In the construction industry, countless factors are beyond your control— from supply chain disruptions to unpredictable weather. Among these challenges, the growing labor shortage stands out as one of the most pressing issues facing construction companies today.
With many experienced tradespeople nearing retirement, the workforce is shrinking. What can a company do in this situation? Throw in the towel? Not a chance.
At PDI Drywall, I’ve found that prioritizing the well-being of my workers is essential to overcoming the labor shortage and building a strong, reliable team. For this reason, my subcontractor relationships are just as important as my client relationships.
In this post, I’ll share how my approach to empowering subcontractors supports their success and strengthens my business.
Subcontractors vs. Employees
Let me clarify what I mean by subcontractors (or subs). Technically, PDI Drywall operates as a subcontractor on most projects, hired by the general contractor in charge of the job site.
When I refer to subs, I’m talking about the people PDI hires to hang drywall and paint on the multi-family buildings we construct. I’d love to bring these hard-working individuals on as employees to provide them with benefits, but as a right-to-work state, North Carolina operates under a largely non-union, subcontractor-based model.
This means we have to work within this industry norm and go with the flow. That said, we’re always trying to improve this flow by creating a supportive model that empowers our subs and fosters a collaborative work culture.
Now, let’s explore PDI’s supportive model and all the benefits that go along with it.
Establish Independence with an EIN
The first step in helping our subs establish independence is setting up an Employee Identification Number (EIN) with the IRS. An EIN is like a social security number for a business, allowing subcontractors to operate as legitimate, recognized entities. With an EIN, they gain access to new financial opportunities and greater earning potential.
An EIN is essential for:
- Filing business tax returns
- Opening business bank accounts
- Hiring employees
EINs never expire, laying the foundation for subs to grow their business in the future— maybe even hiring their own team. Many subs who start with us eventually build their own businesses, working directly with general contractors. Sure, we may “lose” good people this way, but fostering their growth and success is extremely rewarding. Plus, it strengthens our reputation, attracting more talented workers.
Speed Up Payments and Increase Legitimacy
Once subs have an EIN, we guide them to open a business bank account. This simple step speeds up payments and ensures transparency, making the process smoother and more professional. It also enables them to work with larger companies with strict regulations, which often pay higher rates.
Formally setting up their business also gives subs the option to file a lien if they’re not paid on time— a powerful tool in the construction industry. A lien serves as a legal claim against a property, giving subs added security and leverage to ensure they get paid.
Promote Safety with Proper Insurance
I require all my subs to carry general liability and workman’s compensation insurance. These policies protect their safety and livelihood in case of accidents while adding legitimacy to their business.
Having properly insured subcontractors isn’t just about following regulations— it’s a reflection of the respect we have for them. This step is a reminder that we view our subs as valuable partners who deserve security and stability.
Establish a Partnership Built on Trust
In right-to-work states, where subs are often undervalued and underpaid to cut costs, our approach stands out. We prioritize fair compensation, growth, and long-term success for every sub on our team.
Empowering our subs is not only the right thing to do, it’s also smart business. Our model builds strong relationships and fosters loyalty, creating a positive work environment that makes us a preferred partner.
The mutual respect and supportive atmosphere on our job sites help us attract and retain skilled talent, keeping us fully staffed with a dedicated team. This loyalty is key to our consistent success in completing projects on budget and ahead of schedule.
When people feel seen, respected, and empowered, they bring their best to each job. This sense of ownership and pride translates directly to the quality and efficiency of our projects, solidifying our reputation as a top-tier company.
Building a Path Toward Self-Employment
There’s nothing more rewarding than seeing one of my former subs running their own business. I’m thrilled to see them supporting their families and even helping their employees thrive. While some might view this as creating potential competition, I see it differently. By supporting these skilled professionals on their journey to success, I’m helping to strengthen the construction industry as a whole.
As they achieve financial independence and stability, they’re better positioned to train others, pay fair wages, and uphold professional standards. I hope that my support encourages them to pay it forward, building a community of skilled, conscientious contractors who elevate the industry for everyone.
Plenty of Work to Go Around
I’m proud to be a part of adding legitimate, properly insured, tax-paying subcontractors to the mix and I encourage others to adopt a similar approach. You’ve heard the stats— the construction industry needs to attract half a million new workers to meet our current demands. There’s plenty of work to go around, and we need reliable professionals who raise the bar and set higher standards for everyone.
As more experienced tradespeople retire, there’s a need to nurture the next generation. By setting up subcontractors with the basics, like an EIN, business bank accounts, and proper insurance, you can help contribute to a workforce that’s empowered, legitimate, and competitive.
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