The Cost of Household Services, Alberta, 2010: A Survey

by Amelia Lamb and Christopher Bruce

In 2005, Economica conducted a survey of the cost of obtaining household services (see The Expert Witness, Vol. 11, No. 2, Summer 2006). At that time, we found that housecleaners in Calgary and Edmonton charged approximately $25.00 per hour; and that handymen charged approximately $33.00 per hour.

Since that time, we have estimated the current costs of household services by increasing the 2005 estimates by the intervening rate of inflation in Alberta. This implies, for example, that our estimate of the cost of housecleaners was approximately $27.50 per hour in 2010.

Increasingly, however, we have become aware that our estimates differ from the rates that prevail in Alberta, particularly in Calgary and Edmonton. The informal evidence available to us suggests, for example, that many housecleaners now charge more than $30 per hour.

For this reason, in late 2009 and early 2010 we conducted a new survey of household costs. In this survey, we obtained housecleaning, handyman, landscaping and snow removal, child care, and home care/meal preparation rates from a large sample of agencies and individuals in both Calgary and Edmonton, and housecleaning rates for smaller samples in Lethbridge, Grande Prairie, Red Deer, and Medicine Hat. We report the results of that survey in this article.

1. Housecleaning

Using the internet, we identified five professional agencies (for example, Molly Maid) in Calgary and four in Edmonton that provide house cleaning; and we identified nineteen Kijiji or Craigslist ads (usually from individuals) in Calgary and twenty-five in Edmonton. In each case, we attempted to obtain an hourly rate to clean a 1600 square foot, two story house, assuming there were no pets and that the cleaner would not be responsible for the basement.

In Calgary, the average rate among professional agencies was $36.63 per hour, with a range from $24.00 to $45.00. The comparable average for Edmonton was $34.50, with a range from $20.00 to $41.25. Among those who advertised on Kijiji or Craigslist, the average hourly rate was $23.76 in Calgary and $23.44 in Edmonton, (with over seventy percent of the rates falling between $20.00 and $25.00).

In the smaller cities, all of our data came from Kijiji or Craigslist ads. In those cities, the average hourly rates (with numbers of ads in brackets) were: Lethbridge (16), $20.81; Red Deer (7), $20.00; Medicine Hat (4), $23.75; and Grande Prairie (7), $18.71.

An important question is raised by the deviation between the rates charged by professional services and those by individuals: if individuals charge, say, $20 to $25 per hour, and agencies charge $30 to $40 per hour, why do clients hire the professional firms?

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 will 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 a reliable housecleaner in Calgary or Edmonton for less than $20 per hour – and that cost would rise to more than $30 per hour if the client wished to hire a bonded cleaning service.

2. Handyman

We obtained the names of handyman services in Calgary and Edmonton from Kijiji and Craigslist. 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 twenty-six services in Calgary was $24.88; whereas the average in Edmonton, among twenty-one services, was $29.24. In both cities, approximately 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 less than $20.00 per hour in Calgary (nine out of twenty-six) than in Edmonton (two out of twenty-one).

3. Lawn care and snow removal

Again, lawn care and snow removal firms were identified from Kijiji and Craigslist ads in Calgary and Edmonton. With respect to lawn care, we asked for a quote on a suburban city lot (4200 sq ft lot with an 1800 sq ft 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 twenty-six lawn care firms in Calgary charged an average of $29.71 per attendance (with the majority between $25 and $35) and the thirteen firms in Edmonton averaged $36.15 (with the majority between $30 and $40). With respect to snow removal, the six Calgary firms that charged per attendance averaged $26.67, whereas the five Edmonton firms averaged $33.80. One Calgary firm charged a flat rate of $100 per month and one charged $140 per month.

4. Child care

We identify 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 $650 to $700 per month for all ages of children; and that day cares charge approximately $1,000 per month for infants and from $750 to $900 for other age groups.

 

The average monthly rate for the thirteen live-in nannies we identified in Calgary was $1,763; and for thirteen live-out nannies (also in Calgary) the rate was $1,683. In Edmonton, many nannies reported hourly rates. Assuming that those rates applied to forty-hour weeks, the ten live-in nannies charged an average of $1,770 per month and the eleven live-out nannies charged $1,912.

The average monthly rate for before- and after-school care was found to be $401 in Calgary and $415 in Edmonton.

5. Home care & 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 $24.81.

In Edmonton, we found only one agency (We Care), which charged $27.75 per hour. However, we also identified two individuals on Kijiji, who charged $14.00 per hour and $15.00 per hour, respectively.

 

6. 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 $5.00 per hour per child (assuming that nannies care for two children on average), housecleaning services cost more than $25 per hour, and lawn care and snow removal can cost over $30 per visit.

Second, the convention of using $12 to $16 per hour for household services is insupportable. All of the services that were identified in our survey either cost significantly less that that – for example, childcare – or significantly more – for example, housecleaning, lawn care, and handyman services.

These findings strongly support the view 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 by 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.

Our findings also suggest that it may be inappropriate to rely on the wage rates reported by Statistics Canada 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 and Craigslist charged more than $22.00 per hour on average; and housecleaning agencies charged more than $30 per hour (more than twice the wage that Statistics Canada reports).

7. 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, we propose to 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).

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 $30.00 per hour (down from $32.00 in 2005).

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 $20.00 per hour elsewhere (compared to $25.00 and $20.00, respectively, in 2005).

Finally, we will assume that it costs $850 per month to care for each baby (the approximate mid-point of day care and home care costs), $800 to care for each toddler/pre-school child, and $400 per month to provide after-school care for each school-aged child (up from $700, $600, and $275, respectively, in 2005).

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Christopher Bruce is the President of Economica and a Professor of Economics at the University of Calgary. He is also the author of Assessment of Personal Injury Damages (Butterworths, 2004).

Factors that Influence Retirement

by Derek Aldridge

This article first appeared in the Autumn 2011 issue of the Expert Witness.

We often note in our reports that a plaintiff’s loss of income can be sensitive to assumptions regarding his retirement age. (The retirement age assumption will generally be more important for a plaintiff who is close to retirement than for one who is still many years away.) In addition, it is also sometimes reasonable to incorporate early retirement scenarios, in which we assume that due to his residual deficits, a plaintiff will retire earlier than he would have if uninjured. This can have a substantial impact on the plaintiff’s future loss of income, especially if he is already close to retirement age.

The reason that an early with-accident retirement scenario is often sensible is because a person’s health is an important factor in his decision to retire. That is, poor health tends to hasten retirement, all else being equal. Of course, there are other factors that also influence a person’s decision to retire (financial considerations being most important, but also job satisfaction, spousal influences, and so forth), but health is an important factor, especially with respect to unplanned retirement.

Two articles that examine health impacts on retirement were recently published in Statistics Canada’s Perspectives on Labour and income. The first article (Heath factors and early retirement among older workers) used 12 years of longitudinal data1 to examine the various health factors that caused people to retire early. The second article (Retirement, health and employment among those 55 plus) used a cross-sectional survey2 of Canadians age 55 and over, to examine the reasons why they were either working (and not previously retired), partially retired, fully-retired, or previously retired but now working. Below, I will discuss some of the findings in these articles that are relevant to estimating a person’s loss of income due to an injury.

Health factors and early retirement among older workers (Park, 2010)

The first article relied on data from a group of workers who were age 40–52 in 1994/95. The survey interviewed this group every two years, through 2006/07, by which time they had reached age 52–64. By the end of the 12-year period, approximately 20 percent of the workers had left the labour force. However, among those who reported that they had fair or poor health, 35 percent had stopped working. Among those workers in poor health who stopped working, almost half reported that illness or disability was the main reason they had exited the labour force.

More specifically, the article found that when compared with men who reported that they had excellent health, men who reported fair or poor health were nearly five times more likely to exit the labour force. The researchers found a weaker health effect among women, and this effect was judged to be not statistically significant.3 The stronger effect among men was indeed found to be statistically significant. Among men, it was found that eye problems, back pain, ulcers, and migraine headaches were especially likely to increase the likelihood of retirement.

The researchers also examined health behaviours, and found that among men, daily smoking and heavy drinking also increased the chance of labour force exit (relative to males who did not practice these behaviours). In particular, male heavy drinkers were almost twice as likely to exit the labour force early, versus those who did not drink heavily. Among women, the one health behaviour that was judged to be statistically significant was obesity. Obese women were found to be 1.6 times more likely to exit the labour force early.

The article reported that if health status was controlled for, the effects of smoking and obesity disappeared. That is, smoking and obesity directly impact health, which in turn impacts retirement. Thus, the link between smoking/obesity and retirement is an indirect one. However, heavy drinking had a direct influence on retirement, even when overall health was controlled for. That is, heavy drinking was observed to be associated with early retirement among men, independent of the impact of drinking on the men’s health.

Although it is not especially relevant in the context of personal injury claims, the article also noted that working conditions had a significant impact on the likelihood of labour force exit. In particular, high job strain (stress), job dissatisfaction, and low supervisor support were all found to have statistically significant effects on retirement behaviour.

Retirement, health and employment among those 55 plus (Park, 2011)

The second article relied on a survey of a group of “older” Canadians, aged 55–85 in 2009. The survey group was divided into four subgroups: those who had never retired, those who were partially retired, those who were fully-retired, and those who had previously retired but had returned to work. The characteristics of the four groups were examined, in an effort to determine which characteristics were associated with a person’s retirement status.

The study reported some unsurprising results (for example, women were more likely to be retired than men; most of the workers who had never retired were under age 65, and so forth), and then addressed some issues that are much more interesting from our perspective.

Even when the age differences were accounted for, the study found that the retirees had worse health than those who were not retired. More than half of the retirees reportedly had three or more chronic conditions4, while more than a fifth had five or more chronic conditions. This effect was more pronounced among women than men.

The study also considered physical inactivity and found that retirees were much more likely to be considered physically inactive than those who were working.

Another factor considered by the study that is interesting from a personal injury perspective is financial status. The study reported that nearly 40 percent of the “never retired” workers reported that they had inadequate financial plans for retirement. More specifically, more than a third of them reported that they had less than $25,000 in savings and investments. In addition, among the groups who had retired at least once, the most common reason they reported for their decision to retire was that it was financially possible. These findings reinforce the notion that (especially for older plaintiffs), a person’s financial ability to retire should be considered when estimating when that person would have retired, but for the accident.

Comment

The two articles discussed above provide additional support for our common practice of assuming that a plaintiff with substantial residual deficits will likely retire earlier than she would have in the absence of the accident. The articles also identified some factors to be considered when making an assumption concerning a plaintiff’s without-accident retirement age. However, while we know that poor health tends to hasten retirement, we will continue to face the difficulty of knowing the specific effect on a particular plaintiff. That is, for most cases it will remain unclear whether it is more reasonable to assume that a plaintiff’s injuries will cause her to retire (say) three years early or two years. We are left with offering assumptions that are reasonable, providing multiple scenarios, and ultimately leaving it up to the Court to make a specific finding.

References

1. Park, Jungwee. 2010. “Health factors and early retirement among older workers.” Perspectives on Labour and Income. June 2010. Statistics Canada Catalogue no. 75-001-X. p. 5–13.

2. Park, Jungwee. 2011. “Retirement, health and employment among those 55 plus.” Perspectives on Labour and Income. January 2011. Statistics Canada Catalogue no. 75-001-X. p. 1–12.

Footnotes

1. Longitudinal data is collected over a period of time from the same set of people. [back to text]

2. Cross-sectional data is collected from a group of people at one point in time. [back to text]

3. By “not statistically significant”, I mean that the researchers believed that it might have been random chance that caused it to appear as though women with poor health were more likely to exit the labour force than women with excellent health. [back to text]

4. The number of chronic conditions was calculated based on respondents’ answers to questions about whether they had been diagnosed by professionals as having any of the following chronic conditions: asthma, arthritis, osteoporosis, high blood pressure, back problems, migraine headaches, chronic bronchitis, emphysema, chronic obstructive pulmonary disorder (COPD), diabetes, stroke, heart disease, cancer, stomach or intestinal ulcers, urinary incontinence, Alzheimer’s disease or other dementia, bowel disorder/Crohn’s disease or colitis, Parkinson’s disease, thyroid conditions, cataracts, glaucoma, mood disorders, and anxiety disorders. [back to text]

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Derek Aldridge is a consultant with Economica and has a Master of Arts degree (in economics) from the University of Victoria.