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.
Incidentally, most repairs to an HVAC system are quite self serviceable.
The channel https://www.youtube.com/@WordofAdviceTV/videos has saved me a lot of money.
On a complete tangent on the topic of “home maintenance you should know”, hot water tanks should be purged yearly (to get rid of the debris collecting on the bottom), and have a sacrificial anode rod to stop corrosion and should be replaced every ~3 years (magnesium) or ~5 years (aluminum)
Some of the things I've personally encountered are attempts to service refrigerant without first weighing tank, and a claim that R-22 systems can no longer be serviced due to EPA refrigerant ban; I suspect these are very common grifts.
Still worse, a brazen attempt to service an older R-22 system with R-410A, which would have completely destroyed a heat pump that I ended up getting an additional 5 years of serviceable life out of (after dismissing that clown on the spot).
Other ridiculous mistakes I've had to deal with are incorrect wiring of air handler emergency heat source during initial installation that prevented system from cooling; and on that same heat pump system less than a year later, discovering an improperly secured lug within exterior disconnect box that eventually created enough heat to fry ~6 inches of insulation before failing open and killing power to compressor (in retrospect, city inspector not only should have caught this, but should have required the contractor to replace the disconnect box altogether to remain in compliance with prevailing residential building code).
The grift has gotten so bad over the years that a few friends---a professional ME and electrician---have gone out of their way to earn § 608 tech certs[1] to legally purchase refrigerant and have sufficiently tooled themselves up to handle common failure modes.
[1] https://www.epa.gov/section608/section-608-technician-certif...
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've had people come out and look at my furnace because it wasn't turning on properly.
They looked at it for 5 minutes, told me it's too old and needs to be replaced.
It needed a $5 sensor which I replaced myself after doing some basic testing. There are so many grifters in the trades. It is so hard someone honest, that is going to show up on time and do the job.
I almost want to start or buy a construction business.
Could someone ELI5 why AC capacitors are so fragile? I had one fail last year on a unit that was just out of warranty.
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.
Hm what’s the best way to look up the owner of a business? I share this viewpoint on dentists and doctors
Just curious, how do you verify this?
I have thinking about doing this for a while. How does one go about verifying whether a business is PE owned or not?
How do you find out who owns the business?
Literally what kind of question would you ask on the phone?
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.
Highly efficient Mini-split heatpumps are becoming simpler for the moderately technical homeowner to install everyday. 5-6 years ago installation typically involved a vacuum pump, a gauge set, sometimes a flaring tool to re-dress factory terminated line fittings, etc. Fairly inexpensive new 4th gen Mini-split heatpumps are drop-shipped from Amazon, have pre-evacuated line-sets that just bolt up to the inside head and pre-charged outside compressor units. I wonder how wide availability of these relatively cheap units are going to impact the bullish picture described in the WSJ article.
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.
American capitalism really worked way better when it had a geopolitical competitor. Funny how that works.
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.
I was talking about politics and our general social discussion about trade school vs university. Obviously that’s a centuries’ old discussion, but I don’t recall talk of plumbers vis a vis the benefits of college specifically before Joe the Plumber, and now it comes up all the time.
What does this sitcom episode demonstrate, exactly? Haven’t seen it, but from the description the title’s pun is based on the relationship of the characters, and not income or education. Is there a relevant storyline not described in the notes?
> I wonder how this article was pitched
Easily. PE bad is trendy at the moment. And plumber becomes millionaire plays into the “anyone can become rich” narrative
The article didn’t run with PE bad, it’s implying the opposite. And yes, exactly, reinforcing the questionable American Dream narrative while sort of ignoring or obscuring that they’re talking about a tiny number of people getting one-time lucky at the expense of everyone, especially the average tradesperson.
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.
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.
> 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.
Looking at BLS wage statistics for tradesmen really won't tell you anything about the financial well-being of private small business entrepreneurs; you need to be looking at their company's financial statements---which is quite privileged data---for a meaningful idea.
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.
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.
It’s very regional, for instance in Quincy Washington they are actively constructing well over a million square feet of data centers. Each one has hundreds of electricians working in it. My personal friend is clearing $350k before union benefits the last three years as an electrical foreman. They work 6 days a week 3 weeks a month and work 10 hour days in a really small town. Union work, prevailing wage, over time and completion bonuses increase the pay in these jobs to be triple what a local electrician would make doing house calls. Of the 500 heads my friend oversees, most are not even from this state. But… once those data centers are done being built the economy will crash for many local business rely on those high paying jobs. Restaurants, hotels, etc are hit hardest. And a lot of the workers will to another “hot” region, or go back to where they came from and earn half. I know a few that “retired” by 40, making $300k living in a trailer on site, in a town with nothing to do after 8, gives you a lot of chance to save money.
> 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.
That's because high earning tradespeople are typically not wage earners. They operate their own companies.
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.
It's not just about the money. Most people want a lazy bullshit office job rather than hard physical labour.
Climbing ladders isn't a lot of fun when you reach 40.
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.
I remember ~20 years ago a guy where I worked was the in-house telecom type guy, phones, network drops, etc.
Before that he was a tiling contractor. He said you could make $1m a year if you wanted to. But it was physically super demanding (that lead to his transition to telecom)
Sitting at a keyboard for 8+ hours a day for years is super unhealthy.
any reccs for an open source logic analyzer on par with saleae?
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.
Which opens up the door for the next generation.
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.
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 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?
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.
"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.
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).
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?)
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 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.
You're not supposed to need to charge it in the first place. Once it's leaking like that, the system generally needs to be replaced, due to some microscopic leak springing somewhere in the welds.
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%.
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.
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.
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.
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.
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)
"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.
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.
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.
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.
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.
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
Hah, after a nearly $17,000 HVAC replacement, I was poking away at my new smart thermostat and trying to configure it for the two stage furnace and AC (the old one was single stage)...
Thermostat: your system isn't wired for two stage.
Me: ?!?
Look under thermostat, nope, previous wiring. Call installer company (one of the biggest in the area). "We'll come out and have a look tomorrow." They do, and give me a similar quote, maybe $500ish.
Uh, no. I paid for the installation of a two stage system. That installation should include the wiring to run the system as a two stage system.
Another call and it was no charge, but I shouldn't have had to make either call.
And then of course, being the "cynic" I am, I wonder how many people with this company that have brand new two stage systems happily running on single stage.
This is after I was told if I waited for the off-season, there was a 15% discount. But the AC died at the start of summer, so I said, I'll take it ASAP. I made a down payment, duly waited... and then was told - the night before the install - that they wouldn't be there, because they had no stock of the air conditioner (what, you just discovered that now?). No big deal, my furnace was working fine. I'll wait. Six-eight months. Which, fine, it got installed before next summer. But if I'd known that you had no supply, and were never going to be able to honor the installation window, I'd have opted for the "off-season" install.
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.
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?
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.
I mean, hasn't it been like that forever?
Here in Norway, the owners of such shops have always been "asset rich", because they pretty much own every asset in their company. That means vehicles, tools, shop, parts and products inventory, and what have you.
Prior to enrolling college, I was an (electrician) apprentice. I ditched that for a degree in electrical engineering. During college I took on a variety of part time jobs to support myself - a bunch of them were temp trade jobs. Roofing, construction, and what have you.
I'll tell you this though: I've never, ever met a shop owner that didn't work from 7 in the morning to 9 in the evening, minimum 6 days a week.
Some of these guys practically grew up in their fathers shop, and have been ingrained with such a hardcore work ethic, that work is all they know. They could liquidate or sell their shop, and retire - but I've yet to meet anyone that does that. I've seen more shop owners die before they retire, due to the lifestyle choices around this kind of work. And those that "retire" will anyway keep hanging around the shop.
This usually leads to what we just called "voluntary involuntary" overtime. Basically the shop owners will assume that everyone loves work as much as them, and will assume everyone wants to work overtime 6 hours a day.
- 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"
Yuuup, the ones who make serious cash may still be on job sites part of the time (the ones you want to hire sure are…) but they’re making so much money because their main jobs are sales and management.
Same as anything else, the real money is in getting a slice of the value of a bunch of other people’s labor. A tradesman who’s quite good at their trade, but no good at management or sales, has a much lower cap on earnings because this route’s not available.
These are businesses where the knowledge gap is so wide between the service provider and the client mixed with the life or death need of "I need to flush" or "I need heat in the winter" that people routinely get fleeced.
Basically means you're about to be hit with a $500-5000 bill for what is likely a $50 part + 30 mins labour.
Gross margins don't grow, but they are monsterous.
I can understand how HVAC techs are making millions. The one that just showed up to my place recommended a $6,500 total replacement of the indoor coil unit, to address a frozen condenser line outside. I declined, ran the furnace to melt the ice, put a new $5 filter in it and it is working just fine.
3 years ago basic service on my whole house AC was $450. It’s probably $600 now.
I love how they subjected me to a proof of work challenge to view their paywall.
These folks are much more important and skilled than your typical software engineer at a FAANG employer. Kudos to them.
Bro, what? BLS has them at $48K/year
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>"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.
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.
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.