from Hacker News

America's new millionaire class: Plumbers and HVAC entrepreneurs

by hhs on 10/13/24, 3:35 PM with 260 comments

  • by pjbk on 10/13/24, 4:26 PM

  • by elawler24 on 10/13/24, 10:07 PM

    My dad bought a failing HVAC business 30+ years ago, then made it profitable over the years and sold it back to his employees last year. He had the option to take a few highly lucrative PE deals, but it was clear they would squeeze the life out of the employees and customers he had worked hard to support over many years. I can’t imagine how low quality this kind of trade work will become if PE owns them all. It will be similar to vet, dentist, and dermatology clinics which now feel like factories that don’t care about the humans on the other end - often employing fear tactics and sales quotas to incentivize upsells.

  • by dahart on 10/13/24, 4:58 PM

    I wonder how this article was pitched. Strange messaging, turning the news of private equity hoovering up HVAC companies into plumbers getting rich? Surely private equity will do what it always does, drive up prices, drive down quality, and bail out leaving behind a mess if or when it suits them. It also seems pretty funny to call it a “class” when they’re referring to a few dozen business owners, not really trades workers.

    Did the plumbers getting rich meme start with Joe the Plumber? My cynical hypothesis is that it’s a movement to steer people away from college fearing a hollowing out of the working class and higher wages if everyone’s university educated. Are there other reasons this talking point keeps circling? Googling multiple sources shows plumbers making an average of $60k/year which is lower than the average teacher salary in the US. Neither of those classes is getting rich and both are feeling the squeeze of inflation, no doubt being contributed to by private equity.

  • by SoftTalker on 10/13/24, 4:38 PM

    There are several tradespeople I know (electricians, plumbers, carpenters) who make more money than I do. But I don't begrudge them that, electricians do work where a mistake can literally kill you, and all of these jobs have high injury rates and will wear your body down much faster than sitting at a keyboard.

    Edit: and there are no "open source" tools. You have to buy them, and good ones are not cheap.

  • by bradfa on 10/13/24, 4:37 PM

    Some local skilled trade companies have been recently bought out. From feedback I’ve heard from customers, quality has declined. Lots of car dealerships locally have consolidated lately and their service quality has declined while prices have shot up.

    While private equity may be making some local business owners rich, they’re ruining the customer experience.

  • by thomasjudge on 10/13/24, 9:11 PM

    This article and a lot of the discussion fails to make clear that there is a big difference financially between being a plumber/electrician/hvac tech and owning a plumbing/electrical/hvac business

  • by jacknews on 10/13/24, 4:36 PM

    "The wave of investment is minting a new class of millionaires across the country, one that small-business owners say is helping add more shine to working with a tool belt."

    How naive. PE does not enter a market in order to make existing workers into millionaires, but to create a monopoly/monopsony where they can gouge both customers and employees, to extract maximum profit. Quite often, the goal is not even to run the market sustainably, but just to produce optical profits for a quick resale.

    A few local contractors may get bought out and become millionaires, but everyone else will be impoverished.

    We can probably even predict some next steps. They will recommend and lobby for various 'safety' regulations or certifications that would be difficult for smaller shops to meet, and then pressure commercial landlords, housing associations, etc to require those certifications.

  • by hoofhearted on 10/13/24, 5:30 PM

    My theory behind the big private equity play behind buying up all the HVAC companies is that some smart people on wall street realized that R22 refrigerant was banned, and basically any system using R22 that was installed before 2010 will have to be replaced in the coming years because you can’t find the refrigerant needed to charge your system.

  • by robsh on 10/13/24, 4:40 PM

    Millionaire class? The article describes a small business owner who wants to retire. Meanwhile, the private equity firms are going to monopolize the market and raise prices. Sadly, none of the 20 or 30 year olds who are actually doing the work will be able to buy out their owners business.

    Any young tradespeople: form a coop and buy your bosses business. Better to be a 10% owner than 0%.

  • by ChuckMcM on 10/13/24, 10:42 PM

    There is this joke that goes: "A surgeon calls a plumber to unclog his toilet, the plumber arrives and 30 minutes later it's all back up and running. He tells the surgeon 'That will be $500'. And the surgeon replies, 'Hey I'm a surgeon and even I don't make $500 for 30 minutes work!', and the plumber replies, 'I get it, I didn't make that much when I was doing surgery either!'" :-)

    But the heart of this is that somehow we brainwashed kids into thinking that they had to be "scientists" or "executives" if they wanted a fulfilling life and a comfortable salary and that just isn't true. If you're unable to find a 'tech job' consider learning how to hang drywall or wire up an outlet and overhead light. There is both work that can be done right now that needs those skills and it can be more rewarding than writing some dark pattern web site that helps a schmuck trick seniors out their money. /endrant

  • by nine_zeros on 10/13/24, 5:35 PM

    It is true that trades work has picked up quite a bit. High school kids and their career counselors say the reasons are:

    - Well-defined career path.

    - High pay as you keep going ahead.

    - Union pay and benefits. Incredible stability. Incredible healthcare.

    - No outsourcing.

    - Lots of paid leave. None of that unlimited PTO scam.

    - Lot of camaraderie. None of the corporate nonsense where execs take it all at the expense of people.

    - Opportunity to start your own business at a certain point.

    - No large student loan to get started.

    While not all kids articulate all these points well, but they can tell how their seniors in college are grinding too much for little return - while trades people are working hard, taking vacations, raising families - and buying homes.

    The average tradesperson in a HCOL is a millionaire by age 40 simply because they could buy a house earlier in their lives. And they are able to start families and live a very stable life. Kids are picking up on this.

  • by BobbyTables2 on 10/13/24, 10:06 PM

    I’m noticing HVAC systems (installed) are about 3x the price they were 10 years ago.

    And they is from the cheaper companies that don’t advertise on the radio!

  • by snapetom on 10/13/24, 10:38 PM

    Back in the early 90's when being a millionaire meant something, I believe it was the NYT that ran a piece about how there were a disproportionate amount of plumbers and electricians in that class. Essentially they outlined how it wasn't a huge leap to grow your own small business in that industry and retire well. As long as you didn't snort/drink/gamble your earnings away.

  • by antisthenes on 10/13/24, 4:38 PM

    I wonder if that's the reason my HVAC guy tried to charge me $700 for running a thermostat cable less than 8 feet (that I later did myself in less than 30 minutes).

  • by slyall on 10/13/24, 10:59 PM

    The 1996 book "The Millionaire Next Door" covered this a bit.

    Lots of contrast between doctors and similar who spent all their income on expensive houses, cars, club memberships etc and people who owned blue collar businesses who bought in similar/more income but lived modestly.

    https://en.wikipedia.org/wiki/The_Millionaire_Next_Door

  • by blackeyeblitzar on 10/13/24, 5:16 PM

    So how will this play out in the future? Once PE acquires all these businesses, squeezes all the life out of them, and runs it at aggressive prices, can any future small businesses pop up to compete against them? Or is everyone doomed to buying these services from PE companies with poor service?

  • by asdefghyk on 10/13/24, 10:26 PM

    Observation. The charges of plumbers and HVAC entrepreneurs would also be influenced by the number/supply of such workers. If their are lots plumbers and the same customer demand then it is reasonable plumbers incomes/charges would decrease.

  • by TrackerFF on 10/14/24, 7:31 AM

    I mean, hasn't it been like that forever?

    Here in Norway, the owners of such shops have always been "asset rich", because they pretty much own every asset in their company. That means vehicles, tools, shop, parts and products inventory, and what have you.

    Prior to enrolling college, I was an (electrician) apprentice. I ditched that for a degree in electrical engineering. During college I took on a variety of part time jobs to support myself - a bunch of them were temp trade jobs. Roofing, construction, and what have you.

    I'll tell you this though: I've never, ever met a shop owner that didn't work from 7 in the morning to 9 in the evening, minimum 6 days a week.

    Some of these guys practically grew up in their fathers shop, and have been ingrained with such a hardcore work ethic, that work is all they know. They could liquidate or sell their shop, and retire - but I've yet to meet anyone that does that. I've seen more shop owners die before they retire, due to the lifestyle choices around this kind of work. And those that "retire" will anyway keep hanging around the shop.

    This usually leads to what we just called "voluntary involuntary" overtime. Basically the shop owners will assume that everyone loves work as much as them, and will assume everyone wants to work overtime 6 hours a day.

  • by bryanlarsen on 10/13/24, 4:56 PM

    - Buying an annuity with the same benefits as a good pension will cost over >$1M, so it's not much of a stretch to call anybody who was one of those a millionaire too.

    - I think the keyword here in the title is "entrepreneur", not "plumbers & HVAC"

  • by sub7 on 10/14/24, 3:37 AM

    These are businesses where the knowledge gap is so wide between the service provider and the client mixed with the life or death need of "I need to flush" or "I need heat in the winter" that people routinely get fleeced.

    Basically means you're about to be hit with a $500-5000 bill for what is likely a $50 part + 30 mins labour.

    Gross margins don't grow, but they are monsterous.

  • by replwoacause on 10/15/24, 11:57 AM

    I can understand how HVAC techs are making millions. The one that just showed up to my place recommended a $6,500 total replacement of the indoor coil unit, to address a frozen condenser line outside. I declined, ran the furnace to melt the ice, put a new $5 filter in it and it is working just fine.

  • by ein0p on 10/15/24, 11:52 AM

    3 years ago basic service on my whole house AC was $450. It’s probably $600 now.

  • by int0x29 on 10/13/24, 9:07 PM

    I love how they subjected me to a proof of work challenge to view their paywall.

  • by skywhopper on 10/13/24, 5:10 PM

    These folks are much more important and skilled than your typical software engineer at a FAANG employer. Kudos to them.

  • by tennisflyi on 10/13/24, 8:32 PM

    Bro, what? BLS has them at $48K/year

  • by FpUser on 10/13/24, 11:44 PM

    >"PE firms across the country have been scooping up home services like HVAC—that is, heating, ventilation and air conditioning—as well as plumbing and electrical companies. They hope to profit by running larger, more profitable operations."

    There are few things I like less than PE acquiring home services. Now instead of being served by qualified person for a reasonable price they send you an imbecile and charge few times as much. Spoken from a personal experience.

    FUCK YOU PE.

  • by hooverd on 10/13/24, 4:18 PM

    Can this be the next thing tech democratizes?