September 5, 2023
Paying a living wage vs minimum wage
Jacki HartThere are many ways in which the pandemic left a lasting impact on our profession. Some have been extremely beneficial, while others are applying pressure to profitability and team retention.

One of the strongest legacy benefits that stands out in my mind is the elevated consumer/property-owner awareness and appreciation for landscapes and pleasant outdoor spaces. There was a huge increase in demand for residential landscaping at all levels. The related ripple effect that spread across all green profession sectors drove unprecedented sales, while many sectors in the economy were shut down or drastically restricted.

We have also seen an unprecedented influx of job seekers — both from the sectors that were deeply restricted (such as food, entertainment, travel and retail), and from those sectors where workers realized how much ‘safer’ they felt working outdoors.

Along with this worker migration has come labour shortages in manufacturing and logistics — among other pressures driving inflation to levels we haven’t seen in decades. With higher costs of living comes demands for higher wages to make ends meet.

Many of you reading this column are living this new reality, which is putting an unprecedented squeeze on the gap between labour burden costs and charge out rates.

While we’ve never before (at least not in my 43-year green industry career) been poised to leverage this level of increased demand and respect for our products and services, it is somewhat bittersweet. The pressure is on us to attract, acquire and retain great team players like never before. We need to be competitive in our wage rates, benefits and perks.

More than minimum

Enter the Living Wage. It’s a concept getting lots of attention. And it’s a powerful recruiting and retention tool when properly leveraged.

Check out this website and look up the ‘living wage’ currently posted for your area:

Living Wage is the new minimum wage for competitive employers. You can apply and become certified as a living wage employer via — then promote it on your social media posts and recruitment marketing across all channels. If you’re not already paying your lower wage earners the ‘living wage,’ it will require a ‘reset’ to get your wage rates up to a competitive level. Similarly, your charge out rates will also have to bump up.

Many business owners push back on raising their charge out rates, afraid to lose customers on price. Those with multi-year contracts into which there are no clauses allowing for increased pricing or renegotiation have a different challenge. But for those who price their contracts each year, or by the project, the room is there to increase rates. Getting past the ‘price increase’ barrier requires a change in perspective.

A win-win situation

For years, labour has been a top-of-mind issue. Consider this new scenario checklist for those looking to shift to paying
'Living Wage’ as a baseline:
  • You have a higher demand for job seekers wanting to work outside. Check.
  • You have a steady right-fit sales funnel. Check.
  • You are paying a Living Wage to your newest/entry level employees, and everyone else proportionately more based on merit and capability. Check.
  • You are charging out your labour and COGS plus Overhead Recovery at a rate sufficient to earn the profit you’ve targeted. Check.
  • Your team is engaged, excited to learn and grow into the opportunities you have laid out for them. Check.
  • You have 90 per cent retention year after year — and have little recruiting, onboarding and training to do each spring. Check.
Let’s face it: The cost of training is huge, so the less training we have to do, the more effective and profitable our teams’ performance and pride of accomplishment will be. The higher your pay scale, the more likely you can build a better workplace in which everyone on your team can thrive. A win-win for everyone. When retention is low, then both lost opportunity and the training costs are high. Training typically requires your highest paid, technically capable staff to spend much of their effort mentoring and teaching others — which means they are your highest paid and least effective people at the production tasks. A pretty expensive pattern to be stuck in.

This is a new era. One in which we have the best opportunity to raise our charge out rates (along with every other trade), in order to pay our staff well, to live well. And for them to want to grow a career within our professional sectors.

One last thought here: If you’re worried about raising rates, just consider that for every customer or quote you might lose by increasing your charge out rate, it makes room for customers who are ready and willing to pay well for your services at a higher and up-to-date rate. Better trained and experienced staff do a better job, customers notice and see the value. Everyone is happier — you, the team, your customers.
Jacki Hart CLM
Prosperity Partners Program Manager