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Author Topic: How much am I worth?  (Read 1750 times)

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Offline Brad_S.

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How much am I worth?
« on: July 09, 2019, 12:24:06 AM »
How much am I worth?

I am hoping some of you who either utilize independent contractors or are independent contractors can give me some advice.

In 2016 the green energy company I was working for went bankrupt and I was laid off in the employee purge that followed. I searched for a job for years, living off of my savings when unemployment insurance ran out. Age discrimination is real! 

This past spring I was offered the opportunity to work for a former sawmill client in his high end home building business as an independent contractor. The pay was $20 an hour which was welcome at the time.

Since then I have learned two things: A) I canít make a decent living as an independent contractor at $20 an hour and B) my skill set is worth more than $20 an hour. Luckily the contractor agrees. Iím about to enter negotiations with him later this week and wonder what is a fair price for both of us?

In one week alone I used my skill with the a skid steer to grade a residential property and prepare it for seed. I then used a concrete cut off saw to shape fieldstone for a very nice if-I-do-say-so-myself walkway. I then went into the shop and used my skill at wood finishing to spray a conversion varnish on interior built-ins for a million dollar home.

I am often called upon to use my own equipment such as chainsaws, power tools etc. to complete the job at hand. (I also use my truck and trailer for jobs but I have been charging mileage and an hourly rate for the trailer for that.)

So what is fair? I know heís going to offer me $25 an hour. I donít feel thatís sufficient to cover the fact that I have to pay my own Social Security taxes, my own healthcare, my own truck and business insurance, etc. etc. He does however let me use his woodshop which is very well-equipped. Just this week, he had his mini excavator dropped off at my property and I am accomplishing all manner of great projects with it for just the cost of the fuel. 

The reason he came looking for me to join his team is that he plans on buying a sawmill and kiln so that he can process trees off the clients property and return them to the house in the form of finished materials such as flooring, trim, cabinetry, etc. I will be running the wood processing aspect of the enterprise along with the aforementioned equipment for site work and spray finishing.

So can anyone advise me on what I can go in and ask for? My significant other is saying I should ask for 35. I donít know if thatíll fly but maybe I could get him up to $30 an hour. I then have to decide weather to just grin and bear it if he doesnít meet my price or I need to be willing to walk. I am told that these days, itís hard to find employees who show up consistently, on time, straight and sober and are conscientious about the work they do. That has to be worth something, doesnít it?...even though Iím an old guy?! I should also mention that I spend a lot of time doing simple manual labor and (Iím in pretty good shape for my age). I really donít want to be doing it and hopefully will price myself out of having to do it.

The collective knowledge of this group is incredible and I value any input. Thanks in advance!

"Life is what happens to you while you're busy making other plans." J. Lennon

Offline Greyman

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Re: How much am I worth?
« Reply #1 on: July 09, 2019, 02:00:38 AM »
I don't really have a feeling for the pay, but I can definitely sympathize.  Last time I looked at medical insurance it was $1100/mo for a decent plan for my daughter and I (now have it only for my daughter), and the taxes for the self-employed never seem to end.  No sick days, no vacation, etc. etc.  Stand firm on what you think you're worth, and if they balk then give a lower rate if they provide all the tools.  Then watch them realize what they're asking you to do...   

Offline Ron Wenrich

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Re: How much am I worth?
« Reply #2 on: July 09, 2019, 06:15:30 AM »
I worked as an independent contractor for most of my career.  But, I was working mainly on production and never got into the hourly thing except on certain occasions.  From an IRS standpoint, if who you're working for is setting your hours, you're not an independent contractor.  You're an employee.  Also, the taxman wants to know if you're set up as a business.  I was and had other clients, although most of my business was with one client.  I passed the smell test.  The contract cutters did not, and the company had to pay a bunch of workman's comp money and a hefty fine when the taxman came.

Things to remember as an independent contractor, you better have some type of insurance.  Liability if you're running equipment.  Error and omissions if you're making any type of decisions.  Disability, since your client isn't providing workman's comp.  There is no health insurance or 401k contributions.  You are paying both halves of your Social Security.  Those have to be figured in to your pay.  It will easily be half of your hourly rate.  I never figured the health insurance, since I was covered by my wife's policy.  I passed that savings on to my client, in this case.

Other things you need to be reimbursed for is if you are bringing your own tools.  Also, transportation to and from the jobs.  For some clients, I charged a mileage fee.  It depended on the client.  Mostly, I would drive to a mill and do the work, so there wasn't much excess mileage.  If there was overnight travel involved, I would expect to be reimbursed.

You have to figure out what the average wage is for someone doing your type of work in your area.  Then, add about 50% to come up to a base of what you should have.  What perks do you get?  I never had to buy firewood.  I was given bonuses and a couple of weeks of vacation pay.  I rarely was sick.  If there isn't holiday or vacation pay, you would want to factor that in.  

In my case, I would work 4Ĺ days at the mill.  I took care of the production and minor maintenance.  I didn't do any marketing.  Marketing was set up as a commission.  When repairs were needed, I went home.  I'm not a mechanic, and I didn't want the responsibility for repairs.  I didn't hire men or supervise them.  I sent them a weekly bill by email.  My check was there on Friday.  Worked great for me.  After expenses, my salary was above those comparable in the area for less hours and less headaches.  I haven't done that type of work in 7 years.  

My last job was a consulting job.  It was $50/hr plus expenses.  It was in a big city area and it was for a major insurance company.  My time started when I got into my truck and ended when I got out of my truck.  Telephone calls were on the hourly rate.  I always tried to match my fee to my client.  If they didn't have any money, they couldn't pay a big fee.  Sometimes any income is better than no income.  

Good luck.
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Offline gspren

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Re: How much am I worth?
« Reply #3 on: July 09, 2019, 07:06:05 AM »
 The govt has strict rules on what an independent contractor is but they don't follow the rules that well themselves. I was a govt supervisor my last few years before retiring and had some contractors in my building, I legally wasn't "in charge" of them but I told them what needed done, :D, anything that I told them needed done had to already be specified in their written contract. Good luck, it sounds like you are an employee that's forced to be considered a contractor because of the mandated insurance rules.
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Offline nativewolf

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Re: How much am I worth?
« Reply #4 on: July 09, 2019, 07:38:41 AM »
My advice would be to make a deal that is clearly in each others interest, stop working hourly, and don't try to game the independent contractor-it does not help employed to game that system. If he wants you to help get the sawmill side of things going perhaps you setup a business, lease the site & equipment from him, he supplies logs, you saw them, he pays $0.10/bdft or something like that (and the idea being it is not much more than a wash) and you get to use the site and equipment to offer sawing services to the General Public (great and unwashed or washed) and you keep all of it.  Just spit balling but this could help you dig out of the hole you find yourself in at the moment.  You need to do something other than hourly work (in my opinion).

Anyway, some sort of business relationship that is not hourly.  If you're just working for him, with his tools, and he's the only person you are working for then it is really just employment, by calling it independent contractor really you are just playing with silly margins at a risk to you (IRS will hit you worse than him) and at little benefit.  

If you setup a company ensure that you have another shareholder in your LLC so it is not a sole member LLC.  Pay yourself guarantee payments instead of employment.  Votes, keep records, etc.  Get a good lawyer that will help minimize tax consequences in a legal and normal manner (leasing is an expense  :) offsets income created by sawing for the great masses, etc etc).

Liking Walnut

Offline Crusarius

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Re: How much am I worth?
« Reply #5 on: July 09, 2019, 07:55:20 AM »
I have never known an independent contractor to work for less than $60 an hour. Sounds like the guy wants you as an employee but doesn't want you on the books to cost him money in workmans comp and all the other headaches involved in having on the book employees.

My personal opinion is he is taking advantage of you and knows it which is why he gives you the perks you get.

If you setup an actual business and work as an actual independent contractor you can charge quite a bit more. But then you need to think about all that other stuff mentioned above.

Here is a big question, if you were getting paid $60 an hour (remember you have to deduct taxes and everything) would you be able to buy all the perks he is giving you and paying you pennies? Personally I would rather be self sufficient and not have to rely on someone else if I need a piece of equipment.

$20-30 an hour is an employee wage. Not a contractor! Employees get benefits.

Online Bruno of NH

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Re: How much am I worth?
« Reply #6 on: July 09, 2019, 08:18:33 AM »
I did this for years
I did it for $45 an hour
The jobs were 8 mins. From my home I came and went when I wanted used all my own tools.
Drove snow plow truck,not mine got paid  $35 an hour.
I chose to do this because it was close to home and great folks to work with.
You won't get rich .
I lost my tolerance of dealing directly with the home owner's.
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Offline Southside

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Re: How much am I worth?
« Reply #7 on: July 09, 2019, 08:27:52 AM »
lease the site & equipment from him, he supplies logs, you saw them, he pays $0.10/bdft or something like that


I think the general concept has potential, but at that rate the OP would go broke fast.
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Offline Peter Drouin

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Re: How much am I worth?
« Reply #8 on: July 09, 2019, 12:35:36 PM »
I would come with all my equipment. Most times pay by the job. If by the hr,- minimum $100.00. Do what you know how to do. 
To hire my mill and me it's 125.00 an hour plus blades.
Less than an hr, 100.00. 
If you want to work for him on the books, then start at $25.00 an hr the first year.
Just remember He doesn't care about you or your family.
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Offline Tom the Sawyer

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Re: How much am I worth?
« Reply #9 on: July 09, 2019, 05:22:15 PM »
Brad,

We don't know how old you are (profile?), but I would assume that you have a family, own property, have payments to make, etc.  Start with what those things cost, basically build a budget.  Is there a pension or SS contributing to your income, a working spouse?  

Figure those things up and you'll have a baseline for how much you need to earn to meet your obligations. Then add in anticipated new expenses, those things you didn't have to worry about when you were an employee (self-employment taxes, insurances, other self employment expenses).  If you are up to 50k, then working for $25/hr won't cut it.  As others have mentioned, working as an employee for $25/hr, will require much more as an independent contractor.  Definitely investigate the IRS definition for "independent contractor", you may find that what he is directing you do puts you in the category of employee. 
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If you call and my wife says "He's sawin logs", I ain't snorin'.

Offline Dave Shepard

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Re: How much am I worth?
« Reply #10 on: July 09, 2019, 05:49:44 PM »
$25-30 per hour on his comp, depending on benefits, or lack thereof, would be my starting point. Anyone who is any good around here is already employed, or self-employed. If you are skilled, reliable, and aren't a total curmudgeon, then you have all the cards in your hand. Comp in NY is much worse than MA. He probably has to pay %30 or more. Keep that in mind. If you can legally sub to him with just liability insurance, that's an advantage. If he's paying a guy $25, then he's probably into him for almost $40/hour when all is said and done. Why should you cost him any less? In MA, you can't sub, and show up and take orders, or use the contractors equipment. I'm guessing what he wants to do is technically illegal. 
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Offline brianJ

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Re: How much am I worth?
« Reply #11 on: July 09, 2019, 06:35:42 PM »
You would do well to look around and talk with other builders.    It is amazing what having just one other option will do for your bargaining strength and just day to day respect &  appreciation.

Offline lxskllr

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Re: How much am I worth?
« Reply #12 on: July 09, 2019, 06:52:55 PM »
Others have covered the law and monetary aspects, I'll go for the more esoteric variables... You should ask yourself how much you like working with this guy, and how much you like the specific work your doing, and how hard would it be to improve that work situation there or elsewhere.

My career has been spent literally making about half what I could have made elsewhere. What I lost in money, I gained in freedom, a work mix I mostly enjoy(it is work afterall!), and being a big fish in a small pond. I get asked whether or not I want to do something, and this past year has been spent clearing the farm which provides me enjoyment, and doesn't provide income to the boss, but I still get paid. I could have traveled far from home, been a gypsy jumping from company to company, and killed myself working overtime, but my life satisfaction would have been low. Money isn't everything, and you're only being taken advantage of if it feels you're being taken advantage of.

Figure out what you *really* want, and work to make that happen. You usually can't have everything(still waiting for someone to pay me to stay home), but with patience you can get what makes you happy.

Offline dgdrls

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Re: How much am I worth?
« Reply #13 on: July 09, 2019, 11:00:12 PM »
I have never known an independent contractor to work for less than $60 an hour. Sounds like the guy wants you as an employee but doesn't want you on the books to cost him money in workmans comp and all the other headaches involved in having on the book employees.

My personal opinion is he is taking advantage of you and knows it which is why he gives you the perks you get.

If you setup an actual business and work as an actual independent contractor you can charge quite a bit more. But then you need to think about all that other stuff mentioned above.

Here is a big question, if you were getting paid $60 an hour (remember you have to deduct taxes and everything) would you be able to buy all the perks he is giving you and paying you pennies? Personally I would rather be self sufficient and not have to rely on someone else if I need a piece of equipment.

$20-30 an hour is an employee wage. Not a contractor! Employees get benefits.
agreed,  you're not a contractor if he offered to pay you $20 and hour.   When I was in consulting we used a 3.0 multiplier on a wage for billable hourly rates.
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Offline WV Sawmiller

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Re: How much am I worth?
« Reply #14 on: July 10, 2019, 09:02:03 AM »
   I've never been a good negotiator so take what i saw with a grain of salt. One thing to remember however is to be sure to negotiate based on what service you're providing or product you are producing and not on what your family situation or financial needs may be. The two are totally separate. You may well have to tell an employer you can't live on what he offers and go look elsewhere but that is not his fault so don't lay a guilt trip on him. You can still part on good terms. You might even ask him if there is other work available so you can earn more through overtime or special projects.

   I'd suggest you negotiate a decent hourly rate for services only then negotiate extra for use of your equipment. You might even suggest a bonus on specific jobs where you saved him time and money by coming up with a creative technique to do a particular project. Good luck.
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Offline snobdds

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Re: How much am I worth?
« Reply #15 on: July 10, 2019, 11:41:09 AM »
An IC should be billing at $75/hr as a minimum.  You probably have $40-50/hr just in Health Insurance, taxes, 401K or Roth IRA contributions, Life Insurance and Disability Insurance.  Always pay yourself first and protect yourself for the future., if you can't, find something that can.  The job market is such that a person with a skill set and a work ethic can get pretty much what they want. 

The IC model is designed more for one off jobs, not a full time employee.  The employer is better off hiring you and paying all the benefits that can later be a tax write off for him.  I question his business acumen if he does not understand this. 


Offline mike_belben

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Re: How much am I worth?
« Reply #16 on: July 10, 2019, 12:32:38 PM »
You can say youre worth whatever all day long.  If i pull my camper up next to your guys shop and say ill do it for $15/hr, guess what?

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Offline Ron Wenrich

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Re: How much am I worth?
« Reply #17 on: July 10, 2019, 12:44:07 PM »
Depends what sort of value you bring to the operation.  Just because you're cheaper doesn't mean you're a better deal.  I replaced a sawyer that was making way less, but didn't bring the value that I brought.  Just because you're an independent contractor doesn't mean you're worth the high $/hr quotes.  Every market and every situation is different.  
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Offline BradMarks

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Re: How much am I worth?
« Reply #18 on: July 10, 2019, 01:24:37 PM »
As a former employer(a contractor to the industry I was in) in a high workermen's comp labor industry, the desired rate from a client was three times the average hourly rates of the employees. That was the target. So if it was $12 back then (yrs ago) I needed $36/hr/employee to cover expenses and try to make a profit. Remember, workers comp, social security, benefits, vehicles, other equipment, insurance, TAXES, accounting, overhead/admin, and the list can go on. It adds up fast. Heck, the mechanic rate next door to me is $92/hr, so $60-75/hr, 8 hrs a day (no time clock), 5 days a week may work for you or not.

Offline Peter Drouin

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Re: How much am I worth?
« Reply #19 on: July 10, 2019, 02:07:31 PM »
Good work isn't cheap / cheap work isn't good.
A&P saw Mill LLC.
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License NH softwood grader.


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