Raising the living standard for the working poor

[PopeyesPappy]

Here is the question. How much are you willing to spend to raise the standard of living of the working poor? Would you be willing to spend 10%, 25%, 50%, twice as much more for the services of unskilled labor?

Let's use lawn maintenance as an example. The lawn moving business has a high overhead rate. You need a lot of expensive equipment. The equipment has to be maintained and parked somewhere when not in use. There are fuel and other consumable costs. You have pay licensing and insurance including property, vehicle, liability, and unemployment. Plus tax expenses like payroll, federal and state unemployment. It all adds up. 

Around here the going price to have a ½ acre residential lot mowed, trimmed, blown off is currently about $60. That is up from around $50 pre COVID. The labor gets paid 10-$12 an hour with no benefits. I have ran the numbers, and I could make that work with 25 employees. Eight 3 worker crews plus a small engine mechanic to take care of routine maintenance and repairs. I would take care of business development and accounting/payroll. Each of the 8 crews would need to average 10 half acre yards a day, not an unreasonable number, so I could pay the bills plus have 100,000 - $150,000 a year for myself and to pay for unforeseen expenses.

But what if I wanted to treat my employees like actual people and provide them with some benefits? How much would I have to charge you the customer, and where would you draw the line for the services I am providing.

At my baseline a crew supervisor gets $12 an hour, and a crew member gets $10. If I raised that to $16 for the supervisor and $15 for the crew member I need to get $71 (18.33% increase) per yard to keep the bottom line the same.

Adding 7 days (56 hours) of sick time changes the rate to $73 (21.67%). Adding 80 hours of vacation each raises the rate to  $76 (26.67%). Adding 6 paid holidays it goes to $78 (30%).

Health insurance is really going to cost. If the company pays $900 per month per employee we have to charge $91 (51.67%). For $1200 it is $95 (58.33%). For $1600 it is $101 (68.33%). For $2400 it is $112 (86.67%). Where I am right now family coverage for the buy up plan which still has a per family $7500 deductible runs about $3600 a month. So even at the top tier our yard service people would still be looking at $1200 a month out of pocket for family coverage.

Adding 3% 401k matching = $113 a yard (88.33%). Plus a 4% cash bonus = $115 a yard (91.67%).

Altogether providing a decent pay and benefits package has almost doubled the cost of the service. Would you as a customer be willing to go there?

[GSOgymrat]

We are willing to pay "the going rate" for typical service and 10% more than what other companies are charging for excellent service. We have an acre lot, 3/4 of which is maintained, and pay $85 for mowing and trimming. We could pay less but we have a good relationship with our yard service.

Like any other business, fees are set by what the market will bear. Your prices must remain in the ball park of your competitors. Even if you convinced your competitors to join you in doubling service fees, fewer people will be able to afford the service.

[the_antithesis]

More importantly, I do NOT trust that doubling prices would lead to more money going to the workers. Not even for a second. I don't even need the news to tell me about the scandal to know it will happen.

Ideas like this are like "How about if we all be nice to one another?" or back in the 70's "Let's just stop the war."