by Christopher J. Bruce and Russette S. Pack
The cost of hiring individuals to perform household services such as housecleaning, snow removal, and handyman repairs can amount to a significant percentage of the damages in a personal injury or fatal accident claim. Yet, despite the importance of these costs, reliable estimates of the components of a household services claim are very difficult to obtain. In order to assist the court in this respect, Economica has conducted a number of surveys of household services costs since 1997.
In those surveys, for example, we found that the hourly cost of housecleaners in Edmonton and Calgary rose from approximately $13.50 in 1997, to $25.00 in 2006, and to $30.00 in 2010; and for handymen the rates rose from $24.00 in 1997 to $32.00 in 2006, and then fell to $30.00 in 2010.
As four years have passed since our last survey, and as our experience suggests that rates tend to increase appreciably over time, we have undertaken a survey of providers for 2014. This article summarises our main findings.
I. Housecleaning
Using the internet, we identified five professional agencies (for example, The Clean Team) in Calgary and four in Edmonton that provide house cleaning; and we identified fourteen ads from individuals (usually on Kijiji) in Calgary and seventeen in Edmonton.
In Calgary, the average rate among professional agencies was $34.40 per hour, with a range from $25.00 to $45.00.
The comparable average for Edmonton was $47.75, with a range from $34.00 to $57.00. Among those individuals who advertised on websites such as Kijiji, the average hourly rate in Calgary was $23.85 and in Edmonton was $24.32, (with almost half of the rates at exactly $25.00).
In the smaller cities, almost all of our data came from Kijiji ads. In those cities, the average hourly rates (with numbers of ads in brackets) were: Lethbridge (6), $24.16; Red Deer (7), $22.14; Medicine Hat (5), $24.50; and Grande Prairie (7), $25.00.
II. Handyman (maintenance) services
We obtained the names of handyman services in Calgary and Edmonton primarily from Kijiji. In each case, we attempted to obtain quotes to: “replace several fence boards, clean and repair the gutters, and paint the step rails and trim.” If those rates were not available in the ads, we phoned to obtain them.
The average hourly rate among nine services in Calgary was $31.77; whereas the average in Edmonton, among eight services, was $26.06. In both cities, more than half of the responses fell between $20.00 and $30.00, with the difference in the cities’ averages resulting primarily because a larger number of individuals quoted more than $30.00 per hour in Calgary (four out of nine) than in Edmonton (one out of eight).
III. Lawn care and snow removal
Again, lawn care and snow removal firms were identified from Kijiji ads in Calgary and Edmonton. With respect to lawn care, we asked for a quote on a suburban city lot (4,200 square-foot lot with an 1,800 square-foot, two-story home) with lawn in front and back.
With respect to snow removal, we obtained quotes for a house with a two car driveway, stairs, entry, and a city sidewalk. In all cases, firms quoted either per attendance at the home or per month (i.e. not per hour).
The fifteen lawn care firms in Calgary charged an average of $37.80 per attendance (with seven between $35 and $40) and the ten firms in Edmonton averaged $34.25 (with six at $30).
With respect to snow removal, the six Calgary firms that charged per visit averaged $38.75, whereas the eight that charged a flat rate per month averaged $160.00.
In Edmonton, we identified five firms, all of which charged a flat monthly rate, averaging $142 per month.
IV. Childcare
We identified five methods of providing (commercial) child care: day care, day home, live-in nanny, live-out nanny, and before- and after-school care. We obtained all of our information from various internet sites.
The numbers of day cares and day homes that were contacted in Calgary and Edmonton, and their average monthly fees, are reported in Table 1.
There it is seen that day homes charge approximately $700 to $800 per month for all ages of children; and that day cares charge approximately $1,200 to $1,300 per month for infants and from $900 to $1,200 for other age groups.
The average monthly rate for the twelve live-in nannies we identified in Calgary was $2,300; and for thirteen live-out nannies (also in Calgary) it was $2,518. (These individuals reported hourly rates of $13.08 and $16.55, respectively.) In Edmonton, many nannies only reported hourly rates. Assuming that those rates applied to forty-four hour weeks, the twelve live-in nannies charged an average of $2,053 per month ($11.66 per hour) and the eleven live-out nannies charged $2,464 ($14.00 per hour).
The average monthly rate for before- and after-school care was found to be $430 in Calgary (nine agencies) and $480 in Edmonton (YMCA).
V. Homecare and meal preparation
We were able to identify four agencies in Calgary that provide generalized home care services, such as meal preparation, light housekeeping, grocery and clothes shopping, grooming and dressing, bed-making, and bathing. In each case, we sought a quote for “a relative that had been injured in an accident and was recuperating at home.” The average hourly rate among these agencies was $21.50. In Edmonton, we found four individuals who charged an average of $19.50 per hour.
In addition, CBI Health quoted $29.00 per hour for assisting a relative “who had been injured in an accident and was recuperating at home;” and Alberta Health Service (AHS) indicated that they would provide: in home meal preparation for $25.00-$30.00 per hour; personal care (including bathing and dressing) for $23.00-$30.00 per hour; and twenty-four hour live-in care for $23.00-$27.00 per hour. (Skilled nursing would cost $38.00-$75.00 per hour from AHS).
VI. Hourly rate proposal
Statistics Canada provides data concerning the amounts of time spent on six types of “household work and related activities.” These are: cooking/washing up, house cleaning and laundry, maintenance and repair, other household work, shopping for goods and services, and primary child care.
For the purposes of calculating the costs of household services, in our reports we will combine “cooking/washing up” with “shopping” and evaluate that category at the approximate average rate for home care and meal preparation, $25.00 per hour (up from $20.00 per hour in our 2005 survey, but the same as the rate we obtained from our 2010 survey).
We will combine “maintenance and repair” with “other household work” (a large portion of which consists of “gardening and ground work”) and evaluate the resulting services at the landscaping, snow removal, and handyman services rate of approximately $35.00 per hour (up from $30.00 in 2010).
We will evaluate “house cleaning and laundry” at the rate for housecleaning services. For the purposes of our reports, we propose to use the conservative rate of $30.00 per hour in Calgary and Edmonton, and $25.00 per hour elsewhere (compared to $30.00 and $20.00, respectively, in 2010).
For each of the preceding services, however, we will assume that professionals will be 25 percent more efficient than the plaintiff would have been. Hence, our assumption is that the cost of those services is 25 percent less than the rate that has been quoted per hour.
Finally, we will assume that it costs $1,000 per month to care for each baby (the approximate mid-point of day care and home care costs), $900 to care for each toddler/pre-school child, and $450 per month to provide before- and after-school care for each school-aged child (up from $850, $800, and $400, respectively, in 2010).
For the purposes of quantifying child care costs on an hourly basis, we propose to employ $10.00 per hour.
VII. Discussion
The data discussed in this article raise an important question: if individuals listed on Kijiji charge approximately $25 per hour, why do consumers hire professional agencies at $10 to $15 per hour more than that? We suspect that the answer to this question derives from three factors.
First, agencies may be able to offer a higher quality of service than can private individuals. For example, they might provide training to their employees, use screening interviews to select the most skilled workers, or offer to replace workers who proved to be unacceptable to the client.
Second, it is possible that agencies might be able to complete their tasks more quickly than would private contractors, thereby lowering the effective hourly rate of the former.
Finally, commercial firms may be better able than individual cleaners to develop reputations for reliable service. If a cleaner is sick or otherwise unable to work, a firm can often replace that individual with another employee; whereas if self-employed individuals are unable to meet their commitments, their jobs go undone. Customers may be willing to pay a premium for the more reliable service.
Regardless of the answer to this question, however, the fact is that it would be very difficult to hire, say, a reliable housecleaner in Calgary or Edmonton for less than $25 per hour – and that cost would rise to more than $35 per hour if the client wished to hire a bonded cleaning service.
It should be noted, however, that even if it costs, say, $25 per hour to hire a housecleaner, it does not follow that it will cost $25 to replace one hour of a plaintiff’s time. The reason for this is that professional cleaners may be able to complete more work in an hour than could non-professionals. The best information we have available, for example, suggests that this differential is approximately 25 percent; that is, to replace one of the plaintiff’s hours will require only 0.75 hours of a professional’s time. In this case, the cost of replacing an hour will be $18.75 (= 0.75 × $25). [Note: this argument with respect to the greater efficiency of professional providers applies to all of the other services identified in this report, except child care.]
A further puzzle raised by our findings is that, according to the Alberta Wage and Salary Survey, “light duty cleaners” earned an average of $14.76 per hour in 2013, with a range of $13.76-$16.43, almost $10.00 per hour less than the rates charged by individuals advertising on Kijiji. What is the source of this differential?
One possibility is that the individuals identified by the Survey are working as employees for large cleaning companies and, therefore, have security of employment; whereas those advertising on Kijiji are self-employed, with the attendant uncertainties.
Another possibility is that it is the more productive, reliable individuals who choose self-employment.
Regardless of the answer, our evidence suggests that individual consumers will not be able to hire housecleaners at the wage found in the Alberta Wage and Salary Survey. It is the rates found on Kijiji and on the websites of professional agencies that best reflect the cost to a plaintiff of hiring a housecleaner for an hour.
VIII. Summary
In this article, we have reported the results of a survey of household services providers in Alberta. Two outcomes are very clear. First, it is inappropriate to use a single, hourly rate to evaluate all such services. Whereas child care services cost approximately $10.00-$15.00 per hour, housecleaning services cost more than $25 per hour, and lawn care and snow removal can cost over $35 per visit.
Second, the convention of using $12 to $16 per hour for household services is unsupportable. All of the services that were identified in our survey cost significantly more than that, even after allowing for the greater efficiency of professionals.
Our findings also suggest that it may be inappropriate to rely on the wage rates reported by the Alberta Wage and Salary Survey (or other sources of average wage rates) to estimate the costs of services such as housecleaning. Whereas the wages for that occupation average approximately $15 per hour, the individual housecleaners we identified through Kijiji charged more than $25.00 per hour on average; and housecleaning agencies charged $25.00-$50.00 per hour (more than twice the wage that Statistics Canada reports).
Finally, we are of the opinion that hourly rates for housekeeping services should not be obtained by averaging the figures that have been adopted in previous cases.
We are pleased to note that Madame Justice D. C. Read agreed with our conclusion on this point in her decision in Palmquist v. Ziegler, 2010 ABQB 337, at para [271] (emphasis added):
By using an average of numbers accepted in other cases in order to establish a number used to make an assumption in this case, all of the possible errors, either of the trial judge or of the economists who gave evidence in those cases, are incorporated into the number to be used in this case. Courts rely upon economists to determine what assumptions are reasonable to make and their decisions are only as reasonable as are the assumptions used. I have no means of evaluating the expert evidence that was before those other courts to determine whether or not I accept the assumptions made. It is circular to accept that an average of numbers accepted by another courts has any validity in respect to the issue of what economic assumptions are reasonable for me to make in this case.
To view our previous articles related to the costs of household services (or other articles of interest to personal injury law), please visit our website, www.economica.ca, or call our office at 403-297-0012.
Russette Pack is Economica’s administrative assistant.