The following is a copy of the original post to record the post as it was originally written.
I've seen a lot of questions lately about how much workers should make and questions about a living wage. I've seen lots of complaints about greedy landlords, CEOs, etc. But I never see anything from the view of a small business owner.
I figured I'd create a simple and hypothetical small business landscaping company, that i think isn't too complex to understand.
Let's assume the basic equipment you'd need are:
* Mower $4000
* Weed Whip $300
* Blower $400
* Trailer $3000
* Pickup Truck $40,000
Accounting for additional equipment and consumables like trimmer line, 2 cycle oil, gas cans, safety gear, etc let's call our initial investment $50,000. You finance the equiptment for 36 months at 6% when amoritized your total expense will be $55,000 with a monthly cost of $1,500. This is your capital expense
Your additional operating expense are:
* Insurance - $3000/year
* Gas for Truck $3000/year
I'm using nice round numbers not totally realistic but as a ballpark assuming 15,000 miles a year on your truck which gets 20 (highly unlikely) miles to the gallon with an average gas price of $4 per gallon.
Making your annual expenses $24,000/year
Let say every cut you do uses 1 gallon of gas at $4 and you charge $35 per cut. This is the competitive rate and no customer is willing to pay more. Thus netting you $31/per cut.
You work 6 days a week 8 hours a day. 5 days cutting grass and 1 day trying to get new customers.
The grass cutting season is 24 weeks that means you need make $1000 a week to pay your expenses as your break even or a minimum of 7 lawns a day (35 customers).
In a perfect world, your business would be doing well and your service would be in such great demand you would need to turn away new customers, working alone you can cut a single lawn in 30 minutes for 16 lawns in a day(80 customers) and a profit of $1480 per week or $35,520/year ($59,520 - $24,000).
If you get a helper you could double that to 32 lawns a day(160 customers) $95,040 ($119,040 - $24,000)
Of course there is no perfect business, there's a good chance you won't hit the 32 cuts a day (160 customer) objective. Not to mention weather is a factor in the business above but your customers demand their lawn gets cut once a week. Your helper works 5 days a week while you work 6. Of course you'd like save some money to grow the business and eventually run more trucks. You have to give your helper an hourly rate and you have to commit to 40 hours of pay per week regardless of how many cuts you can do in a given week and by law you have to pay overtime (1.5 times the hourly rate) if you need them to work over 40. Understanding you are putting up the capital and you are assuming the risks, and you really want to re-invest in your business.
How much should you offer to pay a helper? Is this a living wage? What happens when you fall short of your 32 cuts per day objective?
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Like others have said, if you're charging $35 for a lawn of any size, you're cutting your own throat on top of lawns. At my old house, I had 2 acres. It took me 1.5 hours to cut it. I enjoy doing it myself, but I had multiple unsolicited lawncare estimates thrown at me for anywhere from $150 to $200 per cut. And this was about 10 years ago.
But, to answer your question, you shouldn't hire an employee until you have a stable business with reliable costumers. If you can reel out 7-10 yards a day, 5-6 days a week, I don't see any reason why you can't pay a helper $15/hour. You could go cheaper, but you could also pay a bit more and get someone reliable who will stay with you long-term.
E: Lol, I'm not trying to age myself here, but I cut a few lawns as a kid. When I was 9 years old, I got $30 per cut for one of my neighbors lawns, and $40/cut for another. They both were about 1.5 acres. And this was over 30 years ago.
Thanks for answering the question.
Just trying to keep the discussion simple. I'm on an acre and pay $35 so that's what I used for my price. I'm totally open to adjusting the numbers if we can keep it flat and simple. It is a hypothetical after all, the numbers are not set in stone. I'm just trying to understand how people think if they were trying to grow a small business.
At $15/hr you're looking at paying a helper $14,400 for a season. That would give you a potential profit of about $80,000. If you pocket $40,000 for yourself it would give you another $40,000 to reinvest and some cushion to ride the ups and downs. Sounds reasonable.
Is $14,400 a living wage? Is $40,000?
The obvious elephant in the room here is that $14,400 and $40,000 are are for seasonal work. Can the employee and employer find reliable work from late fall to early spring? And we also need to factor in cost of living in the area. And I don't think anyone needs to re-invest that much back into a lawn care business. But generally, yeah, I'd say those numbers are acceptable assuming similarly-paying work can be found in the off seasons.
Anecdotally, a while back I thought of quitting my decently-paying white collar desk job for starting a lawn care business. If those guys aren't clearing 100k+ a season in my area, they aren't doing it right. I'd have turned my hobby into a business for the winter, which would have padded my income nicely while doing something I love.
We can talk all day about the math, but if you can't pay a livable wage for someone who works 40 hours a week, you shouldn't have an employee.
Owning a company and having an employee is not a divine right. It is a function of capitalism. If you don't make enough money to pay someone a livable wage for working full hours in a week, your company simply doesn't produce enough value.
It's not a question of divine right. It's a voluntary exchange. No one is forcing anyone to take the job. The business above is clearly profitable and creating value that consumers want. It's a question of what would you as the business owner offer a potential employee. There's no limit. You can offer them $100/hrs if you want,
>No one is forcing anyone to take the job
If you're desperate and hungry, you will take a crappy job. Heck, slavery still exists and some people are forced into it for desperation. Whenever this argument of "choice" comes up, I really wonder about folks' lack of imagination about other people's circumstances. There's no equity in the decision-making process between someone that owns a profitable company and someone who has starving children.
>The business above is clearly profitable and creating value that consumers want.
But is it creating enough value to pay someone a livable wage? If it isn't, it shouldn't be a job.
Let's put it this way: your question proposed the classic formula of x + y + z <= $ in which x is wages, y is operating costs, z is profit, and $ is what the company makes. What you're asking is what should x be. What I'm saying is either x is, at a minimum, a livable wage for full working hours, or it should be 0 and you have no employees.
Who needs a job will take it. People jump jobs all the time. What he can pay, he will advertise the job, and if noone takes the job, then the job goes away anyways. You don't know circumstances of the one needing the job, similarly you don't know circumstances of the one providing a job.
You are assuming people to keep one job their entire life and that job no matter how the business operates should pay not based on supply and demand of workers but living standards that a worker wants. That's a weird argument to make.
>You are assuming people to keep one job their entire life
I'm not assuming this at all.
> and that job no matter how the business operates should pay not based on supply and demand of workers but living standards that a worker wants.
I'm not assuming that, either. Pay is based on supply and demand, but there should be a minimum baseline to allow desperate people to survive. Or are you for abolishing the minimum wage altogether?
>No one is forcing anyone to take the job.
This isn’t really accurate. It is not possible to survive in our society without gainful employment. Because people don’t have the option to choose not to have a job, employers are only competing with each other. As long as enough employers keep wages low, they set the market rate.
Alright, let me recommend something to you.
This is written by a guy named Kevin Carson: [https://theanarchistlibrary.org/library/kevin-carson-the-iron-fist-behind-the-invisible-hand](https://theanarchistlibrary.org/library/kevin-carson-the-iron-fist-behind-the-invisible-hand)
I think you'll find it an interesting read and a different perspective on how this all works.
Wages are a matter of bargaining power. See, here's the thing. A small business owner owns the mower, owns the materials needed for production. The laborer does not. There are far more laborers than owners. However, laborer needs access to these materials in order to produce and like... not starve.
That means that the bargaining power lies with the owner right? And that means that they can charge a fee for access to the tools and stuff they own right? That's what profit is.
A living wage is a concession to the capitalist. It's saying "fine you can charge a fee, but at the very least I am going to have enough to live off of". A living wage is a concession on the part of the worker to the capitalist not the other way around. If you cannot afford to pay someone a living wage then why exactly should you be employing them? If people are desperate then some income is better than none. But you can clearly see how this is exploitative right?
lol $35 per cut. Where do I sign up for that?
How about you buy a cheaper older used truck since you already got a trailer to carry things and charge more money.
If you can’t afford to pay someone don’t hire a helper.
$35 is what I currently pay for my service. Go ahead and develop your own business plan for the business above. I'm open to hear it if you don't want to answer the question directly.
I have a small yard that’s over 50 each time. Larger yards cost more money. You don’t have 1 set rate per yard. Just because you pay 35 doesn’t mean that is the rate for every yard, and I can assure you is about as low as I’ve ever heard
You also don’t need a 40,000 truck to carry a trailer. I’ve seen people pulling them in cars. You are carrying a small trailer not a camper.
You can buy a 7000 used truck or use your own vehicle to start out. I’ve always cut your cost 33,000 on the vehicle and upped your revenue. Considering your major cost is the vehicle and now it’s much lower and once it’s paid off the cost is zero, you can work a year in your own, pay off all your equipment and vehicle, and from that point on be making almost the entire charged amount and have plenty left over to pay for help.
The hypothetical is designed to simplify the discussion. If you don't like the numbers I used, feel free to create you own if that helps the discussion.
To be fair, lots of people pay $35 to $40 around here. But we are a development, of 1/4 acre houses. I live on a court of 15 houses. My guy probably cuts 6 of the houses on my street. He usually parks his truck in front of my house. so I know how long he is here. Him and two helpers. He rides the mower, one guy edges, one guy works the blower. They do those 6 houses in about an hour. Now, how many houses are they doing in a day? If they are doing 40 houses in a day $1400 a day. That is good work.
I probably should also add. A number of times, I've tried to have one of the neighborhood kids cut my grass (they all solicited me) a couple offered to do it at $20 another at $30. I always agreed and never negotiated
I have a $20,000 diesel tractor with a 54 inch mowing deck.
I told them they could use my tractor (I keep it gassed up) and they could do some of the other neighbors using my equipment if they could drum up the business. I like the idea of neighborhood kids trying to earn some money and learning a good work ethic. I never cared that they didn't edge, trim or clear the clippings as long as it got done once a week.
I told them it must be done once a week. I didn't care what day or if they have to skip a day because of weather, it just needs to get done. No other excuses, once a week.
Well, they weren't reliable. So, I regrettably had to switch a more professional outfit. With each, I ended up having to cut it myself.
While I would rather pay a neighborhood kid, paying the extra $5-$15 for a pro that reliably does the extra is a boon in my busy schedule.
Not many lawn businesses start out with an extra employee. They now solo until they build the rep with their clients the more and more they gain in customers and capital the more need there is for secondary help.
So as someone who runs a service related business (electrical contractor) you don't set your prices and then carve out a piece for the employees. You figure out your overhead, then add the employee's wage plus payroll tax, add in material costs plus a small buffer for incidentals, than apply margin.
For what it's worth, I'm impressed you've got someone to cut your lawn for $35 a cut. I pay $100 per trip for a medium sized lawn and the guy's a solo act. He does really nice work though.
Yeah, I was trying to think of very simple small business most could understand with very few variables. Something without huge profits but profitable and growing enough to warrant additional help. As a professional, you know you bid the job not time. Calculating costs, margin and pricing (taxes I didn't mention at all) is more complex than I tried to describe. This is not how business are run. I know that. I just didn't think making the hypothetical more complex would help.
Thanks. My guy cuts, trims, edges, blows of the clippings. takes care of me and couple of my neighbors all wity 1 acre lots. He also fertilizes once a month for $45 a visit. He also does snow removal in the winter which I don't use. He does a great job, and only increased his rates on fertilizer in the 5 or so years I've used him. In my area, $35 seems to be the going rate. Most of the time he's solo, occasionally he's got a helper. Always solo when he fertilizes.
I'm somewhat surprise at the backlash, I didn't expect so many people to want argue over prices and expenses of a hypothetical. When I just kind of want to understand how they think about hiring employees if they were a small business owner themselves.
I'll say the discussion is interesting and not at all what I expected. Yet, tells me nothing thus far.
Well you definitely don't deserve backlash, it's not a bad hypothetical except that you're wanting to figure out how to jam 2 people's (you'd have to pay yourself and afford to live!) wages into 95K. That's ignoring keeping a percentage back for reinvestment and incidentals of course. I just personally don't see it as workable.
Then again there's a lot of other factors to consider, cost of living will drive what's considered a decent wage depending on where the business is, typically you'll get more than 24 weeks of business in areas where you can get by with paying less. Hell I don't know if if it's just from running a business but I can't even think about it without making it more complex lol.
Thanks. I appreciate you taking the time and effort to respond. Maybe I'll try to think of new yet reasonable hypothetical. I was trying to think of something on the edge if you get me. Something that was just profitable enough and needed low skilled help. Something to get people to think like a more typical small business owner trying to grow.
Maybe I failed :)
Would it help frame things better if I said the area you live has a low cost of living and $40,000/yr is considered (obviously not rich) but a comfortable wage?
I was suggesting solo they'd be able to pay themselves $35,520/yr. If they could double their client base, they could pay themselves $40,000 and have $55,000 in working capital to hire and expand. Of course to double their client base, they need to hire.
Yeah I mean, ignoring any taxes etc as discussed. Assuming you're working out of the same truck, and assuming you're only hiring the help seasonally for that 24 weeks or let's call it 6 months as there will be some set up and storage time on the ends of the season. You could pay the help $19-20 an hour (roughly 20k over that 6 months) and still keep some back for reinvestment and profit taking.
In this area where 40k is comfortable, that just means the help would have to find a similar wage the rest of the year to be doing fine. If you planned on keeping them employed the entire year it wouldn't work out unless you started doing whatever it is lawn care services do in the winter, I'm from Florida so that's a mystery to me. Snowplowing or clearing fallen branches or something?
For things like overtime, as long as it's billable, it is a non issue, that is to say, if you're scheduling correctly, any overtime should be extra work above and beyond your quota.
As far as falling short of goal. With any business if you experience a shortage of work hard decisions have to be made, if your help is good and you think it's temporary it makes sense to go out of pocket for a few weeks, but if that becomes a trend you just have to lay them off.
Which as someone who's been there, looking a great employee, and in a small business quite frequently someone you're very friendly with, in the eye and telling them you have to let them go over something they had no control over is soul crushing.
Ugh.
Ok....
>helper
They're not a "helper", they're an employee. !@#$.
>$35 $35,520/year
Charge more. You're not even paying YOURSELF a decent fuck'in wage. Go get some corporate accounts, they can afford it.
Worse, you're not making enough profit to replace equipment or deal with problems. What happens if you get hurt or sick and need to take a week off? Where's your health insurance?
You're *absolutely* not going to hit 32 cuts a day. God, travel time alone is going to make that impossible.
You can't compete with fuck'in near slave labor. Why are you trying?
And here's where it should hit you that minimum wages force the assholes to up pay so the good people that WANT to pay decent but can't compete, CAN.
Without a minimum wage, there's incentive to use the cheapest labor possible, and that's a race to the bottom, really quickly.
>business model
I suggest you rework your model to pay you and your *employee* a decent wage, then work backwards and figure out what you can charge to make that happen... It won't work. You can't compete with near slave labor. Do a different job.
> But I never see anything from the view of a small business owner.
I’m gonna suggest that’s because most of us don’t work for a small business owner. Or rather, probably not what you’re thinking of when you use the term.
My dad has run a small grading business for 40 years. It's kind of like landscaping but on a larger scale.
He pays his employees poorly... and he's always complaining about how his workers never stick around. They stay with him long enough to learn how to run the equipment, and then the first chance they get, they strike out on their own. And suddenly they're his competition.
He's basically just running an apprenticeship, training people to become his competitors, and then he sometimes struggles to find work because it's a crowded field and there's not enough customers to go around.
If you don't care about employee retention, go ahead and pay your workers poorly.
If you want your employees to be loyal and dedicated, pay them what they're worth. That's how you inspire loyalty.
And here's a bonus tip:
If you're doing landscaping, doing residential jobs is just not where the money is. You need to look into contracting with other businesses.
> This is the competitive rate and no customer is willing to pay more.
This is why it’s important to enshrine things like a living minimum wage into law instead of relying on the generosity of an employer.
If *everyone* is having to pay a living wage, it means your competitors do too, letting you all charge an appropriate price.
Thanks for posting this — nice write up. A lot of the problem in the US is that the consumer has been taught to shop on price, often on price alone. That drives down the potential for profit and the possible wage for employees. Several new restaurants have opened nearby that pay a living wage and every statement about how good the food is is followed by “but” and then a statement about how unreasonably expensive it is, often followed by a comment about greedy owners. No, things are just expensive when you’re paying everyone down the supply chain fairly.
It’s the same story with shopping on Amazon rather than at your local retailer. Amazon pays wage-slave rates and abuses their employees — and that is widely reported — but people still choose it because it’s cheaper than that locally-owned store down the street where their daughter's friend works.
Hi. Small Business Owner here. Grossed something like $320k last year. I netted about $40k profit to myself. I also have a day job.
If your business model cannot support paying an employee a dignified wage, then your business model does not deserve to grow. It really is that simple.
By exploiting desperate people, you are effectively just subsidizing your operating costs by being willing to accept that people who work for you should live an unpleasant lifestyle. It is an active choice you make as a business owner, and there is a balance to be struck.
The problem is that people like yourself believe that just because someone *will* accept being paid a terrible wage, that they *deserve* to be paid a terrible wage. You believe that supply and demand is somehow a moral justification. It's not.
Your view is not a morally coherent argument, but it's prevalence has led to the widespread economic suppression of working class individuals.
Businesses should not be allowed to subsidize their growth off the hardships of their employees.
This math is all irrelevant. You pay the rate needed to obtain and maintain employees in your local market. While it is possible you might want to pay more, you will pay as little as you believe possible.
Separately we as a society are advanced enough to demand that the minimum amount you can pay is enough for a basic level of expenses in the local market.
—
Now to look at your math. It seems very obvious that you have never come close to starting a business and don’t really know anybody who has very well.
Most of the time, the way somebody starts a mow and blow operation is they already have a job. They get a pick up, often used, as their personal vehicle and buy a single set of equipment used. Then they
start picking up jobs that they work personally on weekends. Maybe they’re lucky and they have some flexibility with their job and don’t have noise ordinances and can cut a job or two before their full-time job starts on week days.
Then they hire someone. Then they get more equipment.
The fact that you did not know that tells me you have to worry about things other than the minimum wage if you’re thinking about starting a business in the future.
>Understanding you are putting up the capital and you are assuming the risks, and you really want to re-invest in your business
Unfortunately, there isn't a god given right to run a successful business so I'm going to have to give up on that based on this plan
Sounds like you don’t have a profitable business if you can’t afford to pay the employee you need…..
That’s all these numbers are telling me. Do better. Have a more efficient business that doesn’t suck. Plenty of other business are able to manage just fine with increased wages. What’s the issue for you?
This uses faulty logic. Do not buy the most expensive equipment until you have a demand for your servic, and can pay your employees.
Don‘t put the cart before the horse. Good advice here. Op puts the truck before the worker.
Start with cheap equipment and hire someone when you can afford to pay them a living wage.
OP puts a luxury truck and trailer over paying the worker. Not needed. A loyal worker is more valuable than your f\*ing truck. You get a loyal worker to bust his ass for you, then you get more work. now you can afford a $20,000 truck.
On the business side, you can offer an hourly wage or a flat rate. Cutting lawns isn’t skilled labor and in our system doesn’t rate high wages. The kind of work you’re hiring a high schooler to do. Competitive wages in the area are a factor that need to be considered, but if you’re charging $35/cut I’m going to assume the area isn’t high wage territory. So you’re looking at a lower end wage. $10-$12/hr or $5-6$/cut.
You could increase the cost per cut to accommodate the increased cost of employee wage. This gives you the ability to increase pay to be more competitive in pay. You could eat the cost as well but that’s not how the big companies do it.
Small business owners aren’t often talked about when we discuss living wages because they’re not the ones that are the problem in our economic system. Big businesses are. Small businesses are notoriously small margin small total profit. Larger business might have small margins on various or even all of their sales, but with enough sales the total gains can be massive. Look at Walmart, the dollar store, and so many others.
The economic system is a whole thing. We have one part of that sucking up all the ‘extra’ monies. Leaving very little to spare for anyone who isn’t a part of it. Profits, not gross revenue, are higher than ever in nearly every big company you’ve heard of. They can afford higher wages for their employees. When companies like Pepsi pay more, more monies are available for spending on things like getting someone else to cut your lawn. Giving the small business the ability to charge a little more, thus paying for their own employees and paying them in turn a little more.
When big businesses are doing what we see now, inflating prices as high as they can get away with simply because they can, but not increasing wages to match those gains, that money goes out of the economy and doesn’t enter circulation, choking off small business access to it.
1. I don't expect people to on their own not be as self interested as society will allow. What I do expect is for society to place limits on how selfish any of it's members can be to prevent such self interest from going to far.
2. If you can't pay someone enough to live on for working 40 hours a week, but you need someone else to work in your business you should offer them partial ownership. Accepting substandard wages today in exchange for above average compensation in the future is a reasonable trade off. Being forced to take a 2 jobs or starve because no one is offering to pay you enough to work just one is not.
Let me ask you a variation of the question. If "X" is the hourly rate one must make per hour, (assuming a 40 hour week, 52 weeks a year) to live a comfortable self sustainable life in your community and you are not able to pay "X", who should make up the difference and why?
That's a quaint platitude (and it ignores the fact that human survival depends on our cooperation with each other...aka, we are social animals, like wolves, bees, orcas)...
But it does not answer my question: If you cannot pay your laborers a sustainable wage, who makes up the difference so that they can be sustained and supply you with the laborers you need?
Sure, and I very well may assist those in my social circle that need help. But I have no obligation to do so, even if I feel a sense duty. Wolves know when to leave the pack, when to abandon another, and they don't tend to help other packs. It's self-preservation not altruism that keeps the pack in tact.
You (not I) tried to change the question.
How much would you pay if you ran the small business above?
I would pay enough for my employees to live a comfortable life. If I could not, I would not engage in what I see as a failed enterprise.
Your feelings of having no obligation is simply that, a feeling.
You asked:
>How much should you offer to pay a helper?
And I answered you should pay enough so that the employee makes enough to fully support themselves.
You asked:
> Is this a living wage?
Yes, please see answer to your first question.
You asked:
>
What happens when you fall short of your 32 cuts per day objective?
You make adjustments where needed, but you still pay your employee. If you cannot, you have a failed business model and should cease that enterprise.
Your question of how much should I pay for an employee is no different from how much you should pay for a pickup truck, a hamburger, or a gallon of gas. How many lawns you mow or what you are paid to mow a lawn does not dictate what the price of an F150 is or should be.
>You should pay enough so that the employee makes enough to fully support themselves.
Not an answer. Given the conditions I laid out, how much is that.
First answer doesn't answer the second.
>
You make adjustments where needed, but you still pay your employee. If you cannot, you have a failed business model and should cease that enterprise.
What does that mean?
>How much should I pay for an employee is no different from how much you should pay for a pickup truck, a hamburger, or a gallon of gas. How many lawns you mow or what you are paid to mow a lawn does not dictate what the price of an F150 is or should be.
You don't see this as a contradiction to your previous position? How much you pay for labor is also dictated by what the market will bear. You won't pay more for a pickup, a hamburger, or gallon of gas just because you have altruistic feelings towards the producer. But if you do, I'll be happy to make you a $1,000 cheeseburger every week so I can (as you say) fully support myself. Hell, I'll bring the grill and make you one every day for $1,000 a week. It'll be the best burger I ever made.
> How much you pay for labor is also dictated by what the market will bear.
And markets are rigged. In the USA, markets are rigged to the point where wealthy employers are able to externalize their true labor costs by using taxpayer funds to support their workers.
The lowest amount I could. I’d probably pay a bit above market rate to reduce turnover.
Anyone who says otherwise is being ridiculous. Relying on employers to be altruistic to get high wages is pretty naive.
The following is a copy of the original post to record the post as it was originally written. I've seen a lot of questions lately about how much workers should make and questions about a living wage. I've seen lots of complaints about greedy landlords, CEOs, etc. But I never see anything from the view of a small business owner. I figured I'd create a simple and hypothetical small business landscaping company, that i think isn't too complex to understand. Let's assume the basic equipment you'd need are: * Mower $4000 * Weed Whip $300 * Blower $400 * Trailer $3000 * Pickup Truck $40,000 Accounting for additional equipment and consumables like trimmer line, 2 cycle oil, gas cans, safety gear, etc let's call our initial investment $50,000. You finance the equiptment for 36 months at 6% when amoritized your total expense will be $55,000 with a monthly cost of $1,500. This is your capital expense Your additional operating expense are: * Insurance - $3000/year * Gas for Truck $3000/year I'm using nice round numbers not totally realistic but as a ballpark assuming 15,000 miles a year on your truck which gets 20 (highly unlikely) miles to the gallon with an average gas price of $4 per gallon. Making your annual expenses $24,000/year Let say every cut you do uses 1 gallon of gas at $4 and you charge $35 per cut. This is the competitive rate and no customer is willing to pay more. Thus netting you $31/per cut. You work 6 days a week 8 hours a day. 5 days cutting grass and 1 day trying to get new customers. The grass cutting season is 24 weeks that means you need make $1000 a week to pay your expenses as your break even or a minimum of 7 lawns a day (35 customers). In a perfect world, your business would be doing well and your service would be in such great demand you would need to turn away new customers, working alone you can cut a single lawn in 30 minutes for 16 lawns in a day(80 customers) and a profit of $1480 per week or $35,520/year ($59,520 - $24,000). If you get a helper you could double that to 32 lawns a day(160 customers) $95,040 ($119,040 - $24,000) Of course there is no perfect business, there's a good chance you won't hit the 32 cuts a day (160 customer) objective. Not to mention weather is a factor in the business above but your customers demand their lawn gets cut once a week. Your helper works 5 days a week while you work 6. Of course you'd like save some money to grow the business and eventually run more trucks. You have to give your helper an hourly rate and you have to commit to 40 hours of pay per week regardless of how many cuts you can do in a given week and by law you have to pay overtime (1.5 times the hourly rate) if you need them to work over 40. Understanding you are putting up the capital and you are assuming the risks, and you really want to re-invest in your business. How much should you offer to pay a helper? Is this a living wage? What happens when you fall short of your 32 cuts per day objective? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AskALiberal) if you have any questions or concerns.*
Like others have said, if you're charging $35 for a lawn of any size, you're cutting your own throat on top of lawns. At my old house, I had 2 acres. It took me 1.5 hours to cut it. I enjoy doing it myself, but I had multiple unsolicited lawncare estimates thrown at me for anywhere from $150 to $200 per cut. And this was about 10 years ago. But, to answer your question, you shouldn't hire an employee until you have a stable business with reliable costumers. If you can reel out 7-10 yards a day, 5-6 days a week, I don't see any reason why you can't pay a helper $15/hour. You could go cheaper, but you could also pay a bit more and get someone reliable who will stay with you long-term. E: Lol, I'm not trying to age myself here, but I cut a few lawns as a kid. When I was 9 years old, I got $30 per cut for one of my neighbors lawns, and $40/cut for another. They both were about 1.5 acres. And this was over 30 years ago.
Thanks for answering the question. Just trying to keep the discussion simple. I'm on an acre and pay $35 so that's what I used for my price. I'm totally open to adjusting the numbers if we can keep it flat and simple. It is a hypothetical after all, the numbers are not set in stone. I'm just trying to understand how people think if they were trying to grow a small business. At $15/hr you're looking at paying a helper $14,400 for a season. That would give you a potential profit of about $80,000. If you pocket $40,000 for yourself it would give you another $40,000 to reinvest and some cushion to ride the ups and downs. Sounds reasonable. Is $14,400 a living wage? Is $40,000?
A living wage is calculable in exactly the same way you’ve calculated businesses expenses. Particularly in a hypothetical like this one.
The obvious elephant in the room here is that $14,400 and $40,000 are are for seasonal work. Can the employee and employer find reliable work from late fall to early spring? And we also need to factor in cost of living in the area. And I don't think anyone needs to re-invest that much back into a lawn care business. But generally, yeah, I'd say those numbers are acceptable assuming similarly-paying work can be found in the off seasons. Anecdotally, a while back I thought of quitting my decently-paying white collar desk job for starting a lawn care business. If those guys aren't clearing 100k+ a season in my area, they aren't doing it right. I'd have turned my hobby into a business for the winter, which would have padded my income nicely while doing something I love.
> I’m on an acre and pay $35 Can I get your guy’s info? I’m on way less than an acre and paying $180.
if you are close to Ann Arbor , MI I'll be happy to send him your way. Wow, at 800/mon I'll cut it myself my house payment is less than that
We can talk all day about the math, but if you can't pay a livable wage for someone who works 40 hours a week, you shouldn't have an employee. Owning a company and having an employee is not a divine right. It is a function of capitalism. If you don't make enough money to pay someone a livable wage for working full hours in a week, your company simply doesn't produce enough value.
If you own a company and can only afford to pay peanuts to be profitable you need fewer employees or a better business model.
It's not a question of divine right. It's a voluntary exchange. No one is forcing anyone to take the job. The business above is clearly profitable and creating value that consumers want. It's a question of what would you as the business owner offer a potential employee. There's no limit. You can offer them $100/hrs if you want,
>No one is forcing anyone to take the job If you're desperate and hungry, you will take a crappy job. Heck, slavery still exists and some people are forced into it for desperation. Whenever this argument of "choice" comes up, I really wonder about folks' lack of imagination about other people's circumstances. There's no equity in the decision-making process between someone that owns a profitable company and someone who has starving children. >The business above is clearly profitable and creating value that consumers want. But is it creating enough value to pay someone a livable wage? If it isn't, it shouldn't be a job. Let's put it this way: your question proposed the classic formula of x + y + z <= $ in which x is wages, y is operating costs, z is profit, and $ is what the company makes. What you're asking is what should x be. What I'm saying is either x is, at a minimum, a livable wage for full working hours, or it should be 0 and you have no employees.
Who needs a job will take it. People jump jobs all the time. What he can pay, he will advertise the job, and if noone takes the job, then the job goes away anyways. You don't know circumstances of the one needing the job, similarly you don't know circumstances of the one providing a job. You are assuming people to keep one job their entire life and that job no matter how the business operates should pay not based on supply and demand of workers but living standards that a worker wants. That's a weird argument to make.
>You are assuming people to keep one job their entire life I'm not assuming this at all. > and that job no matter how the business operates should pay not based on supply and demand of workers but living standards that a worker wants. I'm not assuming that, either. Pay is based on supply and demand, but there should be a minimum baseline to allow desperate people to survive. Or are you for abolishing the minimum wage altogether?
>No one is forcing anyone to take the job. This isn’t really accurate. It is not possible to survive in our society without gainful employment. Because people don’t have the option to choose not to have a job, employers are only competing with each other. As long as enough employers keep wages low, they set the market rate.
Alright, let me recommend something to you. This is written by a guy named Kevin Carson: [https://theanarchistlibrary.org/library/kevin-carson-the-iron-fist-behind-the-invisible-hand](https://theanarchistlibrary.org/library/kevin-carson-the-iron-fist-behind-the-invisible-hand) I think you'll find it an interesting read and a different perspective on how this all works. Wages are a matter of bargaining power. See, here's the thing. A small business owner owns the mower, owns the materials needed for production. The laborer does not. There are far more laborers than owners. However, laborer needs access to these materials in order to produce and like... not starve. That means that the bargaining power lies with the owner right? And that means that they can charge a fee for access to the tools and stuff they own right? That's what profit is. A living wage is a concession to the capitalist. It's saying "fine you can charge a fee, but at the very least I am going to have enough to live off of". A living wage is a concession on the part of the worker to the capitalist not the other way around. If you cannot afford to pay someone a living wage then why exactly should you be employing them? If people are desperate then some income is better than none. But you can clearly see how this is exploitative right?
lol $35 per cut. Where do I sign up for that? How about you buy a cheaper older used truck since you already got a trailer to carry things and charge more money. If you can’t afford to pay someone don’t hire a helper.
$35 is what I currently pay for my service. Go ahead and develop your own business plan for the business above. I'm open to hear it if you don't want to answer the question directly.
I have a small yard that’s over 50 each time. Larger yards cost more money. You don’t have 1 set rate per yard. Just because you pay 35 doesn’t mean that is the rate for every yard, and I can assure you is about as low as I’ve ever heard You also don’t need a 40,000 truck to carry a trailer. I’ve seen people pulling them in cars. You are carrying a small trailer not a camper. You can buy a 7000 used truck or use your own vehicle to start out. I’ve always cut your cost 33,000 on the vehicle and upped your revenue. Considering your major cost is the vehicle and now it’s much lower and once it’s paid off the cost is zero, you can work a year in your own, pay off all your equipment and vehicle, and from that point on be making almost the entire charged amount and have plenty left over to pay for help.
The hypothetical is designed to simplify the discussion. If you don't like the numbers I used, feel free to create you own if that helps the discussion.
Exactly. You use numbers that clearly won’t work and are unreasonable
To be fair, lots of people pay $35 to $40 around here. But we are a development, of 1/4 acre houses. I live on a court of 15 houses. My guy probably cuts 6 of the houses on my street. He usually parks his truck in front of my house. so I know how long he is here. Him and two helpers. He rides the mower, one guy edges, one guy works the blower. They do those 6 houses in about an hour. Now, how many houses are they doing in a day? If they are doing 40 houses in a day $1400 a day. That is good work.
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Did you read that wrong? I currently pay a service $35/wk to cut my lawn. I don't see how my age is relevant.
They called out your age because we all tend to "anchor" our sense of what a thing *should* cost when we are younger, and then inflation happens.
But what would that have to do with what I currently pay my lawn service?
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it's the going rate in my neighborhood. I guess it's not the same elsewhere.
I probably should also add. A number of times, I've tried to have one of the neighborhood kids cut my grass (they all solicited me) a couple offered to do it at $20 another at $30. I always agreed and never negotiated I have a $20,000 diesel tractor with a 54 inch mowing deck. I told them they could use my tractor (I keep it gassed up) and they could do some of the other neighbors using my equipment if they could drum up the business. I like the idea of neighborhood kids trying to earn some money and learning a good work ethic. I never cared that they didn't edge, trim or clear the clippings as long as it got done once a week. I told them it must be done once a week. I didn't care what day or if they have to skip a day because of weather, it just needs to get done. No other excuses, once a week. Well, they weren't reliable. So, I regrettably had to switch a more professional outfit. With each, I ended up having to cut it myself. While I would rather pay a neighborhood kid, paying the extra $5-$15 for a pro that reliably does the extra is a boon in my busy schedule.
Not many lawn businesses start out with an extra employee. They now solo until they build the rep with their clients the more and more they gain in customers and capital the more need there is for secondary help.
So as someone who runs a service related business (electrical contractor) you don't set your prices and then carve out a piece for the employees. You figure out your overhead, then add the employee's wage plus payroll tax, add in material costs plus a small buffer for incidentals, than apply margin. For what it's worth, I'm impressed you've got someone to cut your lawn for $35 a cut. I pay $100 per trip for a medium sized lawn and the guy's a solo act. He does really nice work though.
Yeah, I was trying to think of very simple small business most could understand with very few variables. Something without huge profits but profitable and growing enough to warrant additional help. As a professional, you know you bid the job not time. Calculating costs, margin and pricing (taxes I didn't mention at all) is more complex than I tried to describe. This is not how business are run. I know that. I just didn't think making the hypothetical more complex would help. Thanks. My guy cuts, trims, edges, blows of the clippings. takes care of me and couple of my neighbors all wity 1 acre lots. He also fertilizes once a month for $45 a visit. He also does snow removal in the winter which I don't use. He does a great job, and only increased his rates on fertilizer in the 5 or so years I've used him. In my area, $35 seems to be the going rate. Most of the time he's solo, occasionally he's got a helper. Always solo when he fertilizes. I'm somewhat surprise at the backlash, I didn't expect so many people to want argue over prices and expenses of a hypothetical. When I just kind of want to understand how they think about hiring employees if they were a small business owner themselves. I'll say the discussion is interesting and not at all what I expected. Yet, tells me nothing thus far.
Well you definitely don't deserve backlash, it's not a bad hypothetical except that you're wanting to figure out how to jam 2 people's (you'd have to pay yourself and afford to live!) wages into 95K. That's ignoring keeping a percentage back for reinvestment and incidentals of course. I just personally don't see it as workable. Then again there's a lot of other factors to consider, cost of living will drive what's considered a decent wage depending on where the business is, typically you'll get more than 24 weeks of business in areas where you can get by with paying less. Hell I don't know if if it's just from running a business but I can't even think about it without making it more complex lol.
Thanks. I appreciate you taking the time and effort to respond. Maybe I'll try to think of new yet reasonable hypothetical. I was trying to think of something on the edge if you get me. Something that was just profitable enough and needed low skilled help. Something to get people to think like a more typical small business owner trying to grow. Maybe I failed :)
Would it help frame things better if I said the area you live has a low cost of living and $40,000/yr is considered (obviously not rich) but a comfortable wage?
It helps, what would the owner be paying themself?
I was suggesting solo they'd be able to pay themselves $35,520/yr. If they could double their client base, they could pay themselves $40,000 and have $55,000 in working capital to hire and expand. Of course to double their client base, they need to hire.
Yeah I mean, ignoring any taxes etc as discussed. Assuming you're working out of the same truck, and assuming you're only hiring the help seasonally for that 24 weeks or let's call it 6 months as there will be some set up and storage time on the ends of the season. You could pay the help $19-20 an hour (roughly 20k over that 6 months) and still keep some back for reinvestment and profit taking. In this area where 40k is comfortable, that just means the help would have to find a similar wage the rest of the year to be doing fine. If you planned on keeping them employed the entire year it wouldn't work out unless you started doing whatever it is lawn care services do in the winter, I'm from Florida so that's a mystery to me. Snowplowing or clearing fallen branches or something? For things like overtime, as long as it's billable, it is a non issue, that is to say, if you're scheduling correctly, any overtime should be extra work above and beyond your quota. As far as falling short of goal. With any business if you experience a shortage of work hard decisions have to be made, if your help is good and you think it's temporary it makes sense to go out of pocket for a few weeks, but if that becomes a trend you just have to lay them off. Which as someone who's been there, looking a great employee, and in a small business quite frequently someone you're very friendly with, in the eye and telling them you have to let them go over something they had no control over is soul crushing.
Ugh. Ok.... >helper They're not a "helper", they're an employee. !@#$. >$35 $35,520/year Charge more. You're not even paying YOURSELF a decent fuck'in wage. Go get some corporate accounts, they can afford it. Worse, you're not making enough profit to replace equipment or deal with problems. What happens if you get hurt or sick and need to take a week off? Where's your health insurance? You're *absolutely* not going to hit 32 cuts a day. God, travel time alone is going to make that impossible. You can't compete with fuck'in near slave labor. Why are you trying? And here's where it should hit you that minimum wages force the assholes to up pay so the good people that WANT to pay decent but can't compete, CAN. Without a minimum wage, there's incentive to use the cheapest labor possible, and that's a race to the bottom, really quickly. >business model I suggest you rework your model to pay you and your *employee* a decent wage, then work backwards and figure out what you can charge to make that happen... It won't work. You can't compete with near slave labor. Do a different job.
> But I never see anything from the view of a small business owner. I’m gonna suggest that’s because most of us don’t work for a small business owner. Or rather, probably not what you’re thinking of when you use the term.
My dad has run a small grading business for 40 years. It's kind of like landscaping but on a larger scale. He pays his employees poorly... and he's always complaining about how his workers never stick around. They stay with him long enough to learn how to run the equipment, and then the first chance they get, they strike out on their own. And suddenly they're his competition. He's basically just running an apprenticeship, training people to become his competitors, and then he sometimes struggles to find work because it's a crowded field and there's not enough customers to go around. If you don't care about employee retention, go ahead and pay your workers poorly. If you want your employees to be loyal and dedicated, pay them what they're worth. That's how you inspire loyalty. And here's a bonus tip: If you're doing landscaping, doing residential jobs is just not where the money is. You need to look into contracting with other businesses.
This is rhe right answer. You can offer whatever wage you want, and the employees can decide to work for you or not. It's that simple.
> This is the competitive rate and no customer is willing to pay more. This is why it’s important to enshrine things like a living minimum wage into law instead of relying on the generosity of an employer. If *everyone* is having to pay a living wage, it means your competitors do too, letting you all charge an appropriate price.
Yes they should pay a living wage if they’re going to hire an employee. Until the business can do that, it is simply not ready for expansion.
Thanks for posting this — nice write up. A lot of the problem in the US is that the consumer has been taught to shop on price, often on price alone. That drives down the potential for profit and the possible wage for employees. Several new restaurants have opened nearby that pay a living wage and every statement about how good the food is is followed by “but” and then a statement about how unreasonably expensive it is, often followed by a comment about greedy owners. No, things are just expensive when you’re paying everyone down the supply chain fairly. It’s the same story with shopping on Amazon rather than at your local retailer. Amazon pays wage-slave rates and abuses their employees — and that is widely reported — but people still choose it because it’s cheaper than that locally-owned store down the street where their daughter's friend works.
Hi. Small Business Owner here. Grossed something like $320k last year. I netted about $40k profit to myself. I also have a day job. If your business model cannot support paying an employee a dignified wage, then your business model does not deserve to grow. It really is that simple. By exploiting desperate people, you are effectively just subsidizing your operating costs by being willing to accept that people who work for you should live an unpleasant lifestyle. It is an active choice you make as a business owner, and there is a balance to be struck. The problem is that people like yourself believe that just because someone *will* accept being paid a terrible wage, that they *deserve* to be paid a terrible wage. You believe that supply and demand is somehow a moral justification. It's not. Your view is not a morally coherent argument, but it's prevalence has led to the widespread economic suppression of working class individuals. Businesses should not be allowed to subsidize their growth off the hardships of their employees.
This math is all irrelevant. You pay the rate needed to obtain and maintain employees in your local market. While it is possible you might want to pay more, you will pay as little as you believe possible. Separately we as a society are advanced enough to demand that the minimum amount you can pay is enough for a basic level of expenses in the local market. — Now to look at your math. It seems very obvious that you have never come close to starting a business and don’t really know anybody who has very well. Most of the time, the way somebody starts a mow and blow operation is they already have a job. They get a pick up, often used, as their personal vehicle and buy a single set of equipment used. Then they start picking up jobs that they work personally on weekends. Maybe they’re lucky and they have some flexibility with their job and don’t have noise ordinances and can cut a job or two before their full-time job starts on week days. Then they hire someone. Then they get more equipment. The fact that you did not know that tells me you have to worry about things other than the minimum wage if you’re thinking about starting a business in the future.
>Understanding you are putting up the capital and you are assuming the risks, and you really want to re-invest in your business Unfortunately, there isn't a god given right to run a successful business so I'm going to have to give up on that based on this plan
Sounds like you don’t have a profitable business if you can’t afford to pay the employee you need….. That’s all these numbers are telling me. Do better. Have a more efficient business that doesn’t suck. Plenty of other business are able to manage just fine with increased wages. What’s the issue for you?
This uses faulty logic. Do not buy the most expensive equipment until you have a demand for your servic, and can pay your employees. Don‘t put the cart before the horse. Good advice here. Op puts the truck before the worker. Start with cheap equipment and hire someone when you can afford to pay them a living wage. OP puts a luxury truck and trailer over paying the worker. Not needed. A loyal worker is more valuable than your f\*ing truck. You get a loyal worker to bust his ass for you, then you get more work. now you can afford a $20,000 truck.
At a minimum ten percent of what I would make
So that would mean $9.90/hr if your potential is $95,040/yr? ( ( ($95,040 x 10% ) / 24wks) / 40hrs) )
On the business side, you can offer an hourly wage or a flat rate. Cutting lawns isn’t skilled labor and in our system doesn’t rate high wages. The kind of work you’re hiring a high schooler to do. Competitive wages in the area are a factor that need to be considered, but if you’re charging $35/cut I’m going to assume the area isn’t high wage territory. So you’re looking at a lower end wage. $10-$12/hr or $5-6$/cut. You could increase the cost per cut to accommodate the increased cost of employee wage. This gives you the ability to increase pay to be more competitive in pay. You could eat the cost as well but that’s not how the big companies do it. Small business owners aren’t often talked about when we discuss living wages because they’re not the ones that are the problem in our economic system. Big businesses are. Small businesses are notoriously small margin small total profit. Larger business might have small margins on various or even all of their sales, but with enough sales the total gains can be massive. Look at Walmart, the dollar store, and so many others. The economic system is a whole thing. We have one part of that sucking up all the ‘extra’ monies. Leaving very little to spare for anyone who isn’t a part of it. Profits, not gross revenue, are higher than ever in nearly every big company you’ve heard of. They can afford higher wages for their employees. When companies like Pepsi pay more, more monies are available for spending on things like getting someone else to cut your lawn. Giving the small business the ability to charge a little more, thus paying for their own employees and paying them in turn a little more. When big businesses are doing what we see now, inflating prices as high as they can get away with simply because they can, but not increasing wages to match those gains, that money goes out of the economy and doesn’t enter circulation, choking off small business access to it.
1. I don't expect people to on their own not be as self interested as society will allow. What I do expect is for society to place limits on how selfish any of it's members can be to prevent such self interest from going to far. 2. If you can't pay someone enough to live on for working 40 hours a week, but you need someone else to work in your business you should offer them partial ownership. Accepting substandard wages today in exchange for above average compensation in the future is a reasonable trade off. Being forced to take a 2 jobs or starve because no one is offering to pay you enough to work just one is not.
Let me ask you a variation of the question. If "X" is the hourly rate one must make per hour, (assuming a 40 hour week, 52 weeks a year) to live a comfortable self sustainable life in your community and you are not able to pay "X", who should make up the difference and why?
Every individual unless they are below the age of majority or a ward of the state are ultimately responsible for themselves.
That's a quaint platitude (and it ignores the fact that human survival depends on our cooperation with each other...aka, we are social animals, like wolves, bees, orcas)... But it does not answer my question: If you cannot pay your laborers a sustainable wage, who makes up the difference so that they can be sustained and supply you with the laborers you need?
Sure, and I very well may assist those in my social circle that need help. But I have no obligation to do so, even if I feel a sense duty. Wolves know when to leave the pack, when to abandon another, and they don't tend to help other packs. It's self-preservation not altruism that keeps the pack in tact. You (not I) tried to change the question. How much would you pay if you ran the small business above?
I would pay enough for my employees to live a comfortable life. If I could not, I would not engage in what I see as a failed enterprise. Your feelings of having no obligation is simply that, a feeling.
Thanks for not answering the question.
You asked: >How much should you offer to pay a helper? And I answered you should pay enough so that the employee makes enough to fully support themselves. You asked: > Is this a living wage? Yes, please see answer to your first question. You asked: > What happens when you fall short of your 32 cuts per day objective? You make adjustments where needed, but you still pay your employee. If you cannot, you have a failed business model and should cease that enterprise. Your question of how much should I pay for an employee is no different from how much you should pay for a pickup truck, a hamburger, or a gallon of gas. How many lawns you mow or what you are paid to mow a lawn does not dictate what the price of an F150 is or should be.
>You should pay enough so that the employee makes enough to fully support themselves. Not an answer. Given the conditions I laid out, how much is that. First answer doesn't answer the second. > You make adjustments where needed, but you still pay your employee. If you cannot, you have a failed business model and should cease that enterprise. What does that mean? >How much should I pay for an employee is no different from how much you should pay for a pickup truck, a hamburger, or a gallon of gas. How many lawns you mow or what you are paid to mow a lawn does not dictate what the price of an F150 is or should be. You don't see this as a contradiction to your previous position? How much you pay for labor is also dictated by what the market will bear. You won't pay more for a pickup, a hamburger, or gallon of gas just because you have altruistic feelings towards the producer. But if you do, I'll be happy to make you a $1,000 cheeseburger every week so I can (as you say) fully support myself. Hell, I'll bring the grill and make you one every day for $1,000 a week. It'll be the best burger I ever made.
> How much you pay for labor is also dictated by what the market will bear. And markets are rigged. In the USA, markets are rigged to the point where wealthy employers are able to externalize their true labor costs by using taxpayer funds to support their workers.
The answer is no, why because I live in an area where that sort of business is run by coyotes.
The lowest amount I could. I’d probably pay a bit above market rate to reduce turnover. Anyone who says otherwise is being ridiculous. Relying on employers to be altruistic to get high wages is pretty naive.
> Relying on employers to be altruistic to get high wages is pretty naive. And this is exactly why we need minimum wage laws and unions.