is exactly what I am charging if some client wants me to do some crap on their website that takes me 2 hours. And my only overhead is needing to invoice them and switching from another project. Because I rather make progress on some project that actually pays my bills long term
I love how they subjected me to a proof of work challenge to view their paywall.
"The wave of investment is minting a new class of millionaires across the country, one that small-business owners say is helping add more shine to working with a tool belt."
How naive. PE does not enter a market in order to make existing workers into millionaires, but to create a monopoly/monopsony where they can gouge both customers and employees, to extract maximum profit. Quite often, the goal is not even to run the market sustainably, but just to produce optical profits for a quick resale.
A few local contractors may get bought out and become millionaires, but everyone else will be impoverished.
We can probably even predict some next steps. They will recommend and lobby for various 'safety' regulations or certifications that would be difficult for smaller shops to meet, and then pressure commercial landlords, housing associations, etc to require those certifications.
That has already begun. Saw stop technology is already working it's way into regulations. A decent non saw stop table saw will cost you ~500 USD. A saw stop saw will be 1200.
When this article first came out, I had a similar reaction, that it seems that regulations that just favor one company doesn't seem all that right.
But I remember in that thread a few had said that as part of this, SawStop will be forced to license their patent to competitors.
Maybe that'll drive up the cost of table saws, but to be honest, people like me (at best, a wannabe weekend woodworker, not a pro) have stayed away from Table saws because of a concern for safety, but things like Sawstop being more ubiquitous might result in people like me buying them, and expanding the market, possibly bringing prices down.
Sure, Sawstop does nothing to prevent the big issue with table saws (kickback) but still, having a riving knife + sawstop probably makes a huge difference in the overall safety of using a table saw, and that seems worth it.
Many of the saw stop patents are expired and the rest near expiration. That is why we see movement now as there is a limit to patent costs.
But an average table saw used professionally probably cuts more than 700 USD of limbs during its lifetime. So that seems very warranted and no, we will just take care very well is not a real substitute. That is what at least 10% of our parents also thought while we were fathered.
If my math is right, the cost of even 1 limb greatly exceeds 700USD.
Seems like a small price to pay to not dismember your employees with accidents.
You can always sell used equipment. There is a thriving market for that.
Exactly. Eventually regulatory capture begins and eventually enshittification.
No one can start a new plumbing/HVAC small business. Your only option is to go work for Walmart (metaphorically speaking).
> No one can start a new plumbing/HVAC small business.
This isn't true at all, I know several people who have done it.
I understood OP's comment as once PE comes in, monopolizes and regulatory captures, then no one can start a new plumbing/HVAC small business.
Yeah, I think that’s the sentiment. I do wonder how true it can be, however.
I wonder how it is in various states, but at least where I live the actual plumbers get licensed, not the plumbing company. So what can they do to stop it? NDAs? Non-Competes? The state also takes a dim view on such things until you are paying someone a significant amount of W-2 money.
SEO? Brand recognition?
Well anyway, a few months ago I shared a table at a restaurant with someone that worked at a family office, and was buying up landscaping companies. I asked some questions in a polite and friendly manner; nothing too pointed or invasive. But came away with the idea that there is a lot of money out there looking for something to do, and not a lot of good ideas.
"where I live the actual plumbers get licensed, not the plumbing company."
Which then leads to plumbing shops were the licensed plumber doesn't even work there and just rents out the license to the business so it can operate. Plumbing certs are a complete pyramid scheme.
Creating ever more onerous/costly/time-consuming requirements for lengthy apprenticeships or other licensing gatekeeping is one common way to restrict supply, all while appearing to be serving the public interest.
Not unless you know time travelers. It’s a statement about the future, and how this kind of industry consolidation tends toward regulatory capture.
So in 5 years or so, we suddenly see laws everywhere that require expensive certifications, new kinds of insurances, audit requirements, and so on in the name of “safety” no one can start a new small business in those industries without a team of consultants, lawyers, big auditing firms, and so forth.
Are they also as bad at reading as you?
They meant after consolidations.
It is true that trades work has picked up quite a bit. High school kids and their career counselors say the reasons are:
- Well-defined career path.
- High pay as you keep going ahead.
- Union pay and benefits. Incredible stability. Incredible healthcare.
- No outsourcing.
- Lots of paid leave. None of that unlimited PTO scam.
- Lot of camaraderie. None of the corporate nonsense where execs take it all at the expense of people.
- Opportunity to start your own business at a certain point.
- No large student loan to get started.
While not all kids articulate all these points well, but they can tell how their seniors in college are grinding too much for little return - while trades people are working hard, taking vacations, raising families - and buying homes.
The average tradesperson in a HCOL is a millionaire by age 40 simply because they could buy a house earlier in their lives. And they are able to start families and live a very stable life. Kids are picking up on this.
You failed to mention any of the downsides:
- competition from non-Union labor
- broken body by 50
- fewer jobs than programming (there are multiple times as many programming jobs than plumbing, for instance)
- working conditions (no office work, expect hot/cold environments potentially far away from family)
> fewer jobs than programming (there are multiple times as many programming jobs than plumbing, for instance)
Every blue collar worker I know would counter that with "AI". i.e, "at least my industry doesn't shoot itself in the foot"
The miniscule fraction of people in the software industry who are building AI are not the people in the software industry who are at risk of being replaced by AI.
> competition from non-Union labor
Very little. Because non-union workers join the union as soon as they see the benefits.
> broken body by 50
As opposed to broken minds by 50 for toxic corporate jobs.
> fewer jobs than programming (there are multiple times as many programming jobs than plumbing, for instance)
This is true. But that's because software development is considered one large blob while trades is broken into HVAC, plumbing, electrical etc.
> working conditions (no office work, expect hot/cold environments potentially far away from family)
And yet, they can pick and choose their work for the most part. No badging in for 5 day RTO BS.
>Very little. Because non-union workers join the union as soon as they see the benefits.
This isn't true and sounds like union propaganda. It's very easy to find non-union trade workers in big cities, even very liberal ones that are supportive of unions.
>As opposed to broken minds by 50 for toxic corporate jobs.
People don't have broken minds from corporate jobs. Physical damage from labor is real and extremely common. Every tradesman 40+ will tell you this. People retiring from corporate jobs do not consistently warn people that your mind will be broken.
>And yet, they can pick and choose their work for the most part. No badging in for 5 day RTO BS.
Are you joking? RTO isn't a thing because the trades were never allowed to work from home in the first place.
"The average tradesperson in a HCOL is a millionaire by age 40 ...."
This is a pretty bold claim that I'd like to dig into. Do you have a reference or source for this? What HCOL are you referring to?
I'm quite interested in this whole topic of earnings and wealth in the trades. I am quite skeptical that any non-business-owner trades person is going to have a significant net worth (or earnings) above the general average locally, but maybe you can point me at a specific HCOL where the trades are more heavily unionized or something that would tell a more interesting story.
Here is BLS data: https://www.bls.gov/oes/2023/may/oes471011.htm
Remember that BLS data leans on the lower side. BLS data for software also leans lower.
The reason they are millionaires by age 40 is because of the value of their houses. They bought early in life.
This is for "First-Line Supervisors of Construction Trades and Extraction Workers." Does this represent the "average tradesperson" at age 40?
If we dig into the BLS numbers for the people doing the work in what HN tends to talk about as trade workers:
Plumber - median $61,550 per year [1]
HVAC tech - median $57,300 per year [2]
Electrician - median $61,590 per year [3]
Framer(Carpenter) - median $56,350 per year [4]
Bricklayer(Mason) - median $53,010 per year[5]
Software engineer - median $130,160 per year [6]
It isn't immediately obvious to me what data source could give us a good answer to net worth by age for any of these careers. That is why I asked if you had a reference for it. It's even murkier when looking for data on when someone in the trades buys a house on average.
My intuition (and I definitely don't mind being proved wrong) is that high earning, high-ish net worth trade workers is a story we want very much want to be true. But I just don't think it is, especially if we are talking about the average case.
[1] https://www.bls.gov/ooh/construction-and-extraction/plumbers-pipefitters-and-steamfitters.htm
[2] https://www.bls.gov/ooh/installation-maintenance-and-repair/heating-air-conditioning-and-refrigeration-mechanics-and-installers.htm
[3] https://www.bls.gov/ooh/construction-and-extraction/electricians.htm
[4] https://www.bls.gov/ooh/construction-and-extraction/carpenters.htm
[5] https://www.bls.gov/ooh/construction-and-extraction/brickmasons-blockmasons-and-stonemasons.htm
[6] https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htmFWIW - the median is probably not helpful for some of these trades when framed as they are here because it's not a simple salary gradient like you might find with say, l1-l8 software engineer.
For example - master electrician vs journeyman electrician are very different - journeyman require supervision (ie are not allowed to work without it), master's don't.
(I actually wonder if "first line supervisors ..." above includes master electricians, since they are required to supervise journeyman).
The pay tabs at the links have 90th percentile pay. For example, for HVAC techs, it is $84,250. For software it is $208,620.
So how will this play out in the future? Once PE acquires all these businesses, squeezes all the life out of them, and runs it at aggressive prices, can any future small businesses pop up to compete against them? Or is everyone doomed to buying these services from PE companies with poor service?
Bro, what? BLS has them at $48K/year
These folks are much more important and skilled than your typical software engineer at a FAANG employer. Kudos to them.
Can this be the next thing tech democratizes?
The trades are pretty democratized as it is. Every service company I use with is hiring at all levels. Training is available. If you have to get a certificate before you start, that's a barrier to entry, but a nearby community college is likely to have classes.
The real barrier is it's a hard job, and other work is more tempting for a lot of folks.
Tech for trades either looks like a centralized dispatch service that takes 10-30% of the fees and results in a new person showing up for every job (no thanks! Once I find a plumber I like, for non emergency use, I prefer to work with the same one) or maybe something per company that helps organize appointments, scheduling, billing, and notifications about arrival times. This may reduce / eliminate office managers / answering services for busy firms, and could help improve communications for owners that have no employees; but I think it already exists.
There's also potential for planning / drawing / information tools. Augmented reality and stuff. Knowing and recording where the pipes and things are. Sourcing materials. Things like that.
How would tech do it? Uber for plumbers? Theranos for electricians? Juicero for HVAC?
Nope. The average tech worker would be screaming about these working conditions being unreasonable for any human by the end of Day 1.
I’m being partially sarcastic, but partially honest in that tech workers are often ludicrously blind to how good they have it.
“Shit rolls downhill” is different in plumbing. Much more literal. You might be standing in some. You might have to stick your hand in some.
A lot of people just aren’t ready for that kind of work.
I worked when I was a teenager digging a 6 foot pit under a house, that was located next to a stream. Almost no visibility, pit filling with water as you dig, almost no room to shovel dirt out. I also worked on the 12th story of scaffolding grinding out mortar joints on bell towers.
I have little respect for when people complain that just coming into an office will affect their mental health outcomes.
Some people’s tolerance for “stress” makes me question how we ever got this far.
Not quite the same level of hands on, but I spent some time working in chemical plants.
The safety training includes “you will die” many times. What do you do if you hear an alarm? What do you do if a cloud of ammonia comes your way? Where are the escape bags? Which way does the wind sock show the wind blowing?
Stories about people being shredded, falling, poisoned, dying, etc.
Reverting to snapshot when a maintenance goes poorly is just not the same kind of stressful.
Quick edit: I do, however, find office life stressful. I’ve never been happier overall than when working from home. Those stresses are real too, but different.
> I have little respect for when people complain that just coming into an office will affect their mental health outcomes.
I have shovelled many tons of chicken shit. I have also felt the stress of my screw-up jeopardizing a multi-million dollar contract the company depends on.
There are many many advantages to a tech job. But shovelling chicken shit is better for your mental health.
I didn’t say “screw-up jeopardizing a multi-million dollar contract” shouldn’t cause stress. I totally understand that.
I’m talking about people offended just by needing to show up and function in a normal office.
If someone is offering me $120K; I’ll physically show up in a suit if you want.
Traffic jams are also more mentally stressful than shovelling chicken shit.
You still have to drive to work to clean up chicken shit, unless you live with your employer.
Generally no traffic jams in places near chicken shit.
How ludicrously blind are the heirs who collect dividends on Oracle stock to how good they have it?
I guess the workers doing the work and creating the wealth are lucky that Steve Jobs, Eric Schmidt etc. illegally conspired to do wage-fixing so that they and the heirs they work for could get more of the wealth that others created.
>"PE firms across the country have been scooping up home services like HVAC—that is, heating, ventilation and air conditioning—as well as plumbing and electrical companies. They hope to profit by running larger, more profitable operations."
There are few things I like less than PE acquiring home services. Now instead of being served by qualified person for a reasonable price they send you an imbecile and charge few times as much. Spoken from a personal experience.
FUCK YOU PE.