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Housing Labor Shortage Drives up Cost and Delays


crash_davis

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wait....so stopping the flow of labor supply (read immigration) is going to drive up construction costs and delay project completions?  who ever could have predicted that? 

the manual labor shortage is also felt at the restaurant and food industry.  inflation, have we met yet?

 

https://www.statesman.com/business/shortage-texas-construction-workers-leads-higher-costs-delays/U7zN3iaUB6IWb7xUbJgM6O/

 

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A punishing construction labor shortage has plagued builders in the fast-growing state for years and has sent industry leaders scrambling for fixes, most recently prompting them to plead for immigration reform to help replenish an aging workforce. Fewer young people have been entering the construction trades, while tighter restrictions on immigration and competition from other sectors have been crimping the industry’s overall workforce.

 

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And more than half of construction firms around the state who were surveyed say they have lost workers lured away to other employers in the building industry.

As a result, almost 70 percent of Texas companies said they have increased pay in the past year to try to retain or attract workers. About 30 percent said they have provided bonuses.

 

Almost half of the companies surveyed in Texas said they don’t anticipate an easing of the labor shortages over the next 12 months. In addition, 37 percent say they expect shortages of hourly craft laborers to worsen.

 

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I am living this shortage at this very moment.  Many of my customers have refused to believe it until lately when it has hit them right in the giblets.

Qualified roofers, framers, tile setters, drywall hangers, trim carpenters, HVAC techs, plumbers and electricians are in extreme short supply.

Technical schooling should be pushed to many over a college degree.  Face it; we all know not everyone is cut out for college, college is an expensive proposition that can lead to near insurmountable debt with no real upside.

A guest worker program with a path to citizenship must be fast-tracked through congress (good luck).

Consider these demographics:  The average age of a master plumber is 58 years old.  Electricians, 55 years old.  HVAC tech, 50 years old.  For the motivated individual, these demographics will provide an incredible opportunity void to be filled if that individual can learn the trade and the business and find workers willing to learn the craft and actually work for a living. 

There are only so many 75th floor corner offices paying $750K.  Tradesmen will always be needed.  

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I am living this shortage at this very moment.  Many of my customers have refused to believe it until lately when it has hit them right in the giblets.
Qualified roofers, framers, tile setters, drywall hangers, trim carpenters, HVAC techs, plumbers and electricians are in extreme short supply.
Technical schooling should be pushed to many over a college degree.  Face it; we all know not everyone is cut out for college, college is an expensive proposition that can lead to near insurmountable debt with no real upside.
A guest worker program with a path to citizenship must be fast-tracked through congress (good luck).
Consider these demographics:  The average age of a master plumber is 58 years old.  Electricians, 55 years old.  HVAC tech, 50 years old.  For the motivated individual, these demographics will provide an incredible opportunity void to be filled if that individual can learn the trade and the business and find workers willing to learn the craft and actually work for a living. 
There are only so many 75th floor corner offices paying $750K.  Tradesmen will always be needed.  


The problem is that those Trades have barriers for entry of you’re not their friends or family. See NY union electricians. Not an excuse but it’s easier said than done.

Trade school needs to come back to the fullest but the established won’t easily “share” their pieces of the pie.
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I'm in the trade / construction business.  Demolition, carpentry, paint, welding.  Earlier this year, I did a wage comparison for my W2 employees.  2014 vs 2018.  In four years, my average hourly wage has gone up 35%.  Add in the fact that we've added benefits and 401k over that timeframe, and my loaded wage rate has jumped by 50+%.  My lead carpenters that were making $18/hr are now making $30/hr.  My lead painters that were making $16/hr are now making $25/hr.  We've adjusted our pricing to reflect those wages.  And, we haven't missed a beat from a revenue or profit standpoint.  We've actually grown over that timeframe.  Those guys were grossly underpaid, and the wages have caught up.  Simple supply and demand.  It's nearing a breaking point, IMO, though.  I've had guys leave that I was paying $23/hr and got offers for $35/hr for mid-level carpentry work.  I could get on my soapbox about wages, but that would take more than a couple of posts.

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1 hour ago, NotActuallyALonghorn said:

I know a guy who does AC work. He is ready to retire and would teach someone to take over his business, but he can't find anyone who is reliable and willing to put in the work. And he does mostly AC units in new construction, so a minimal amount of crawling around in attics in the summer.

A very good friend of mine was in the same boat with a well established HVAC business in Houston. In business since 1972 with a great book. Retirement came around and some other HVAC companies sniffed around and lowballed him. His son could've taken over and done really well.   HVAC wasn't sexy enough for him and was too hard.  Son still "holding out" for a better job.  Passed on +/- $175K a year gig.  Idiot. 

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12 minutes ago, deadshank said:

A very good friend of mine was in the same boat with a well established HVAC business in Houston. In business since 1972 with a great book. Retirement came around and some other HVAC companies sniffed around and lowballed him. His son could've taken over and done really well.   HVAC wasn't sexy enough for him and was too hard.  Son still "holding out" for a better job.  Passed on +/- $175K a year gig.  Idiot. 

I had a friend who looked into buying out an HVAC business in Victoria. They could never get the numbers to work past about 65k. He kept his 150k yr in O&G consulting. Wife wanting to go back “home” was the main reason he was considering it. Well I guess the hang your shingle American Dream aspect. 

I wonder what the average is, I have a great HVAC guy - honest, mostly available, etc. He may have a basement of cash like Scrooge McDuck but that 25 yo F150 he limps around in suggests otherwise. 

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13 minutes ago, fattyflattie said:

I had a friend who looked into buying out an HVAC business in Victoria. They could never get the numbers to work past about 65k. He kept his 150k yr in O&G consulting. Wife wanting to go back “home” was the main reason he was considering it. Well I guess the hang your shingle American Dream aspect. 

I wonder what the average is, I have a great HVAC guy - honest, mostly available, etc. He may have a basement of cash like Scrooge McDuck but that 25 yo F150 he limps around in suggests otherwise. 

Some do better than others.  Some are better businessmen and better manage their personal finances.  Service area is a factor, as well.  My guy serviced Bellaire, West U, River Oaks with customers that had him consistently service their systems over the years and then do the replacements when the time came.  Repeat and referral business is good. No ad or marketing budget and low overhead helped the bottom line significantly.  He ran a tight ship which meant a good payday for himself. 

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1 hour ago, Spaulding Smails said:

I'm in the trade / construction business.  Demolition, carpentry, paint, welding.  Earlier this year, I did a wage comparison for my W2 employees.  2014 vs 2018.  In four years, my average hourly wage has gone up 35%.  Add in the fact that we've added benefits and 401k over that timeframe, and my loaded wage rate has jumped by 50+%.  My lead carpenters that were making $18/hr are now making $30/hr.  My lead painters that were making $16/hr are now making $25/hr.  We've adjusted our pricing to reflect those wages.  And, we haven't missed a beat from a revenue or profit standpoint.  We've actually grown over that timeframe.  Those guys were grossly underpaid, and the wages have caught up.  Simple supply and demand.  It's nearing a breaking point, IMO, though.  I've had guys leave that I was paying $23/hr and got offers for $35/hr for mid-level carpentry work.  I could get on my soapbox about wages, but that would take more than a couple of posts.

I believe it. I'm on the the budgeting / estimating side of our company's west coast region. The past few years, we were adding 8% escalation per year for the bay area market. Last year, LA led the nation with 7.5% escalation per year. Our $405 million hospital project that starts in 2020 will be closer to $500 million when we add 4 years of escalation through mid-way of construction.

On the Apple UFO project, they were paying bonuses to craftsmen just to SHOW UP to work. In the Bay area, the IBEW negotiated a new contract increasing salaries 7% for the next 3 year when they negotiate a new contract. Throw in light gage framing suppliers jacking up their prices 25% since last year, it's been a crapshoot trying to estimate jobs. Subs will hold their price for < 30 days whereas we used to be able to negotiate in 90 days. Bananas!

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Lots of them at this point.

 

I referenced the current state of affairs in construction a couple months ago when one of the wages/jobs report was somewhat flat.  Its fricken crazy right now.  I have more responsibility and access to company info than in 04-07 so I may be wrong, but the current “economy” seems better.  That is based on amount of work backlog/my income/what I hear from peers regarding their income. 

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9 hours ago, Superhero said:

I believe it. I'm on the the budgeting / estimating side of our company's west coast region. The past few years, we were adding 8% escalation per year for the bay area market. Last year, LA led the nation with 7.5% escalation per year. Our $405 million hospital project that starts in 2020 will be closer to $500 million when we add 4 years of escalation through mid-way of construction.

On the Apple UFO project, they were paying bonuses to craftsmen just to SHOW UP to work. In the Bay area, the IBEW negotiated a new contract increasing salaries 7% for the next 3 year when they negotiate a new contract. Throw in light gage framing suppliers jacking up their prices 25% since last year, it's been a crapshoot trying to estimate jobs. Subs will hold their price for < 30 days whereas we used to be able to negotiate in 90 days. Bananas!

It is a crapshoot.  And, I also realize that as a trade-based company, we're in the cat bird seat right now.  At some point, that will be reversed.  But, we're striking while the iron is hot.

We've shifted to more and more time and materials work, fixed bids valid for no more than 30 days and allowances for materials that gets reassessed at the time the scope commences.  We do high-end residential work, so most of it is over-and-done in six months.  But, we do have architecturally driven work that will bid and go through redesign for months on end.  And then the owner / architect flips out about wages increasing.  I have no idea how these commercial guys are doing in on projects that span 3-4 years.

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33 minutes ago, Spaulding Smails said:

It is a crapshoot.  And, I also realize that as a trade-based company, we're in the cat bird seat right now.  At some point, that will be reversed.  But, we're striking while the iron is hot.

We've shifted to more and more time and materials work, fixed bids valid for no more than 30 days and allowances for materials that gets reassessed at the time the scope commences.  We do high-end residential work, so most of it is over-and-done in six months.  But, we do have architecturally driven work that will bid and go through redesign for months on end.  And then the owner / architect flips out about wages increasing.  I have no idea how these commercial guys are doing in on projects that span 3-4 years.

What do you do?  What's your trade?

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Electricians are the route to go. Of all the trades, the electricians around here are the only one consistently exceeding the GC’s in what they are netting. I have two that are well into the 7 figures net right now and it is steadily increasing. However, they are cannobalizing each other for people so it may be short lived as they drive wages up on each other.

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15 hours ago, Spaulding Smails said:

I'm in the trade / construction business.  Demolition, carpentry, paint, welding.  Earlier this year, I did a wage comparison for my W2 employees.  2014 vs 2018.  In four years, my average hourly wage has gone up 35%.  Add in the fact that we've added benefits and 401k over that timeframe, and my loaded wage rate has jumped by 50+%.  My lead carpenters that were making $18/hr are now making $30/hr.  My lead painters that were making $16/hr are now making $25/hr.  We've adjusted our pricing to reflect those wages.  And, we haven't missed a beat from a revenue or profit standpoint.  We've actually grown over that timeframe.  Those guys were grossly underpaid, and the wages have caught up.  Simple supply and demand.  It's nearing a breaking point, IMO, though.  I've had guys leave that I was paying $23/hr and got offers for $35/hr for mid-level carpentry work.  I could get on my soapbox about wages, but that would take more than a couple of posts.

Where are you located? Those wages aren't happening in Texas yet as far as I can tell. I'm a commercial plumber with 20+ years in the trade, and I've spent the last four months working in the Bay area because I couldn't stomach the thought of working another Texas summer at basically the same wage I've been making for the past 12 fucking years. I hope it starts going up, because like you said we've been underpaid for awhile now. Especially in Austin.

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22 hours ago, deadshank said:

Technical schooling should be pushed to many over a college degree.  Face it; we all know not everyone is cut out for college, college is an expensive proposition that can lead to near insurmountable debt with no real upside.

What he said.   There are a lot of good paying jobs out there in the trade industry.   I

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7 hours ago, Paco said:

Where are you located? Those wages aren't happening in Texas yet as far as I can tell. I'm a commercial plumber with 20+ years in the trade, and I've spent the last four months working in the Bay area because I couldn't stomach the thought of working another Texas summer at basically the same wage I've been making for the past 12 fucking years. I hope it starts going up, because like you said we've been underpaid for awhile now. Especially in Austin.

Same deal in the glass industry.  The wages being paid to glaziers in Austin are a joke. 

 

When you're 500' up on a swinging stage installing a 400 pound piece of glass $20/hr. doesn't quite seem like enough.  Maybe in 1998, but not 2018.

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49 minutes ago, slorch said:

What say the yankee union folks towards the cheapo immigrants framers and whatnot?

 

seems incongruous...

Of course they don’t like them.  With proper training and management they can be just as good or better. You’d be surprised with the ability some have.  

 

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Just now, deadshank said:

Of course they don’t like them.  With proper training and management they can be just as good or better. You’d be surprised with the ability some have.  

 

Most of the houses in Texas are built by them.

 

who the fuck you preachin to?

 

 

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Trades are physically hard work.  You're either hot and dirty or cold and dirty.  (The degree of each depends on which part of the country you're working in.)

I agree that we should encourage more young people to those fields but it's not like they're easy.  You also have to be somewhat intelligent so to say that we should funnel the dullards into being something like electricians is insulting to electricians.

At the end of the day, tough, this issue is the poster child for immigration.

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1 minute ago, deadshank said:

I’m no liberal.  I’m just in the business and see this every day.  We have a problem that needs to be fixed. 

It wasn’t meant towards you personally.

 

The Unions and immigration are directly  juxtaposed. 

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3 minutes ago, Aqua Buddha said:

Trades are physically hard work.  You're either hot and dirty or cold and dirty.  (The degree of each depends on which part of the country you're working in.)

I agree that we should encourage more young people to those fields but it's not like they're easy.  You also have to be somewhat intelligent so to say that we should funnel the dullards into being something like electricians is insulting to electricians.

At the end of the day, tough, this issue is the poster child for immigration.

No need to funnel dullards to the trades.  Many tradesmen are as smart or smarter than those considered well educated.  Smart guys can fare very well in the trades. 

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Just now, deadshank said:

No need to funnel dullards to the trades.  Many tradesmen are as smart or smarter than those considered well educated.  Smart guys can fare very well in the trades. 

That's kind of my point.  People are like "Why not just funnel the average HS kids into trade?"  Well, it's not that easy.  You can't be stupid and work in the trades anymore.  

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1 minute ago, Aqua Buddha said:

That's kind of my point.  People are like "Why not just funnel the average HS kids into trade?"  Well, it's not that easy.  You can't be stupid and work in the trades anymore.  

You can be stupid  but your upside is limited just like anywhere else.  

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On 9/7/2018 at 5:11 PM, deadshank said:

I am living this shortage at this very moment.  Many of my customers have refused to believe it until lately when it has hit them right in the giblets.

Qualified roofers, framers, tile setters, drywall hangers, trim carpenters, HVAC techs, plumbers and electricians are in extreme short supply.

Technical schooling should be pushed to many over a college degree.  Face it; we all know not everyone is cut out for college, college is an expensive proposition that can lead to near insurmountable debt with no real upside.

A guest worker program with a path to citizenship must be fast-tracked through congress (good luck).

Consider these demographics:  The average age of a master plumber is 58 years old.  Electricians, 55 years old.  HVAC tech, 50 years old.  For the motivated individual, these demographics will provide an incredible opportunity void to be filled if that individual can learn the trade and the business and find workers willing to learn the craft and actually work for a living. 

There are only so many 75th floor corner offices paying $750K.  Tradesmen will always be needed.  

The hell with guest worker programs. The government is pushing everyone to go to college and saddle themselves with $100K debt for a worthless liberal arts degree when they should be encouraging young people to enter trade schools.

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Young people don't want to do this work. It's the immigrants, specifically the southern border neighbor immigrants, who are doing the manual work. Always has been. It's tough work. Hence the worker shortage driving up cost. Immigrants are an easy lot to extend all your fears and hatred on. It'll be interesting the to see the conviction when everything starts costing a lot more. This is the same with tariffs. Bubba Joe and Emma Jane are going to start feeling it in the checking account, or rather the credit card statements. Bubba's and Emma's kids want no part of the high in demand manual work. Hell neither do Bubba or Emma.

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5 hours ago, crash_davis said:

Young people don't want to do this work. It's the immigrants, specifically the southern border neighbor immigrants, who are doing the manual work. Always has been. It's tough work. Hence the worker shortage driving up cost. Immigrants are an easy lot to extend all your fears and hatred on. It'll be interesting the to see the conviction when everything starts costing a lot more. This is the same with tariffs. Bubba Joe and Emma Jane are going to start feeling it in the checking account, or rather the credit card statements. Bubba's and Emma's kids want no part of the high in demand manual work. Hell neither do Bubba or Emma.

That's just not true. I can remember a time, and it wasn't that long ago, when most Texas construction workers were rednecks. In fact, one of my aunts married one who actually went by Bubba. 

I also don't think it's safe to assume that kids can't or won't do these jobs. The opportunities aren't there these days. Hell, in big Texas cities, it's hard to help your kid set up a lawnmowing business or back of the house restaurant work because they are competing with Chuy and Julio, who are really good at their jobs and established with their employers.That was not the case when I was a kid / young man. 

 

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22 hours ago, deadshank said:

What do you do?  What's your trade?

Carpentry (mostly fine carpentry and millwork), specialty / custom doors & windows, welding & fabrication and paint.  We also have a demolition division, but wage increases haven't been as noticeable there.  It's primarily evident in the more skilled trades.  

19 hours ago, Paco said:

Where are you located? Those wages aren't happening in Texas yet as far as I can tell. I'm a commercial plumber with 20+ years in the trade, and I've spent the last four months working in the Bay area because I couldn't stomach the thought of working another Texas summer at basically the same wage I've been making for the past 12 fucking years. I hope it starts going up, because like you said we've been underpaid for awhile now. Especially in Austin.

We're in Austin.  We focus on high-end, architecturally driven work which limits our pool of applicants from both a skill standpoint as well as a professional standpoint.  I'm often sending guys into occupied $5M+ residences, so we admittedly pay a premium for talented, respectable employees.  

I think those wages are happening in Texas.  And maybe we're paying a premium, but I think that skilled MEP trades are seeing spikes as well.  It may not be as high of an increase from a percentage standpoint because those trades historically had higher starting pay rates than carpentry or paint, for example.  But, I do know that lead HVAC techs are easily making $35/hr in Austin right now.  I'd assume journeyman plumbers and electricians are $30+/hr as well.

11 hours ago, Somnio said:

Same deal in the glass industry.  The wages being paid to glaziers in Austin are a joke. 

 

When you're 500' up on a swinging stage installing a 400 pound piece of glass $20/hr. doesn't quite seem like enough.  Maybe in 1998, but not 2018.

This is exactly right.  My neighbor just finished a landscaping project with lots of big stacked limestone.  He got an estimate that was double what he was expecting and decided he would do it himself.  It wasn't rocket science, but it was hard work.  I saw him working a full weekend on it, then two days later a crew showed up to do the work.  I asked him what happened and he said it was just too damn hard and he would pay them to do it.  

If you're willing to do the work that others can't do / don't want to do, you can make good money.  Doesn't matter if you're hanging from a swing stage or moving 200 lb stones.

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9 hours ago, Chilly Water said:

The hell with guest worker programs. The government is pushing everyone to go to college and saddle themselves with $100K debt for a worthless liberal arts degree when they should be encouraging young people to enter trade schools.

That would be good, too.  Problem is that American youth by and large don't want to do this work.

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So are housing labor shortages a good or bad thing? It seems to me that it will lead to increased wages for americans of all ethnicities who are willing to do the work. Further, it will increase the numbers and the strength of the American middle class. Plus, as a bonus it will decrease the need for government handouts and decrease the need for high taxes. It seems mostly positive except for increased wage pressures on builders and increased costs for new construction and home improvement.

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21 hours ago, Paco said:

Where are you located? Those wages aren't happening in Texas yet as far as I can tell. I'm a commercial plumber with 20+ years in the trade, and I've spent the last four months working in the Bay area because I couldn't stomach the thought of working another Texas summer at basically the same wage I've been making for the past 12 fucking years. I hope it starts going up, because like you said we've been underpaid for awhile now. Especially in Austin.

Are you an union plumber in the Bay Area? Asking because union plumbers are the second highest paid trade behind elevator mechanics. It’s not surprising for my younger coworkers raise an eyebrow and consider going into the trade when they see a local determination wage sheet.

And to the person who says it’s good to be an electrician... if you’re low voltage, yes. But the project I’m working on, we’re dealing with relocating several ___ kV transmission lines. I wouldn’t want anything to do that can kill me in an instant.

 

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32 minutes ago, Bevo said:

So are housing labor shortages a good or bad thing? It seems to me that it will lead to increased wages for americans of all ethnicities who are willing to do the work. Further, it will increase the numbers and the strength of the American middle class. Plus, as a bonus it will decrease the need for government handouts and decrease the need for high taxes. It seems mostly positive except for increased wage pressures on builders and increased costs for new construction and home improvement.

You're missing the point that demand is up and supply is down because many Americans don't want to be and will not consider being tradesmen / construction workers.  This type of work is considered icky, low-skilled and dead end.  Some facets are but many aren't.   

College and student loan debt are promoted when so many  shouldn't pursue this route. 

In a perfect world Americans in need of jobs would fill the void but it's not happening. 

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11 minutes ago, deadshank said:

You're missing the point that demand is up and supply is down because many Americans don't want to be and will not consider being tradesmen / construction workers.  This type of work is considered icky, low-skilled and dead end.  Some facets are but many aren't.   

College and student loan debt are promoted when so many  shouldn't pursue this route. 

In a perfect world Americans in need of jobs would fill the void but it's not happening. 

If that is the point of this thread, then maybe I am missing it. I'm a professional and subject to numerous stresses every day from running a small business to dealing with life and death situations daily, to the average person thinking that we make too much money and thinking they don't need to pay for their services.

I was a Chem E and Mol. Bio major in undergrad and do most of my housework from plumbing to electrical to masonry (which I am not good at). I recently got bids for installing a gas line and electrical lines for a pool construction. The electrical bids were in line while the gas line bids were ridiculous. I installed a PVC sleeve, purchased the MDPE gas line, had the utility increase the pressure to 2PSI and install a new meter, and dug the trench to 18 inches so all the plumber needed to do was run the line through the PVC and install 2 regulators (1 for the house to bring the pressure back down and 1 for the pool heater to bring the pressure back down). The cost was over $3000 and it was hard to find someone to do it. I could have done it myself in about 1 hour and $300 but my city required a licensed master plumber for permitting.

If anyone thinks that those type of jobs are below them then they are complete idiots. No job is easy and it requires hard work to make money. Only people who are given too much for too little effort would think those jobs are below them. And I think for those people, the school of hard knocks, will get them to realize that they are dead ass wrong. You stated, "In a perfect world Americans in need of jobs would fill the void but it's not happening". While this may be true, the fallacy is that it would not happen. These things take time. Parents may think it is too hard to change their ways. Their children however should see that these jobs are good and profitable, especially when the alternatives are limited.

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