Skilled Woodworker Employee Wages
A highly qualified shop employee with broad responsibilities asks how to assess his own fair wage rate, and kicks off a spirited discussion among employers, employees, and self-employed craftsmen on the forum. February 10, 2009
Question
As my career evolves and my responsibilities grow, I am having a hard time gauging what my salary could be worth. I am a custom stair builder for a large, very high end construction company. I manage four other employees (fabricators and installers). I am responsible for department planning, estimating, scheduling, purchasing, all CAD design/drafting for approval, engineering our shop drawings/partlisting, overseeing production/installation/finishing, when necessary running fabrication and installation, and managing our subcontract work. Our team is turning an average of 12% profit over the past three busy years, and it is trending upward. Thank you for any help given.
Forum Responses
(Business and Management Forum)
From contributor H:
Your team? You mean just the stair shop? Maybe the company as a whole does not clear 12%. Sounds like you do all the office work for your team. Office work as you describe is very important. No one in any company is irreplaceable. We all think we are worth more. What people are paid varies greatly by region and country. If you want more from your boss, he will expect more from you. It sounds like you have a pretty full plate now. Do you have room for more?
From contributor O:
I agree that location is critical here, but I think the statement that "if you want more from your boss he will expect more from you" is overly broad. It's entirely possible that you're underpaid and your boss knows it, and that he could be persuaded to cough up a raise if that's what's needed to keep you around.
From the original questioner:
Thank you for the help. The company is doing well. I'm in the Boston area. I'm looking for a dollar value.
From contributor W:
12% is about right, i.e. in the ballpark for what an owner wants to get for a profit, therefore you are getting paid "in the ballpark" also. If you can get the owner 4% more profit, you should then be worth about 1% more of gross, or about 25% of that additional profit. Numbers can vary, but you get the idea.
I structure our pay incentive so I achieve my minimum acceptable profit (around 8%), and pay out about 25% of profits above that, but their base pay is very modest, under the assumption that if they are only getting me 8%, they are not doing their job adequately, and if it continues, their jobs are in jeopardy (assuming there is enough work, material, manpower, etc. available, of course). Their incentives are part of their pay, in other words.
And if work slows down, we all suffer together somewhat (though I may be losing thousands of dollars a day), but the company survives and we all get to keep our jobs, which is a huge benefit to all involved.
From contributor J:
It sounds like you're a very high end finish carpenter. In California you would get 30-40 an hour, I think. You've asked your question in the owner's section and they all want to pay their guys $7-10 an hour to make them 65-100 per hour. Most guys on their own, with their own license, would be charging 40-75 an hour. If they can find work in this weak economy.
From contributor B:
I beg your pardon... My lowest employee starts at $11 an hour. I wish I could find someone with his qualifications to start for anything less... even less than $20.
From contributor L:
From an owner's perspective, this is what I've found to be true in east Texas. Most shops will start their new shop guys (regardless of experience), at around $8/hour. The interview goes along the lines of: "Can you read a tape?", "Are you on parole?", "Have you worked in a shop before?", "Can you pass a drug screen?" If the answers are satisfactory, then you send the guy/gal out for a drug screen. While they are gone, you are busy in the shop keeping product moving along. When they come back, you put them to work immediately while waiting for the drug screen results.
If the drug screen comes back unsatisfactory, you sit them down and tell them so, and give them 30 days to prepare for the next one, which could be their last! If they pass the drug screen, you put them on probation for 90 days and keep them working. If they are still with you at the end of 90 days, you give them a bump of $.75/hr and offer them health insurance.
Very few are still with you at the 90 day mark. Most will have moved along. The saying is that you get what you pay for. Problem is reality.
Of course, the shops have experimented with higher wages, but the result is typically the same. Only those that have hung out for the first year are given substantial raises up to the $15-$20/mark. Very few ever get over $20/hr. And we wonder why there is such a revolving door with employees.
On another note, a production shop is not the most attractive work environment. There is a lot of noise and dust, even with dust collection. Likewise, your job is repetitive in nature, so it can become boring very quickly. Shop climate is usually very hot and humid or cold and humid. Nothing in between.
From contributor W:
I'll bite. Boston has a little higher pay scale than around here (south and west of you). If no incentives, $30/hr, two weeks vacation, 85% of health paid. If incentives are properly set, $24/hr, two weeks, etc. which would come out to plus or minus the $30/hr, depending on performance. Just an owner-educated guess, that's all.
From contributor L:
To answer your question, in East Texas, your hourly rate would be between $12-$15/hour. Just the way it is here.
From contributor X:
$8 an hour? I wouldn't be able to find someone who knew which end of a hammer to hold at that wage. In the Bay Area, where gas is now $4.70+ per gallon and living costs a lot more, you'd be working for gas money up until coffee break... every day.
From contributor S:
In general I would think your whole package value would be roughly 70k a year on info provided including pay and benefits in the Northeast. Your best bet to convince boss to increase your pay package would be to show the numbers increase since you have taken charge. Numbers don't lie. If you can prove mathematically (dollars) that you have increased revenue/profits, you leave him/her with no excuse not to compensate. That is if you are currently being underpaid.
Just hired temp help starting today at $12.50 an hour with zero experience. Nobody works up here for less than $100 a day. For somebody looking to be full time, no experience, I start at $11 and they either go up to at least $12.50 within 2 weeks or get fired. Landscapers pay $15 an hour to anyone off the street and they get to collect unemployment in the off season.
From contributor K:
1). Department planning
2). Estimating
3). Scheduling
4). Purchasing
5). All CAD design
6). Drafting for approval
7). Engineering our shop drawings
8). Partlisting,
9). Overseeing production
10). Installation
11). Finishing
12). Running fabrication and installation
13). Managing sub-contract work
Are you a superman? How many hours a day do you work? If you can perform all this for a normal 8 -10 hour day, then you should fire your boss and get his salary and all the profits from business. I would say you deserve no less than $100 ph or may be even more.
From contributor A:
Given that you have not said what you do make, or what other benefits are included in your total compensation, and based on your input, I wouldn't do it for less than $100,000/year, plus benefits. In the Boston area, I'm probably a little low. But that's just me.
You said: "I'm having trouble finding something to use for comparison." The best thing to use for comparison is a bona fide job offer from another company. But never use that as a bargaining tool to get a raise from your current employer. You also must consider all the benefits provided beyond just salary.
I think you should be somewhere in between $70k/yr and $100/hr. In the end, you are worth as much as they are willing to pay you, or as little as you are willing to settle for. Hopefully somewhere in between.
From contributor Y:
If you're doing all that, why not go out on your own? Especially if you're feeling underpaid. It can fix that feeling real fast... or start you on your way to your own successful business.
From contributor J:
I have my own shop. I make a decent living and I know from experience there is little money to be made working for someone else. I tried to work for cabinet shops in my early twenties but the pay was ridiculous. I worked in construction and made 3 to 4 times the income to pay for my shop tools. There probably are a few, and I mean very few, shops who pay well. On a side note, I'm a one man shop, and will always be a one man shop. I do not want the headaches of being an employer.
From contributor I:
I have a hard time finding someone that can generate enough to pay them more than 8.00/hr. I don't know about your shop, but I'm very limited on what I can use an 8.00 hr man for. Most I've hired had to have stick figure instructions to find a trash can. I'm looking for a 15.00-20.00 man, and have been for a while.
I know for a fact it's not much, and I don't see how anyone can think of living on that, but the reality is most aren't able to produce enough to warrant more. Compound that with their drug habits, home drama, law enforcement issues, etc. and that caps it.
In answer to the question... Do you know your employer's true expenses? Are you making him money? Can you make him more? Those are the questions he will be asking himself. Your deal is worth about 55-60k here in E. Texas, plus more for the Boston locale. 75-85?
From the original questioner:
Thank you for your help. This is my first time using WOODWEB and the responses are great! If we could try to hone the numbers a little. I am looking for approximate hourly rate - gross - after bennies. No drinking, no drugs, no problems with the law. Our group of five does about 1-1.4 mil per year in custom stairs. Our average is >12% R.O.S. over the past three years. The company matches a small amount in 401k, pays 65% of health and dental, three weeks vacation after 5 years (1 week shutdown), profit sharing. There is a mandatory 45 hours, which has been 50-55 for the past 1.5 years.
From contributor T:
I'm going to throw out a different angle here. You might want to reconsider your position altogether. The automakers published some very disconcerting news today. Even a stellar performer like Toyota had a decrease in sales last month of 21%. These were people who had already figured out how to make a high mileage vehicle, so this could be a significant barometer of things to come. Not very many people need a new car and fewer people are going to need architectural millwork.
I'd go chat this one up with your boss but I would ask him what he thinks the horizon looks like before putting your hand out for more money. I don't know if you are old enough to have been in this industry during some down cycles, but we haven't always been able to walk across the river on the backs of salmon.
The shops I compete with are all very busy... right now. All of us used to have a six month backlog, however this backlog is now down to about six weeks. It could be that we are getting more efficient because of contributors like you, but there could also be some other reasons for it.
From contributor F:
It is always helpful to post numbers for what would otherwise be a truly arbitrary discussion. (Interestingly, one number you left out is your current salary/wage.)
While I understand your question is to determine the comparable rate of pay for your position, your position may be somewhat unique, and your value to the company may depend on factors other than what the industry is paying.
What is your history with the company? Has the return on sales always averaged 12%, even when you were not there? Perhaps an approach to getting more money (since this seems to be what you are really looking for) would be to point out to your employer the impact you have had on increasing the company profit, if that is in fact the case.
How did your position evolve to the point where you have all of these tasks? Perhaps if you could delegate some of your work load, you could have a little more time for yourself, which might be worth more than a little more money.
Either way, think it through before you approach your employer. Sometimes these conversations get heated, and may take a trajectory you don't want them to take.
By way of my own arbitrary interjection, I'd say 70K is closer to what to expect than $100/hr. I don't know if there are many millwork enterprises where a manager who is not an owner gets paid 20% of the gross.
From contributor U:
So how much do you make and what are your benefits? I'd pay 60,000-70,000 depending on a lot of things, including your benefits package, productivity, interpersonal/management skills, if you could take over more departments and help grow the company, etc. There is not one number that is right - it just depends.
From contributor P:
Have you talked to the owner about this subject at all, or are you arming yourself with stats first so you can go into it educated? Any business has a list of places where they need to spend money, like machines, advertising, new health plan, etc. If things are going well and no one rocks the boat, they wouldn't approach an employee who is one of the higher paid people in the company and offer him or her a raise. Maybe if you talk to him he'll be just fine with it.
From contributor S:
I am going to up my number strictly based on the mandatory hours of 45 (50-55) per week. I would say 80k minimum.
On a side note, working that much when needed is one thing to bang a deadline project out or a short uptick in sales. As a standard, not a good idea. Output will drop. Sounds like it is time to add another employee to the mix. Even if it was just someone to clean shop, catch parts, and load/unload trucks. It is amazing how many hours that stuff adds up to.
From the original questioner:
Thanks! Yes, I am arming myself with stats first. I feel like my responsibilities have been growing exponentially while my pay rate has grown modestly. I love my job, and working hard, but like anyone else, I want the best possible deal. This posting was to test the water. I do understand profit, overhead, value of benefits, and my company is very open about sharing this and job performance information. This is all measurable. Thanks for the help.
I get paid $24 hr + benefits.
From contributor W:
Make the argument that your base is fine, but after much thought, you would like them to consider 20% of profits over 10% net profit for you, 5% of profits over 10% to share with your crew, and that you think (with a helper, new machine, etc) you can up his profit average to 16%. Then start delegating.
From contributor H:
If you are getting 24 per hour plus the bennies you posted, then I would say you're well paid. You're getting around 70 k per year based on your figure of 50-55 hours per week. Personally, in this economy, I think you're a little greedy. If I were your present boss I would say "if you can get a better deal, go for it." Everyone always wants more. Problem is the boss has been at it for 10, 20, 30 years and the new guy only 3, and he thinks the place can't run without him. Reality check... you are doing better than many others.
From contributor C:
I agree - this is not a high paying profession. Wish it was.
From contributor Z:
Contributor J's post is right on for typical Northwest wages, lower on average possibly, similar to Texas. Contributor S's numbers, while reasonable, are higher than average and geared towards non-typical specialty fields, and are only good for a tight-knit group where the boss appreciates you as much as you do. Contributor H, well, he's pretty much in the middle and is saying it like it really is. Count your blessings - you've got a good paying job and work to get paid for. You've got enough ammo here to have a fun conversation with whoever holds the purse strings. Let us know what they think.
From contributor J:
You should start thinking about going out on your own and running your own crew. It sounds like you have the knowledge to make it work. Start making connections so that if you don't get the money you want from your employer, you'll have the option. You'll never make what you're worth working for someone else.
From contributor V:
If I were making $48K plus benefits in a blue collar job with no need or requirement for a college education, nor company ownership, I'd be on my knees every night praying that my boss stays in business.
You are making above the median income of the country. Looking over your shoulder at the company profits is no excuse for a pay raise, and will only make you mad, because employees never appreciate what goes into making a company fly - including the continued investment in equipment.
I owned a shop for almost 40 years. I made as much as $500K in before-tax profits on occasion, and about $350K almost every year for the last 20 years. My best paid employee made $22 per hour (higher than most in my area). I'm sure he looked at what he estimated as my profits and thought he should get more. But when the bill came for the new machine for $650K... who do you think pays it? The owner waits at the end of the line for his money, after all employees, after the suppliers and the tax man. The owner probably makes a fraction of what you think.
From contributor D:
But who really cares what the owner makes? It's all about what you can make, right? The best guys almost always leave for greener pastures, and the shop owner is left to pick through what remains, usually unskilled labor. Cabinet shops need skilled labor, but can't afford to pay for it. I say take your skills elsewhere. That is what I did, and I have never looked back. Why should you bust your ass to be at the top of your game and not be compensated adequately for it?
Shop owners wonder why they can't find any good help, and complain about it constantly. The reason is clear; there is no incentive to be your best in this business, unless it is your business. If their business can't be profitable unless they pay you a crap wage, then tough luck for them. Get a license, go out on your own, and then you can let the shop owners compete for your jobs, just like I do. The shop I used to work for fabricates all of the cabinets for my jobs. They are lucky to get my business. They beg me to install their jobs for them, but because I have to hustle my own jobs, I am only available on a limited basis. A lot of their stuff gets installed by hacks, and then they have to pay twice to get the job done right. I have no sympathy. Should have thought about that long before I left. Let them drown under the weight of all of their overhead - you can travel light, work solo or with a helper, and make some money. It is not your fault that these guys picked a high overhead/low profit business. Use them to your advantage and don't worry about it.
From contributor M:
I'm part of the management team, 57.5k, bonus (about 5k last year), 50% health, cellphone.
For that I do:
- 50 to 55 hrs a week at the shop, 10 hrs at home.
- All the tech stuff (4 servers, 25+ workstations at 3 remote stations) including telephones, copiers, blackberries, pdas, software design (pricing and job flow), user help and running cabling when needed.
- Commercial jobs
- Engineering assistance for designers (8 total - none of whom have any shop or construction background)
- Pricing of non-standard stuff
- Development of a closet catalog and garage catalog
- Managing job-flow (along with the lead designer) based on current economic environment
- Generating CNC and optimization files from designer's jobs
- Monitoring pricing
Am I underpaid? Yes, I think so. The highest paid guys in the shop are about 21-22 an hour. Last year we had about 4 mil in total sales, profit around 350k. Sounds like a lot, maybe, but I also know that right now is not the time to talk about it. With the economy the way it is we (the company) have to minimize cost and ride out the storm. I think it will get worse before it gets better, and those left standing at the end win. That's when there will be a renegotiation of salary.
From contributor G:
I don't understand why all the employees who feel they are worth far more than what they are paid and think the owners are making 50K profit on each employee don't start their own business. Just think, you could retire a multi-millionaire in a few short years. Go for it!
From contributor R:
A lot has to do with the fact that wages for a cabinetmaker haven't changed in our area for 15+ years. 1995 - $15/hr average wages for a good mechanic. Today - $17/hr good wages. Look at the cost of living change in those years. The gap between haves/have-nots is growing by leaps and bounds.
From contributor E:
Contributor D, please note that I would have no interest in hiring you. As a "free" man you are probably not paying for workers comp and other niceties like liability insurance. This lack of expense allows you to be more competitive than your former employer. Necessarily, if he is to compete with you and every other former employee who knows everything, he must find ways to control costs. Materials cost you both the same. Fuel cost you both the same. He has an electric bill while you mooch off the customer or contractor. He has some cost for his shop space. You may not. He has to meet or beat your price. Where are the dollars going to come from?
In reality, maybe all of us should be one man shows. This would level the playing field for all of us "investors" in small business with the growing crop of former employees.
The obvious problem, to me, is that employees don't understand anything about accounting, investing in equipment, overhead expenses, government regulations, or much of anything else about running a business or creating jobs that support multiple families.
If an employee thinks he is worth $100k, then at the simplest, they should produce $300k of product. I have yet to see a company profile in a publication, with two exceptions, that produces anywhere near that level of production. Sales rarely exceed $120 to 135K per employee. We get closer to $190k because I have invested over $300K in machinery to support that level of efficiency.
From contributor D:
I am a licensed contractor, and I currently carry WC, general liability, commercial vehicle liability, and I pay my taxes. I am not for hire. I understand your position, and I chose not to be in it. I was given an opportunity to take over the shop from my former boss, and I turned it down. I made my choice based on much of what you read here in this thread, and I believe I have done better for it. My advice to the questioner stands, as I think it would be the best choice for him, provided that he has the work and the continued initiative to sustain it.
