Pay Rates for employees. New to Expert.

[jccaclimber]

This thread reminds me a bit of the challenge of hiring a (CAD) drafter/designer. With a very few notable exceptions, the best ones I worked with had engineering degrees, they just happened to really like driving CAD. Then some genius says "But it's only a drafter, we can hire some kid off the street to do that for $10/hour. Yep, sure can, but unless you get the diamond in the rough it costs more than it saves. Once that diamond realizes they are a diamond you then have to up their pay, or someone else will. It isn't that you need a degree to do that job, it's that most of the people who will do that job really well figured out they would get paid more with a degree (not saying it should be that way, just looking at reality currently), so they went and got one.

I've come across a lot of people that when I asked them why they chose their profession the answer was "I equally like doing X, Y, and Z. X doesn't pay enough to comfortably raise a family, Z does, but Y pays even better. I like them all equally so I went with Y."

For the OP it sounds like they've made the decision to go it as a family for a while. If they are comfortable with staying small it's worth figuring out which draw on their time can be reliably replaced the cheapest. It might be loading the machines, but it might also be the books, answering the phone, delivery, or some other function so that they are available to do what they like and are good at...machining.

 

[William Payne]

This topic seems to come up a lot and honestly considering how much you guys have to pay in retirement funds and health insurance your guys wages in the states are scarily low across the board.

What I read in every thread is that "the numbers don't addd up to pay more"

I hate to play devils advocate but I really wonder just how financially viable some peoples businesses are. I don't mean to be critical but I do wonder just how much if any profit some businesses are making. There is a reason that hourly wage rates and hourly charge out rates are two very different things.

 

[chuckg7442]

I hate to play devils advocate but I really wonder just how financially viable some peoples businesses are. I don't mean to be critical but I do wonder just how much if any profit some businesses are making. There is a reason that hourly wage rates and hourly charge out rates are two very different things.

I think you bring up a valid point. The old saying is it takes money to make money. I wonder if a lot of smaller businesses aren't growing because they're not putting the capital out there to hire more and better talent. I may not be a business owner, but having a solid workforce would mean that the company could take on bigger and more profitable jobs. What do all of the big companies have that the smaller ones don't? Obviously money, but what else? What separates the Joe Blow little guy from the Musks or Bezos? I get that we all weren't born with silver spoons or trust funds, and I don't claim to know much about these guys. I think there is something to be said about drive and vision too.

 

[michiganbuck]

QT: we can hire some kid off the street to do that for $10/hour. and college kids the same.
Part-time workers, we will even pick them up at their house if needed, to do work that is clearly instructed and still they make a few mistakes, but acceptable. Kids under 18 should not run machines...and all safety should be in place.
Skill work young person should be paid $12 to $25.00 IMHO. Some great retired guys will work for 12 to 15.00.

If you can afford $20 then better pay that to keep a good worker..or he/she may walk.

Likey you need to bid $40 to pay $20 and some work cant bid that high. (like cutting lawn grass)

A young adult running a 50K or more CNC and 5.00+ an hour for cutting tools..and paying that person 10/12 is a crime. He/she should walk at the first chance...and the employer should expect that.

Kid rate and part-time can be lower

 

[Tony Quiring]

OCPH.

Operational Cost Per Hour.

Add all costs of operating the company except input materials.

Power, rent, payroll etc.

Add up total available billable hours, not managers but just folks who do billable work.

Divide cost by hours and that is the cost of just being open.

Profit margin and productivity effect what the billable rate needs to be.

Hourly rate has huge impact.

Basic number is OCPH is usually 2 to 5 times hourly pay depending on place so there may not be room to pay 35 an hour for 20 an hour work.

Sent from my SM-G781V using Tapatalk

 

[TiTillIdie]

For the OP it sounds like they've made the decision to go it as a family for a while. If they are comfortable with staying small it's worth figuring out which draw on their time can be reliably replaced the cheapest. It might be loading the machines, but it might also be the books, answering the phone, delivery, or some other function so that they are available to do what they like and are good at...machining.

I think our next step in this starting over process is hiring an AWESOME office manager. Someone to do all the above to keep us on the machines.

I think you bring up a valid point. The old saying is it takes money to make money. I wonder if a lot of smaller businesses aren't growing because they're not putting the capital out there to hire more and better talent. I may not be a business owner, but having a solid workforce would mean that the company could take on bigger and more profitable jobs. What do all of the big companies have that the smaller ones don't? Obviously money, but what else? What separates the Joe Blow little guy from the Musks or Bezos? I get that we all weren't born with silver spoons or trust funds, and I don't claim to know much about these guys. I think there is something to be said about drive and vision too.

I drove past both Jeff Bezos' and Elon Musk's buildings last night (Blue Origin and SpaceX) and thought to myself, how the heck can they fill these buildings up with talent and enough people to get these things done, but I cant seem to find 3-4 really good guys. But it has to be the money. They are starting people at $30 an hour or more. I have to find the work that will produce more revenue to support some $30 / hr guys. But it seems like everyone just wants to bid these jobs so low, no one is making money on anything. As a business owner, I would like to get paid what I am worth and I understand when a talented person wants $30 an hour, but I just don't think we could afford that. I have thought many times about selling out and joining the big guys, but there is something about owning my own business and answering to no one that might just be worth the low pay.

OCPH.

Operational Cost Per Hour.


Sent from my SM-G781V using Tapatalk

It cost us about $36 per hour to have the lights on. Not including payroll, but total of rent, utilities, machine payment. So that right there means if we have 2 people to share the burden of overhead, we are looking at $18 an hour each. if we had 10 people, that burden would only be $3.60 each (a bit more because electricity and such would be higher). So there is something to be said about having employees helping with this, but they have to have talent to make it worth it.

 

[TiTillIdie]

Also, I want to say thanks for everyone's input. There is a lot of valuable info.

 

[William Payne]

One other thing I’ve learned from being in the industry for a while is that it is rare to find a shop owner who is really good at the work side but equally as good at the business and sales side.

A machine shop whether production or low volume is in the sales business.

Someone has to be able to “sell” the businesses services to clients.

I’ve seen it first hand, the company I work for has never been as busy as they are now and our clients are lucrative and high paying. But it required someone having to be able to play the role of the sales guy to go out and get those clients and convince them that we were worth giving work to and thankfully it has worked out.

 

[CITIZEN F16]

One other thing I’ve learned from being in the industry for a while is that it is rare to find a shop owner who is really good at the work side but equally as good at the business and sales side.

I definitely have found the same. Most great salesman like nice clothes, fancy watches and nice cars, but don't like getting dirty.

 

[William Payne]

I definitely have found the same. Most great salesman like nice clothes, fancy watches and nice cars, but don't like getting dirty.

My brother works in sales. Companies will actively scout really good ones and yes they like nice things. But the reality is a great salesman can make a company a lot of money.

Also I like nice clothes, fancy watches and nice cars but that’s why you have work clothes and weekend clothes.

 

[mhajicek]

But it seems like everyone just wants to bid these jobs so low, no one is making money on anything.

That's the race to the bottom. The only winning move is not to play.

You've got to have an angle, something you do better than the other guy, that you can charge more for. That can be quality, or lead time, or tricky geometry, or a bigger work envelope, or micro-machining, or difficult materials, or whatever. But you've gotta have something to set you apart and narrow the field so you aren't competing with everyone else.

 

[michiganbuck]

[Quote Originally Posted by TiTillIdie View Post
But it seems like everyone just wants to bid these jobs so low, no one is making money on anything.]

The market forces prices down by improved methods, cutting product features or quality, having a foreign competition that can have lower-cost manufacturing....

And then USA guys with skin in that game(money) try to keep open as long as they can, sometimes feeding a dead cat with funds they have saved or from another income.

Employees sometimes think every businessman is rich when in truth some are scraping the barrel to keep the doors open.

 

[charlie gary]

I think our next step in this starting over process is hiring an AWESOME office manager. Someone to do all the above to keep us on the machines.




I drove past both Jeff Bezos' and Elon Musk's buildings last night (Blue Origin and SpaceX) and thought to myself, how the heck can they fill these buildings up with talent and enough people to get these things done, but I cant seem to find 3-4 really good guys. But it has to be the money. They are starting people at $30 an hour or more. I have to find the work that will produce more revenue to support some $30 / hr guys. But it seems like everyone just wants to bid these jobs so low, no one is making money on anything. As a business owner, I would like to get paid what I am worth and I understand when a talented person wants $30 an hour, but I just don't think we could afford that. I have thought many times about selling out and joining the big guys, but there is something about owning my own business and answering to no one that might just be worth the low pay.



It cost us about $36 per hour to have the lights on. Not including payroll, but total of rent, utilities, machine payment. So that right there means if we have 2 people to share the burden of overhead, we are looking at $18 an hour each. if we had 10 people, that burden would only be $3.60 each (a bit more because electricity and such would be higher). So there is something to be said about having employees helping with this, but they have to have talent to make it worth it.

Bezos and Musk didn't start out with Blue Origin or SpaceX. They are funding their adventures with money generated elsewhere. Another key difference is they aren't job shops making stuff because they're the lowest (loser) bidder. They are making their own stuff. They also know that talent costs money, and because they made billions elsewhere they can afford the talent (though Musk has been minutes away from bankruptcy a time or two).
Something else they have is an understanding of processes. That's something that is lacking in many small shops. Had you had a quality process in place for someone to periodically check things, would you have had an operator spend two weeks making scrap? I'm not trying to kick you when you're down, just trying to shine a light where there's darkness. One tool among many that can help illustrate where problems in a process lie is a fishbone diagram.
Please Wait... | Cloudflare
This isn't something usually taught in shop class, but using a chart to draw out a process from start to finish can help people see what's going on and where it's going wrong.

 

[eKretz]

I don't work full time anymore due to medical problems, but I do part-time stuff for a buddy's shop (mostly little work or teaching/supervising the other guys or estimating) a couple half-days a week. I am pretty well experienced, and get paid $30/hr - which is what he offered off the bat. If I do work in my own shop I shoot for a minimum of $75/hour as shop rate, but generally do better than that.

A new part time green kid with zero experience I would expect to pay maybe $12/hour while he gets up to speed. I would tell him the better he does in terms of learning and doing good work, the faster he gets to a better pay rate. And I would follow that. If he doesn't improve and start doing good work, keep him at a low rate, and look for someone else. If he does, up his rate at a good clip and keep him happy.

I would expect to need to hold someone's hand at $16/hr level. You are being unrealistic with your expectations. And what sort of training are you doing? This is important if you want good workers. Teach them the right way and an easy way to do good quality work and that's what you'll get.

A guy that has enough experience to do work on his own without being babysat all day and that can be trusted with inspecting his own parts should be at absolute bare minimum $20/hr. A guy that can do setup, create his own procedures and run parts with no interaction from you should be $25/hr plus, easy. If you "can't afford" that, take a closer look at your shop rate - or at what you can do to improve efficiency in your workflow and procedures.

 

[metalmadness]

Here is a new data point for you guys to digest:

Medical device manufacturer in my area hired a technical engineering recruiting firm to fill a position for an experienced CNC programmer (5-10 years). They COULD NOT find a local candidate, so they hired the firm.

Firm reaches out to me and says we will pay you $55-60/hr +OT if you want it to come do a contract with this company. Paid health insurance and retirement but no PTO. Either way, the opportunity was an interesting one because well, if you do math then that translates to $114K salary. With no OT included. I am not sharing this to toot my own horn or tell you i am actually worth that price, merely to show you that if salaries had actually kept pace with inflation, that is the wage we could all be expecting.

That is the kind of wage that makes me perk up my ears.

I mean that company is literally throwing money at people hoping to GOD that someone will jump on it.

I suppose that $50+ is the going rate for an experienced contract medical device CNC programmer in this neck of the woods. Track for that role is likely a 6 month track to permanent hire. You guys talking about $25/hr are kidding yourselves if you think that is enough to hire experienced people. Even in Oklahoma $25/hr is only $52000. That ain't enough. Make it $35 and I guarantee you'll get some good candidates.

 

[eKretz]

For a long time things have been stagnant. I am guessing they are going to start climbing as we run out of experienced people. Either that or everybody will buy robots.

 

[TeachMePlease]

Here is a new data point for you guys to digest:

Medical device manufacturer in my area hired a technical engineering recruiting firm to fill a position for an experienced CNC programmer (5-10 years). They COULD NOT find a local candidate, so they hired the firm.

Firm reaches out to me and says we will pay you $55-60/hr +OT if you want it to come do a contract with this company. Paid health insurance and retirement but no PTO. Either way, the opportunity was an interesting one because well, if you do math then that translates to $114K salary. With no OT included. I am not sharing this to toot my own horn or tell you i am actually worth that price, merely to show you that if salaries had actually kept pace with inflation, that is the wage we could all be expecting.

That is the kind of wage that makes me perk up my ears.

I mean that company is literally throwing money at people hoping to GOD that someone will jump on it.

I suppose that $50+ is the going rate for an experienced contract medical device CNC programmer in this neck of the woods. Track for that role is likely a 6 month track to permanent hire. You guys talking about $25/hr are kidding yourselves if you think that is enough to hire experienced people. Even in Oklahoma $25/hr is only $52000. That ain't enough. Make it $35 and I guarantee you'll get some good candidates.

You mind messaging me a name? Though I have an idea... I have two friends in that field near you... I think one of them is already working there...

 

[CITIZEN F16]

Here is a new data point for you guys to digest:

Medical device manufacturer in my area hired a technical engineering recruiting firm to fill a position for an experienced CNC programmer (5-10 years). They COULD NOT find a local candidate, so they hired the firm.

Firm reaches out to me and says we will pay you $55-60/hr +OT if you want it to come do a contract with this company. Paid health insurance and retirement but no PTO. Either way, the opportunity was an interesting one because well, if you do math then that translates to $114K salary. With no OT included. I am not sharing this to toot my own horn or tell you i am actually worth that price, merely to show you that if salaries had actually kept pace with inflation, that is the wage we could all be expecting.

That is the kind of wage that makes me perk up my ears.

I mean that company is literally throwing money at people hoping to GOD that someone will jump on it.

I suppose that $50+ is the going rate for an experienced contract medical device CNC programmer in this neck of the woods. Track for that role is likely a 6 month track to permanent hire. You guys talking about $25/hr are kidding yourselves if you think that is enough to hire experienced people. Even in Oklahoma $25/hr is only $52000. That ain't enough. Make it $35 and I guarantee you'll get some good candidates.

Key word, "medical", that type work as a whole pays very well. A lot of people think shop owners are greedy, trying to pay as little as possible, when in fact many just cannot afford to pay top hourly dollar with full benefits due to the industries they serve don't pay that well.

 

[cnctoolcat]

Medical device manufacturing is one of the few maker industries left that still operates in a fantasy world.

$1,000 for one bone screw, give me a break.

Open the floodgates to 3rd world competition in medical manufacturing (they are closed, due to safety, FDA, quality, blah-blah) and you would start to see the prices of the products made in this industry nosedive, just like many other industries in the U.S. over the last 30 years.

ToolCat

 

[kustomizingkid]

Medical device manufacturing is one of the few maker industries left that still operates in a fantasy world.

$1,000 for one bone screw, give me a break.

Open the floodgates to 3rd world competition in medical manufacturing (they are closed, due to safety, FDA, quality, blah-blah) and you would start to see the prices of the products made in this industry nosedive, just like many other industries in the U.S. over the last 30 years.

ToolCat

You sound like you are in support of this?