The Real Deal: Contractors forced to pay more for labor. What you need to know if you’re planning renovations.
There's a good chance you might be getting paid more now as compared to before COVID-19 exploded, even though high inflation may be eating into your higher pay check.
Financial experts say, in many industries, the pandemic has certainly forced wages to shift up.
"You have to look at trade, transportation and utilities if you want to find wage gains in New Jersey in the past year, adjusted for inflation gains, they’re of about 2.6%, but also manufacturing jobs have also seen wage gains of about 1.7%," says Caleb Silver, with Investopedia. "Private and small businesses that are actually producing unique goods -- up about 0.7% and construction -- very slight gains -- went up about 0.2% adjusted for inflation. "
When it comes to pay increases and the construction industry specifically, have you tried to get bids on doing any renovations on your house lately? The increased quotes may be a hard-financial pill to swallow -- and now, the higher quotes tie in to contractors being forced to pay more for labor, since they're still not able to get enough people to work.
Atif Dukes owns Dukes and Dukes Construction. He says contractors like him are over-booked right now, material costs are up -- and so is the cost of labor to get the jobs done.
“Yeah. It's crazy,” says Dukes. “There's so much demand and so little help.”
With home prices soaring, he says many of his clients are making the decision to stay put and renovate their homes instead of moving. As a result, contractors can hardly keep up with demand.
“I don't do masonry, but I went to a mason and he told me he was two years out,” says Dukes. “If your house is being re-done on a full scale, some customers are taking on apartments for a whole year.”
With so much work and less available workers, the pay scale goes up, but he can't afford to let that jeopardize his way of life.
“Because the bottom line this is a business we rely on to feed our families and our margins are very low,” says Dukes.
That's why Atif has come up with one way to offset the higher labor costs.
“Most of the guys I'm finding I'm going to vocational schools, different community programs trying to find workers that are younger,” says Dukes.
He wishes he could have as much control over the cost of materials.
“Some homeowners don't understand that they don't understand why the cost may be six months ago you said you're going to charge me $20k for a deck, now it's $40K for a deck and they think it's a rip off,” says Dukes.
Economy experts say inflation may actually end up helping business owners like Atif since it will eventually slow down the economy, and workers may basically start to get more desperate for work. But Atif doesn't see how that can be possible.
“I don't understand that philosophy of the wages going down,” says Dukes. “It doesn't make sense. I don't see it right now -- I don't feel it and I don't see it.”
Atif says contractors desperate for workers may unknowingly end up hiring some who say they know how do a job, but contractors will then find out that they don't.
He's talking with organizations about starting an incentive plan for experienced home improvement workers to accept more jobs.