Edit: and there are no "open source" tools. You have to buy them, and good ones are not cheap.
I should add that all the people I know who are earning really good money in the trades put in some years, established a solid personal reputation in the area, and then started their own businesses.
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.
Also, in the US (at least west appalachia, but it might be all of north america), it seems that the logging/milling industry has incestuous relationships with the building industry, and it seems to be pretty hard to find cheap wood from clearcuts if you're an independant. The person who hosted me and my familly for two weeks in WV used wood he logged himself for his home and dependencies (he was 70 btw), but even for a contract he got he couldn't use the wood from the nearby mill and imported it from Ohio/Canada. And it was in 2018 so there weren't as many pressure on wood availability as post-covid or right now.
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.
> 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.
Indeed, cheating on your taxes can leave you with extra after- (instead-of-?) tax cash in your pocket.
Some of the above is either not really taxable (friends doing favors), actually encouraged/legal (e.g business writeoffs), or really hard to prove especially if it is the odd job (cash). While I'm not based in the US, I imagine some/all of the above points equally apply to many countries.
The point is not one of approval/disapproval. It is one of saying that the "official statistics" are not really that useful often when it comes to blue collar work as anecdotally most blue collar workers do at least some of the above.
It's really a fantastic deal. He does exquisitely good work at a reasonable price. Not the cheapest electrician, but the price/quality is great.
The originating buyer wants quality work, probably as a one-off, but doesn't know or want to know how to find someone like that. Everyone is high risk.
A matchmaker company in the middle has ongoing relationships with the end contractor, knows their work is decent, and provides a framework / legal liability / insurance on top. The contractors they know are lower risk.
So the matchmaker can charge {full cost of high risk - slight discount} while knowing they're actually only taking on {lower risk}.
Where it seems to go pear-shaped is when the matchmaker gets too large and can no longer individually vouch for their contractors (e.g. IBM Services and globally integrated service companies).
Many people are hired onto rough framing crews with no experience. That's what defines it as entry-level work, IMO. You're saying that people without experience make errors in rough carpentry, which makes it not entry-level. (I would say that makes it "not unskilled" but still "entry-level" [because you can be hired with no experience].)
I do pay my wife part of my income so it hits a lower tax rate (this is fine), and she does do my books (she's a CPA, so that tracks).
But there's a staggering amount of expenses I'd normally be paying out of pocket with my post-tax dollars that are now being paid by "the company". Anything the company pays for I end up paying $0 in tax on that money. Like probably 20% of the stuff _I would be paying for anyway_ is paid for by the company and I pay 0% tax instead of 50% tax. Like, what might have been $30k/yr in expenses before now costs me $15k/yr and lets me put $7.5k in my pocket out of what's left.
Health expenses? Yeah, why not establish a self-funded company health plan and pay those out of untaxed dollars too!
It's especially stark in things like "home office" expenses... if I claim it on my personal taxes (whether from my company or working for someone else), I can't claim any mortgage interest as an expense. If I claim it as my company's place of business though I can claim that and much more.
It costs me like $60/yr to keep renewing the corporation, and if I wasn't married to a CPA probably another $600-800 for tax filing. It easily puts 10x that back in my pocket.
And I mean, yeah, it's definitely way easier to cheat on your taxes if you're so inclined. And from what I've seen of the filings my wife has done over the years for accounting firms, bending the rules is pretty much the norm. Many an argument has been had over "no, that's not the letter of the rules I'm not letting you file that" and "okay but you're throwing money away because literally everyone else does that because there's no way to catch it".
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.
Not uncommon in Canada either.
The point was probably to meaningfully contribute to the conversation about trades and typical earnings.
It was a useful comment .. unlike, for example, yours.
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)
In EU aa lot of in-built furniture is made out of "furniture board", it's particle board with some veneer. There are a lot of local companies selling that board, you can order already cnc cut and drilled pieces, you just need to specify drilled holes positions and sizes and you can offer custom furniture. Buy some off-the shelf fasteners and you're ready to go. Made a small library shelf this way for myself and it was 2x cheaper than anything ready made, but looks perfectly profeessional. My local carpenter friend orders at the same company, made me a kitchen much cheaper than anything available at big retailers.
IOW, as long as you color within the lines, they really don't care. My tax guy is pretty good at telling me what might trigger an audit vs what IRS thinks of as perfectly normal.
That's because high earning tradespeople are typically not wage earners. They operate their own companies.