Finding qualified skilled trades professionals has become one of the biggest challenges facing electrical, mechanical, plumbing, HVAC, and other construction contractors. Experienced electricians, plumbers, pipefitters, welders, HVAC technicians, carpenters, and other skilled tradespeople are in high demand—and the best workers often have choices.
Companies can invest heavily in recruiting, advertise on multiple job boards, use recruiters, offer referral bonuses, and spend countless hours interviewing candidates. But there is one problem that recruiting alone cannot solve:
A compensation and benefits package that is not competitive with the local market.
When wages, benefits, overtime opportunities, paid time off, retirement benefits, or other elements of compensation fall significantly below what competing employers are offering, attracting and retaining top trades talent becomes considerably more difficult.
And the cost to the company can extend far beyond an unfilled position.
Top Skilled Tradespeople Know Their Value
Experienced trades professionals generally have a good understanding of what their skills are worth.
A seasoned commercial electrician, plumber, HVAC technician, pipefitter, welder, or other skilled craft professional often knows what competing contractors are paying. They talk with coworkers, former coworkers, union and non-union tradespeople, recruiters, and other professionals in their field. Job advertisements also make wage information increasingly easy to find.
That means an employer may believe its pay is competitive while candidates see something very different.
A difference of even a few dollars per hour can become substantial.
For example, a $4.00-per-hour difference represents approximately $8,320 per year for an employee working 40 hours per week—and potentially considerably more when overtime is involved.
For an experienced tradesperson considering multiple opportunities, that difference can be difficult to ignore.
Risk #1: Your Best Candidates Never Apply
One of the biggest consequences of below-market compensation is also one of the least visible.
You never meet many of the candidates you would like to hire.
Experienced tradespeople scanning employment opportunities frequently evaluate compensation before deciding whether to apply. If the wage range is noticeably below competing opportunities, many highly qualified candidates simply move on.
The employer may then conclude:
“There aren’t any good electricians out there.”
Or:
“Nobody wants to work anymore.”
But the real issue may be different.
Qualified workers may be available—they simply are not interested in the compensation being offered.
This can dramatically reduce the quality of the recruiting pool before the interview process even begins.
Risk #2: Recruiting Costs Increase
When compensation is below the market, recruiting becomes harder and more expensive.
Companies may respond by:
- Posting jobs repeatedly
- Purchasing additional job-board advertising
- Increasing recruiter activity
- Offering hiring bonuses
- Spending more management time interviewing
- Expanding recruiting into larger geographic areas
These efforts can generate additional applicants, but they do not necessarily address the underlying problem.
If another contractor is offering better overall compensation for comparable work, recruiters are being asked to convince candidates to accept an economically less attractive opportunity.
At some point, additional recruiting dollars produce diminishing returns.
Risk #3: You Attract Candidates With Fewer Options
Competitive compensation does more than increase the number of applicants. It can affect the quality of the applicant pool.
Top performers frequently have more employment choices.
An experienced journeyman-level tradesperson with strong technical skills, a good safety record, reliable transportation, professional references, and a reputation for dependability may be considering several opportunities simultaneously.
If an employer consistently pays below market, the candidates willing to accept the position may increasingly be those who have fewer alternatives.
That does not mean every candidate accepting a lower wage is unqualified. Far from it.
But over time, a compensation strategy that sits significantly below the market can make it more difficult to consistently attract the most experienced and sought-after tradespeople.
Risk #4: Candidates Accept Your Offer—and Keep Looking
Another costly situation occurs when an employee accepts a position because it is the best opportunity available at that particular moment.
They begin working.
Training takes place. Paperwork is completed. Uniforms or equipment may be issued. Supervisors begin investing time in the new employee.
Then another contractor calls.
The competing offer pays several dollars more per hour, provides better health insurance, offers a stronger 401(k), provides more paid time off, or has better overtime opportunities.
The employee leaves.
The company is suddenly recruiting for the same position again.
What appears to be an employee-retention problem may actually be a compensation problem.
Risk #5: Turnover Becomes Expensive
Replacing skilled tradespeople costs considerably more than placing another job advertisement.
Turnover can create costs involving:
- Recruiting and advertising
- Interviewing and screening
- Drug testing and background checks
- Orientation and onboarding
- Safety training
- Supervisor and management time
- Reduced productivity while a replacement gets up to speed
There are also indirect costs.
Projects may become understaffed. Overtime may increase among existing employees. Supervisors may spend more time filling labor gaps instead of managing production.
The company may save money on its hourly wage rate while spending substantially more elsewhere.
Risk #6: Your Best Existing Employees Become Recruiting Targets
Compensation does not only affect new hires.
It affects the people already working for you.
When experienced employees discover that competitors are paying substantially more for the same skills, employers can quickly find themselves defending their workforce.
A competitor does not need to convince your employee to completely change careers.
They may simply need to say:
“We’ll pay you $5 more per hour to do essentially the same work.”
For an employee working substantial overtime, that difference can represent thousands—or even tens of thousands—of dollars annually.
Strong employees who were not actively searching for another job may suddenly become interested.
Risk #7: Morale and Productivity Can Suffer
Compensation also sends a message about how a company values its workforce.
Employees understand that businesses must control costs. Most do not expect their employer to always be the highest-paying contractor in the market.
But when employees believe they are being paid significantly less than people performing similar work elsewhere, resentment can develop.
That can affect:
- Morale
- Engagement
- Attendance
- Productivity
- Willingness to work overtime
- Employee referrals
- Long-term retention
Employees who feel competitively compensated are generally less motivated to investigate every opportunity that comes their way.
Compensation Is More Than the Hourly Wage
Employers should also avoid evaluating competitiveness based solely on hourly pay.
Tradespeople frequently evaluate the complete employment package.
That can include:
Hourly wages
The starting point for most candidates.
Overtime opportunities
For many skilled tradespeople, consistent overtime can significantly increase annual earnings.
Health insurance
Premiums, deductibles, family coverage, and employer contributions can make a major difference.
Paid time off
Vacation, holidays, sick time, and PTO policies increasingly influence employment decisions.
Retirement benefits
A strong 401(k) program and employer match can become increasingly important to experienced workers.
Bonuses and incentives
Performance bonuses, attendance incentives, referral bonuses, and project-completion bonuses can differentiate employers.
Travel compensation
Per diem, mileage, travel pay, or lodging assistance can matter greatly when employees travel between projects.
Job stability
Consistent work and confidence about the next project can sometimes be worth as much as an additional dollar or two per hour.
The strongest compensation strategy considers the total employment value proposition, not simply the base wage.
The Market Ultimately Determines the Wage
Every employer has a compensation budget.
But skilled labor markets do not necessarily adjust themselves to fit that budget.
If experienced commercial electricians in a particular market are routinely accepting positions at $35 to $40 per hour, an employer offering $28 per hour may struggle regardless of how effective its recruiting campaign becomes.
The same principle applies throughout the skilled trades.
The important question is not:
“What do we want to pay?”
It is:
“What does the market require us to pay to attract the level of talent we need?”
Those can be two very different numbers.
Before Increasing Recruiting, Evaluate Compensation
When a position remains open for an extended period, companies often immediately assume they have a recruiting problem.
Sometimes they do.
But before significantly increasing recruiting expenditures, employers should evaluate several questions:
- What are competitors paying for similar positions in the same geographic market?
- How does our benefits package compare?
- Are candidates routinely declining offers because of compensation?
- Are new employees leaving shortly after being hired?
- Are experienced employees leaving for higher-paying competitors?
- Are we seeking a level of experience that does not match the wage we are offering?
The answers can help determine whether the solution is more recruiting—or a more competitive employment package.
Competitive Does Not Mean Highest
Fortunately, employers do not necessarily have to become the highest-paying company in their market.
Employees consider many factors when deciding where to work.
A contractor that offers competitive wages combined with reliable work, good supervision, a strong safety culture, respectful treatment, benefits, career opportunities, and a professional workplace can often compete very effectively.
But there is usually a point at which the compensation difference becomes too large for those advantages to overcome.
Understanding where that point exists in your market is critical.
Skilled Trades Recruiting Starts With Knowing the Market
Successful skilled trades recruiting requires more than finding people.
It requires understanding what those people are being offered elsewhere.
Contractors that regularly evaluate local wage conditions and adjust their compensation strategies accordingly place themselves in a much stronger position to attract experienced trades professionals, reduce turnover, and build a reliable workforce.
At Tradeco Construction, we have spent more than 20 years helping contractors connect with skilled trades professionals. Because we recruit tradespeople every day across multiple markets, we see firsthand how wage rates, workforce availability, project demand, and candidate expectations affect recruiting results.
Sometimes the challenge is finding the right candidate.
Sometimes the challenge is recognizing what it takes to get that candidate to say yes.
Understanding the difference can save contractors considerable time, recruiting expense, and frustration.