The Economy and Labor Rates, Spring 2011

You would think that the market downturn is producing deals of a lifetime for products and labor. When in fact, materials spiked late 2010 before dropping to mid year levels and since then have remained more or less steady. In regards to labor, we’re actually seeing costs trend back upwards. You’d think that supply & demand would dictate that less projects would create bidding wars which in turn would result in super low costs – and this was definitely the case a year or two ago. However, we’ve observed that cut-rate subcontractors & tradesmen, those that were willing to work for drastically reduced rates and in many cases, work at a loss, have simply disappeared from the market. This appears to have left a vacuum which has been quickly filled by well managed companies providing higher quality craftsmanship. So not only are labor rates a bit higher as a result of the higher level abilities, they’re also increased because the competition is less intense. On one hand we’re happy to see the pool of subcontractors at a collectively higher level of quality and capability, but on the other, we realize that the days of rock bottom pricing for superior work has passed.

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