In California it's been getting tougher and tougher being a licensed contractor. I recently examined not only why I was losing bids but to whom I was losing them to. I'm talking about small residential jobs like remodels and additions and also residential service work.

Let me add that I have not successfully obtained a small residential service job in over a year. I've bid (for free) dozens of small jobs like hanging ceiling fans and cutting in recessed cans, adding outlets, hooking up hot tubs, etc. I have never gotten these jobs no matter how low a price I offer.

I've been in business 25 years, am licensed, have full liability insurance and comp insurance and have a new $40,000 service vehicle with $20,000 of tools and materials on board. So, in other words, I'm a professional electrical contractor, just like you guys....

When I began this study I knew the answer to why I was not getting these jobs, my price was too high, I knew that I was being under bid dramatically. For example, I charge $350 to cut in fan rated box in the attic and assemble and hang a ceiling fan. The guys who get these jobs typically charge $100 to $150 for this task. We all know this is about a 4 hour job...

So I began to look into my competition, to see how they could deliver such low pricing. I learned that over the last year, every single job I lost was awarded to an unlicensed contractor.

I've been aware of the fantastic growth of the unlicensed contractor ranks for a few years. I wondered why the growth of this industry has exploded in the last couple of years. I discovered that the Contractors State License Board (CSLB) is responsible for the explosion of unqualified, unlicensed contractors.

In California, anyone that advertises to alter or perform any alteration of any building must be licensed by the CSLB. There is an exemption for work under $500 The contractors license law has always required that unlicensed contractors include the following statement in all their advertising and customer documents: Not A Licensed Contractor

Having to include the "Not A Licensed Contractor" language in all your advertising understandably had a chilling effect on unlicensed contractors. The public has a right to know when they're dealing with an unlicensed contractor and this legally required language was intended to inform the consumer.

So in my quest to try to understand why I am competing with so many unlicensed contractors I came across this startling addendum to the CSLB's web site:

Is anyone exempt from the requirement to be licensed?

Yes. Here are some of the exemptions:

·Work on a project for which the combined value of labor, materials, and all other costs on one or more contracts is less than $500 falls within the minor work exemption. Work which is part of a larger or major project, whether undertaken by the same or different contractors, may not be divided into amounts less than $500 in an attempt to meet the $500 exemption. Until January 1, 2005, unlicensed contractors were required to provide to a purchaser a written disclosure stating that they are not licensed by CSLB. This disclosure is no longer required;

Wow! No wonder I see so many guys working out of their trunks! Unlicensed contractors no longer have to inform consumers that they are unlicensed. Thank you CSLB!

As a licensed contractor, because of this law change, I have had to forfeit the sub $500 electrical wiring market to the hacks. The CSLB has made life easier for hacks and more difficult for legitimate, licensed contractors.

Thank you CSLB!

But this is not the first time the CSLB has deliberately made life hard for licensed contractors.

During the 1990's the CSLB did massive sting operations, identifying unlicensed contractors. Instead of subjecting these unlicensed contractors to disciplinary actions, they rewarded them by allowing them to use their experienced as outlaw contractors as qualification to sit for the contractors exam. This was called "Amnesty" and suddenly our ranks were swelled with thousands of unscrupulous law breakers and scofflaws. Anybody with a license number that starts with a "7" is suspect for this reason.

The CSLB has done more harm to our industry that can be imagined. This is what happens when the Government gets involved. Instead of setting standards, the CSLB lowers them.

Thank you CSLB!

blasphemy...but hey, just cut your overhead some more, and you will win these jobs...

With that kind of overhead you are going to need to focus on larger jobs.

What do you mean? Are you saying a 40K truck and 20K in inventory is a high overhead?

Most of my overhead is in insurance (business liability, vehicle & health), taxes (state & city sales, State & federal income), fees, fuel, and tools. And let's not forget about your retirement savings, unless you plan to live on Social Security.

Unlicensed contractors are a threat to all of us who do things right, it sounds like a raw deal in Calif.

How many unlicensed contractors do you suppose pay taxes?

Even when there is a law on the books outlawing it, enforcement becomes the issue. My state outlaws any work on electrical or plumbing without the proper license, regardless of dollar value, but enforcement is for all practical purposes extinct.

And what, pray tell, did you expect?

The problem is not the government. Or the contractors. It's the customers.

Like it or not, some folks see licensing, etc., as but underhanded attempts by politically connected groups to line their pockets. They see permits as letting 'big brother' get his foot in the door. And they worship at the alter of 'cheap.'

Some of it is perception. Another ECN member, as a test, set up a 'shadow' operation. By day, he was "Mr. Licensed Contractor," everything on the up & up. By night, he was "doing side work - don't tell the boss." By day, nice service truck. By night, beat-up mini-truck.

The results? By day, he had no trouble catching up on his sleep. The phone hardly ever rang. By night, more work than he could handle. The irony was that he deliberately charged / quoted 10% more for the 'side jobs.'
The last laugh was also his ... as he is a sole proprietor, and IS in fact licensed, bonded, etc. If, heaven forbid, a job goes bad .... he's got his tail covered. If some predator tries to stiff him, assuming he has no license ... well, he's ready to sue, ask for, and collect triple damages. License, Your Honor? Sure ... he never asked! Doom on him!

Romex, are you proposing that the purpose of licensing should be to eliminate competition that is willing to work for less than what you charge? I thought the purpose of licensing was supposed to be to protect the consumer from unqualified workers.

Hey Reno, that is a great idea. I might just try something like that. Maybe a sign on the rear door of the van saying "cheap electrical no license or insurance premiums to pay" and then use 3rd column pricing. If I get busted for "Unfair and Deceptive Trade Practices" for advertizing as being unlicensed when in fact I am, I can defend myself to a judge by producing all the times the board got notified and no action was ever taken on it.

The CSLB has the "SWIFT" unit that has been doing sting operations on unlicensed contractors. They set up once in awhile, get a (very few) couple of hacks, and proclaim their successes loudly.

In the meantime, Craigslist is just loaded with unlicensed "contractors" advertising for work that requires licensing. (I flag them as prohibited every chance I get, enough people doing the same will remove the ad)
Both RR's area and mine are just full of these guys that will do a service change for you, or build you a whole new house. Handymen advertise "Electrical" with city business license numbers on the sides of their trucks where a State Contractors License should be.

This all seems to go right over the head of the CSLB, who don't do a darn thing about it.

The message seems to be
Get a license, insurance, work legit, pay your taxes, but remember....No good deed goes unpunished.

I agree with those who say the mere fact that you keep up the bonding, insurance, taxes and CEUs necessary for a license is significant "overhead" before you bought your first screwdriver or wirenut.
What does happen to the customer when "mr. trunk slammer" screws up and does a $50,000 "oops"?
I suppose you might be able to sue him but there is a good chance you come up empty.

He said $20K in tools, not inventory.

Schlepping around $20K in tools to do ceiling fans is never going to pencil out, nor is using a $40K truck to schlep them in. Ceiling fans and the like just aren't profitable enough justify that sort of investment. Too much down time (driving around, permits, cleanup), little or no material markup, too many risks, not enough work time to justify the expense incurred to get there and do the work. Even at $350 per a guy is likely to make more money just parking the truck and staying home.

Unlicensed contractors irritate me just as much as they do the next guy, and the fact the CSLB won't do anything about it irritates me even more. Even if they all disappeared tomorrow however, you can't make enough money doing ceiling fans to support $20K in tools and a $40K truck, along with all of the other business expenses you're going to incur when you run a legitimate business.

I see where you are coming from Steve. Small jobs are always an issue. I have gone around and around with minimum charges, trip charges, trying to organize them by area etc. I can't really turn them away, but I know they are not very profitable. Sure some turn into bigger jobs or referrals for bigger jobs, some are just for regulars and you can't say no to them. Fortunately I am able to charge decent rates for them and still get most of them, there are many people here who will not hire an unlicensed electrician. But they are still not as profitable as most of the larger jobs.

One thing I try to do is schedule them near the end of the day, so they don't get in the way of the bigger jobs. (I am just a 2 man shop)Then we can hit it on our way home. If the job is over 2 hours I will try to put several of them together on one day.

Also I can usually give a rough estimate on the phone for things like fans and such, after asking them a series of questions. This eliminates the first trip out there, which is especially good if you don't get the job.

I also keep a well stocked van and can do almost any small job without chasing parts. This way I can offer to do the job right then and there if I am there for an estimate, giving them a slightly better price and making more myself by saving on another trip.

The small jobs are always tough, it would be interesting to hear how other small shops handle them.

Here in Northern Illinois most of the carpenters do their own wiring. Work with a permit requires a license, so they don't get permits. If you're caught working without a permit, they ask you politely to get one.

I don't worry too much about the work I don't get. I work on adding to the work I can get. I still get my fill of playing around in insulation, but I wouldn't complain if someone else got it.

Dave

I hear ya Tiger, hey were you a Crystal Lake Tiger? I lived in Coventry as a kid, both my brothers went to CLHS.

I don't think I like that remark. My lic. # 734685 I earned mine lic. I had to certif. 5 years journeyman (or higher) experience just to get a test date, then waited 6 months for the test, five hour test (whitch took me under three) and I do industrial government work for 10 years. Never had a complaint. So don't be spreading rumors that my lic. was handed to me for doing nothing. I took my test in april 1997.

I hear Illinois doesn't license electricians but I assumed the IBEW would whack anyone working without a union card.

Greg,
Don't go down that road.

Illinois doesn't test, but you test from some of the local departments and they all honor it (except Chicago).

Tiger, Gator?

Dave

Unfortunately most homeowners are more concerned with price than they are with bonding and license. If you watch “flip this house” you might notice the only thing some people care about is the bottom line.

As a trade no matter how much we would like for the cheap labor/competition to go away, it won’t; they got to eat too and there will always be somebody will do it for less, sans license.

The flip side to this if the Contractors board did govern this with an iron fist the public would be livid that the contractors were price fixing, because why should they pay you $350 to hang a ceiling fan when they know a guy who will do it for $50?

Just my thoughts on it, but I don't think chasing service calls will work out for you if you have $60K invested in your truck and tools.

"homeowners are more concerned with price than they are with bonding and license."

One of the main reasons for license, is to protect the homeowner, from himself, a non licensed guy will not have workers comp, so when he gets injured, at the home, It can cost the owner everything.

"they got to eat too"

Yes, just pass the test to show your qualified, pay your way like everyone else, and follow the laws, that excuse, I have to eat too, Is the biggest cry babby crock I ever heard, sure why not let them do brain transplants, they can start with their own.

"The flip side"

The health industry, and many other services are highly regulated, and consumers have price options. Most consumers are price gouged with unlicensed operations.

"I don't think chasing service calls will work out for you if you have $60K invested in your truck and tools."

There are a lot of EC's that have been doing service work with more then that amount invested, and doing very well, try this link
http://ecmweb.com/mag/electric_serves_right/index.html

The testing requirement is four years journeyman experience not five. It's not uncommon for 7 series licensees not to know the testing requirements...

When i took my test i was surprised how easy the trade portion was. The law was hard. But the trade was a joke. i wish the state will make the trade much harder.
The only reason you need a contractors license, is that you can do work worth more than $500. having a license does not mean by any imagination that you know the electrical system. I know a person that took the electrical portion of the test 5 times, finally passed it and now he calles himself a master electrician. That is a joke that a person can take the test until they pass.

Consumers believe that if one has a license they automaticly know the trade.

And furthermoer, my license starts with 7 and i had to earn mine. So, having a license that starts with 7 does n ot mean that you got your off of the shelf.

Edward

I was ready to accept an apology for your claiming that 7 series contractors are bogus. Instead you insult me further. It's not my fault you can't get a job hanging a cieling fan.I have no shortage of industrial work (consistently).Your in no postion to call me a fraud. I was kind of feeling bad for ya, now I hope you get wiped out of business.I don't care what the min requirement is I summited five years.

{Skipr, please don't sink to the level of personal insults, this is not helping anyone.}

OK, lets calm down, and act with SOME restraint!

When a man feels his livelihood is at risk, and that others may have received special treatment that puts him at a disadvantage .... it's easy for tempers to flare. I know I get PO'd when the rules change in the middle of the game.

Let's cut the OP a little slack. It seems clear he was posting with passion as much as anything, and no purpose will be served by goading each other.

In the meantime, let's save our vitriol for those who think government solves much of anything. I believe Romex Racer has made a good case that, this time, they have made it worse!

Regarding the difficulty of the California C-10 test, I'd have to agree with Niko that it was very easy. To some, it represents the intellectual challenge of their lives, but in reality it is about as hard as the test for a drivers license.

This is another area that the CSLB needs to upgrade, and continuing education might be something else we should start.

I'm in favor of raising standards, this thread is a perfect example of how controversial the subject of raising standards can be, but in the long run, raising standards benefits everyone.

I believe the CSLB is in need of serious reform.

We went thru this in New Jersey years ago, back in 1984 there were complaints the testing was too difficult, and the Board was accused of keeping applicants from getting a license. In response to pressure on the board, they outsourced the testing, and the teat standards dropped, making it easier to pass, and with the testing dumbed down, they still had high failure rates, so no matter what the standards are there will always be some that find it difficult, and some that find it easy.

With the dumb down testing, licensed guys were only cheating themself, they passed the test and had to preform in the field, and that is where the lack of knowladge showed up, inspectors were finding little or no improvement in code work, and basic knowladge, so what happened is, we ended up with an ever increasing CEU hours requirement, to bring up the standards.

So please try to keep the excitment down a bit, It will all work out in the long haul, what might be a good idea, is for all the Cal guys that want to improve things to get involved with their local independent contractors assn. or start their own chapter, that is what we did here in Jersey to improve communications with the board and make good things happen.

Save your strength, to fight with the board, not with each other!

Quote: "in the long run, raising standards benefits everyone."

do brain transplants?

Yeah like hanging a ceiling fan and brain surgery are the same...and lot of people do seek alternative medicines, its a major market in case you have not noticed.

Most home owners only care if you have bonding AFTER there is an accident. Sure the laws are designed to protect them, but like alternative medicine most people decide what is best for themselves and what their budget can afford. I am not defending the position I am just acknowledging that it exists.

The way I see it, the task is not the same, but they both require a license in our state.

A poor ceiling fan installation, can wipe out an entire family, brain operation gone bad just wipes out the patient, true they are not the same, poor ceiling fan install can take out more lives.

Your 100% on target, with the consumers decision to put price over everything else.

About 3 years ago I was hungry for work, and chased a job pretty hard that would have really been nice to have at the time. It was a CarMax used car lot that had a good size show room, car wash, repair shop and huge lot with about 40 pole lights. When I NEED work, I can get cheap and this bid was probably a bit below cost but I figured it could be made up on project management. The guy who beat me took it about 20% under my bid.

For the next 6 months I drove by this job on the way to and from work watching the progress. The electrician who took it worked out of a station wagon and rigged wire reels out of the back of it for the pole light pulls. Some nights there would be whole crews of what looked like day labor out in the lot standing up the poles with a man lift. From my perspective it was a joke, but they took the work from me and CarMax got what they wanted, a cheap price.

There is always somebody out there who will do it for cheaper than you.

Hey mine starts with a "7" too.... Its the "8's" you need to worry about ~ but then again I worked for a guy with "5" who was the worst businessman I've ever met, and equally a hack when it came to the work he did. Proving you cant teach old dogs new tricks if they were never capable of learning one in the first place.

RR - Be pro-active in protecting your income. I would suggest you contact your local DBI and seek to make it mandatory for licensing via the CSLB in order to get a biz lic, or pull permits. Or just have fun by sueing them for unfair business practices, by allowing unlicensed to operate. Then call 1-800-rat-u-out for any unlicensed activity you see. Remember, "The enemy of my enemy is my friend" If the CSLB is who enforces this stuff, (nobody else does) then make the wheels squeak and get greased. Whining here aint helping much. And a little consumer education goes a long way, and the CSLB is willing to help you do just that - scare the death out of consumers with some horror stories of hack work and staple one of these to each proposal. http://www.cslb.ca.gov/forms/wyskpamphlet.pdf

When I first started out, I reported lots of unlicensed activity, and absolutely nothing ever came of it. The CSLB collects license fees, enforcement is nearly non existent. I've been migrating out of residential work and into commercial, it's just too hard to make a buck in residential...

SWIFT has been 'round my way. A guy I know was called to bid on a sting op. He's not sure how they got his info - but suspects that someone asked for a card one day, and later called him to bid a remodel.

Occasionaly they put out notices to participate if you have a property to pose as a real job.

Truthfully I would love a job in enforcement - wouldn't you?

Say it isn't so !

Because of recent events, it's been more difficult getting workers at low prices.

Did someone have a potty- mouth?

No, just off topic content.

Roger

Great topic.I know how you feel RR.I live here in NE PA.19yrs.We have no state license.It is so cut throat here I am having the same problem here.I can not remember the last service change I did.I am lucky if I get $1800 for a 200amp mast service.One EC here in PA charged only $600 to add a 200amp disc,and 75 feet of 200amp SER to the panel box.My price would have been alot more then that.Most of these ECs here are giving it away.

I gave a bid to a HO yesterday on a addition.Change the panel,move the service with dis to new loction(50feet)35 openings,3 ceiling fans,8 Hi hats,5 smokes,4 Fixture outs,2 Keylees,3 240 volt T Stats,4 2kw heaters,1 2.5kw heater,and 5 circuits.Gave price of just under 7K.Still waitimg for the call.

Heres the funny part.I gave the HO down the steet a price on a big addition they where doing.My price was 23K.Found out the other guy was 8K.The materal alone was 5K.