CCQ Contractor Compensation Quarterly $23.77 is the average hourly rate for Foremen in 2007 Merit Shop Contractors 2007 Merit Shop contractors anticipate skilled craft hourly wage increases of 4.8% in 2007. Actual increases for 2006 were 4.9 % (including zeros) and 5.0% (excluding zeros). These increases are across the board for all craft, contractor types, contractor sizes and regions of the country. It is our best judgment at PAS that 2007 craft increases will be in the 5.5% range nationally, and may reach 7% in specific Gulf Coast high demand areas. The chart below demonstrates how craft wage increases have fluctuated from 1994 to 2007. AVERAGE HOURLY INCREASES (Including Zero Increases) 1994-2007 Anticipated 5.5% 5.1% 5.2% 4.9% 5.0% 4.5% 4.0% 3.5% 3.0% 4.3% 4.0% 4.0% 4.6% 4.0% 4.5% 3.8% 3.7% 3.8% 4.2% 4.8% 2.5% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cost of Employment The Employer Cost Index (ECI) is an index of the aggregate cost of wages and benefits to employers nationally. While increases in wages and salaries continue at a moderate pace, benefit costs for civilian and private industry workers over the past several years have climbed dramatically. For civilian workers, wages and salaries rose 3.4 percent in the year ended June 2007, compared with a gain of 2.8 percent in June 2006 and 2.5 percent in June 2005. Benefit costs gained 3.4 percent for civilian workers for the year ended June 2007 compared with increases of 3.4 percent for the year ended June 2006 and 5.0 percent for the year ended June 2005. Gulf Coast Update With the continued reconstruction effort caused by hurricanes Katrina, Rita and Wilma, the Gulf Coast is a high demand area for skilled crafts and particularly those crafts most frequently used in industrial and commercial construction. Hence there is continuing pressure on craft wages in Texas, Louisiana, Mississippi, Alabama and Florida. To entice workers into these areas companies are not only paying premium hourly rates but they are also making heavy use of per diems and incentive pay. Nationwide, 49% of industrial contractors use per diems at an average rate of $47 per day. In the Gulf Coast area 51% use per diems to supplement worker costs. The average rate ranges from $59 to $71 per day. Other pay related items include incentives for safety ($.57 per hour nationally and $.89 in Gulf area), attendance ($.76 vs. $.95 per hour), completion ($1.09 vs. $1.50 per hour), and productivity ($1.05 vs. $.75 per hour). Volume 15 Issue 3 Copyright, August, 2007 PAS Publications
Page 2 s By County, State and City The PAS Merit Shop Wage and Benefit survey covers 30 craft and is coded by county. That means that the survey data can be broken down by very specific geographic areas. This is particularly useful to those contractors that work regionally or nationally since it provides critical labor rate information needed for competitive bidding. Purchasers of this survey can request specific reports on areas of special interest to their business interests. The first three reports are part of the purchase price and each additional request is $20 per area report. In addition, on the Merit Shop Survey CD there is a breakdown of labor rates by state and metropolitan area. Here is a sample of Carpenter wage rates for 20 of the 80+ U.S. cities found on the CD. City Hourly Fringe Benefits Austin, TX $17.15 21% Albuquerque, NM $19.04 25% Boston, MA $27.04 23% Chicago, IL $26.98 20% Cincinnati, OH $22.18 21% Dallas, TX $15.88 20% Denver, CO $20.76 23% Detroit, MI $25.65 19% Houston, TX $17.86 18% Kansas City, MO $25.31 22% Las Vegas, NV $19.59 26% Memphis, TN $17.09 20% Milwaukee, WI $28.72 25% Minneapolis, MN $23.59 25% Philadelphia, PA $22.80 26% Salt Lake City, UT $19.61 24% San Diego, CA $25.46 21% San Francisco, CA $26.33 21% Seattle, WA $26.14 20% Tampa, FL $19.05 17% You will find a complete listing and description of all our PAS surveys and reference work at our public web site http://www.pas1.com. In addition, you can download survey participation packets if you have not received one by US Mail. Contractor Compensation Quarterly is published in February, May, August & November and is designed specifically for the construction executive. Subscriptions are $75 per year and may be ordered from: PAS Publications, 75 E. Henry, Saline, MI 48176 (734)-429-1199 August, 2007 Contractor Compensation Quarterly PAS Publications
Page 3 Benchmark s 1997 to 2007 The following table lists rates paid by merit shop contractors from 1997 to the present. (Source: PAS Merit Shop Survey History). The rates shown are national averages. Hourly s 1997 1999 2001 2003 2005 2007 All s $13.74 $14.61 $15.58 $16.70 $17.53 $18.69 HVAC Mech. $14.60 $16.38 $17.44 $19.04 $19.49 $20.96 Carpenters $14.56 $15.35 $16.44 $17.14 $18.07 $19.10 Electricians $15.26 $16.73 $18.28 $20.32 $21.09 $21.97 Pipefitters $15.17 $16.23 $17.50 $18.90 $20.63 $22.01 Plumbers $14.67 $16.73 $17.88 $19.58 $19.98 $21.07 Welders $14.36 $14.99 $18.92 $16.97 $18.13 $20.99 General Laborers $10.26 $10.90 $11.66 $12.56 $13.21 $13.65 The Impact of Inflation The buying power of construction workers has risen continuously since 1990. Hence, each year the average worker s wage buys more goods and services. As of June 2007 as the chart below describes, inflation as measured by the Cost of Living Index rose 2.7% while increases for craft workers rose 4.9%. In other words, craft wages have more than kept up with inflation this past year. In addition, the seventeen year rise in the standard of living for skilled craft continues. 6.00% 5.00% 4.00% 4.30% 4.00% 4.30% 4.00% 5.19%5.15% Cost Of Living Index Verses Increases 4.54% 3.79% 3.77% 3.69% 4.22% 4.90% 4.80% 3.00% 2.00% 1.00% 0.00% 3.30% 2.50% 1.70% 1.60% 2.60% 3.40% 1.50% 2.40% 2.10% 3.50% 3.30% 3.20% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 CPI Wages 2.70% Anticipated If the industry is to continue to attract highly skilled and motivated workers, then pay will not only have to outpace inflation but also look attractive from a career perspective. A large part of that attraction will come from benefits. The construction industry has made great strides particularly in employee access to health insurance. This year 99% of all contractors provide some measure of employee health insurance. According to the Bureau of Labor Statistics, private industry wages rose 3.2% in 2006 and are at 3.1% for 2007. Benefits rose 3.1% in 2006 and are at 2.2% in 2007. Continued improvement in benefits will be a major contributor to successfully enlisting men and women into construction industry careers. PAS Publications Contractor Compensation Quarterly August, 2007
Page 4 Benchmark s For California For the selected crafts shown in the table below, California's average hourly rate for construction workers in 2007 is $24.69, up from $23.12 in 2006. The average benefit rate is 22%, up from 20% in 2006. These craft rates and benefit percentages are reasonably representative of California rates in general. Fringe HVAC Mechanics $19.34 $19.02 25% Carpenters $26.69 $27.42 23% Electricians $26.21 $23.68 19% Pipefitters $29.77 $33.53 24% Plumbers $28.26 $27.68 21% Welders $23.24 $22.68 17% General Laborers $19.32 $18.80 23% Benchmark $24.69 $24.68 22% $80,000 (Based on 2,080 hours) $70,000 $60,000 $12,602 $10,576 $12,579 $12,579 $10,057 $40,227 $55,515 $54,517 $61,922 $58,780 $8,377 $48,339 $9,243 $40,186 HVAC Carpenters Electricians Pipefitters Plumbers Welders Laborers The column chart above shows the selected California crafts annualized wages and fringes. The annual wage and fringes are based on a normal 2080 hour year at straight time. Contractors operating in the State of California have reported the following actual increases for 2006 and their expected increases for 2007 California Increases 2006 Actuals 2007 Anticipated Including Zero Increases 4.4% 4.7% Excluding Zero Increases 4.5% 4.7% August, 2007 Contractor Compensation Quarterly PAS Publications
Page 5 Benchmark s For Florida Florida's 2007 average pay rate is $18.80 an hour up from $16.47 in 2006. Florida's average 2007 benefit rate is 19.86% up from 18.78% in 2006. These craft rates and benefit percentages are reasonably representative of Florida rates in general. Fringe HVAC Mechanics $24.18 $24.69 20% Carpenters $16.71 $16.93 19% Electricians $21.12 $19.85 20% Pipefitters $21.07 $21.99 20% Plumbers $19.00 $19.00 24% Welders $18.34 $21.63 18% General Laborers $11.23 $11.47 18% Benchmark $18.80 $19.36 20% $70,000 (Based on 2,080 hours) $60,000 $10,058 $6,673 $8,930 $8,852 $9,484 $7,030 $50,294 $43,930 $43,827 $34,757 $39,520 $38,147 $4,205 $23,358 HVAC Carpenters Electricians Pipefitters Plumbers Welders Laborers The column chart above shows the selected Florida crafts annualized wages and fringes. The annual wage and fringes are based on a normal 2080 hour year at straight time. Contractors operating in the State of Florida have reported the following actual increases for 2006 and their expected increases for 2007. Florida Increases 2006 Actuals 2007 Anticipated Including Zero Increases 4.6% 4.7% Excluding Zero Increases 4.6% 4.7% PAS Publications Contractor Compensation Quarterly August, 2007
Page 6 Benchmark s For Michigan Michigan's 2007 average hourly rate is $20.99 up slightly from $20.04 in 2006. benefit rate is 23.71% up from 23.16% in 2006. These craft rates and benefit percentages are reasonably representative of Michigan rates in general. Fringe HVAC Mechanics $22.36 $19.12 21% Carpenters $19.63 $19.41 26% Electricians $21.94 $22.43 23% Pipefitters $26.11 $27.91 28% Plumbers $20.41 $20.76 22% Welders $21.11 $21.35 23% General Laborers $15.38 $14.67 23% Benchmark $20.99 $20.80 24% $80,000 $70,000 (Based upon 2,080 hours) $60,000 $15,043 $9,906 $46,509 $10,555 $40,830 $10,286 $45,635 $54,308 $9,462 $9,992 $42,452 $44,408 $7,357 $31,990 HVAC Carpenters Electricians Pipefitters Plumbers Welders Laborers The column chart above shows the selected Michigan crafts annualized wages and fringes. The annual wage and fringes are based on a normal 2080 hour year at straight time. Contractors operating in the State of Michigan have reported the following actual increases for 2006 and their expected increases for 2007. Michigan Increases 2006 Actuals 2007 Anticipated Including Zero Increases 3.5% 3.8% Excluding Zero Increases 3.6% 3.9% August, 2007 Contractor Compensation Quarterly PAS Publications
Page 7 Benchmark s For Pennsylvania Pennsylvania's 2007 average hourly wage rate is $17.70 down from $17.85 in 2006. The average benefit is 25.23% up from 22.79% in 2006. These craft rates and benefit percentages are reasonably representative of Pennsylvania rates in general. Fringe HVAC Mechanics $17.28 $17.12 28% Carpenters $17.97 $17.92 24% Electricians $19.03 $18.57 26% Pipefitters $17.76 $17.10 24% Plumbers $18.47 $17.78 27% Welders $18.96 $17.59 26% General Laborers $14.43 $15.56 23% Benchmark $17.70 $17.76 25% $55,000 (Based on 2,080 hours) $45,000 $10,013 $8,970 $10,172 $8,706 $10,207 $9,988 $35,000 $6,888 $25,000 $35,942 $37,378 $39,582 $36,940 $38,417 $38,417 $30,014 $15,000 HVAC Carpenters Electricians Pipefitters Plumbers Welders Laborers The column chart above shows the selected Pennsylvania crafts annualized wages and fringes. The annual wage and fringes are based on a normal 2080 hour year at straight time. Contractors operating in the State of Pennsylvania have reported the following actual increases for 2006 and their expected increases for 2007. Pennsylvania Increases 2006 Actuals 2007 Anticipated Including Zero Increases 4.1% 4.3% Excluding Zero Increases 4.1% 4.3% PAS Publications Contractor Compensation Quarterly August, 2007
Page 8 Benchmark s For Texas Texas 2007 average hourly rate is $19.29 up from $17.30 in 2006. The average benefit percentage is 18.70% up from 18.35% in 2006. These craft rates and benefit percentages are reasonably representative of Texas rates in general. Fringe HVAC Mechanics $20.36 $20.82 18% Carpenters $18.04 $17.49 19% Electricians $21.25 $21.85 20% Pipefitters $21.40 $21.85 19% Plumbers $20.03 $20.18 18% Welders $22.03 $22.91 19% General Laborers $11.49 $11.90 17% Benchmark $17.30 $19.57 19% (Based on 2,080 hours) $60,000 $55,000 $45,000 $35,000 $25,000 $15,000 $8,802 $8,822 $8,564 $7,779 $7,432 $7,099 $4,316 $42,348 $44,200 $44,512 $45,822 $41,662 $37,523 $24,834 HVAC Carpenter Electricians Pipefitters Plumbers Welders Laborers The column chart above shows the selected Texas crafts annualized wages and fringes. The annual wage and fringes are based on a normal 2080 hour year at straight time. Contractors operating in the State of Texas have reported the following actual increases for 2006 and their expected increases for 2007. Texas Increases 2006 Actuals 2007 Anticipated Including Zero Increases 5.3% 5.3% Excluding Zero Increases 5.3% 5.3% August, 2007 Contractor Compensation Quarterly PAS Publications