Michigan Minimum Wage Threatens to Drive Janitorial Service Pricing Up

Here in Michigan, the state’s minimum wage continues to go up seeing increases from $8.15 in 2015 to $8.50 in 2016, $8.90 in 2017 and an increase to $9.25, expected to go into effect January of 2018.

In industries that depend heavily upon labor like the janitorial industry, rising labor costs have contributed to increased service costs for the customers these industries serve. With labor costs accounting for the majority of janitorial costs in a cleaning business, it is easy to see how challenging it is for a commercial cleaning company to singlehandedly absorb these costs without passing along the increase to their customers.

Still, Facility Managers are under no less pressure to keep janitorial budgets in check and even reduce costs with further belt tightening. So how are some commercial cleaning companies responding to the increased labor costs without either significantly increasing prices OR sacrificing effective janitorial services? It comes down to some best practices that create leaner and more efficient janitorial services, like:

1. Team Cleaning
2. Time Saving Cleaning Equipment
3. Smart Cleaning
4. Employee Retention Practices
5. Open Book Pricing

Team Cleaning Uses Specialization To Maximize Effectiveness & Efficiency

While many commercial cleaning companies continue to use zone cleaning, team cleaning has proven to be more efficient and even more effective.

Zone cleaning divides a building into “zones” or areas that are the responsibility of an assigned cleaner or cleaners. With zone cleaning, each cleaner is responsible for all cleaning tasks in their zone, sometimes an entire floor. The problem with zone cleaning is one of duplication and specialization.

For instance, if each cleaner must vacuum, clean restrooms and the myriad of other duties involved in cleaning one’s zone, then they must each have a full set of the equipment, tools and products required. Likewise, if zone cleaners are responsible for a wide range of tasks, they must be adequately trained across many duties. The diffuseness of responsibility can also make it harder to hold individual cleaners or teams accountable for missed or shoddy work.

Team cleaning offers a much leaner approach while allowing for specialization and enhanced accountability. With the team cleaning method, cleaners perfect specific tasks and perform them throughout a facility. Typically, there is a light duties specialist, a vacuum specialist, a restroom specialist and a utility or general specialist whose duties may vary.

With each person responsible for a specific cache of duties, the work becomes more efficient, accountability becomes heightened, and with less equipment needed, costs are managed better.

Time Saving Cleaning Equipment Can Keep Janitorial Pricing Low

Janitorial equipment has made huge strides in the last few years. From vacuums to floor cleaning machines and more, commercial cleaning equipment has become more efficient and more effective.

For instance, with the Clarke’s Boost floor cleaning machine, a case study showed an 84% reduction in labor compared to older floor cleaning methods.

Investing in this technology has an associated cost, but high tech, efficient equipment can significantly reduce man hours and thus helps keep prices steady even as Michigan’s minimum wage rises.

A second example, HEPA filtration backpack vacuums, allow workers to clean more than twice the area of a building in the same time as traditional vacuums while reducing repetitive motion injuries and improving indoor air quality. Not only does this advanced commercial cleaning equipment save janitorial labor hours, most of it is greener than ever using fewer chemicals, less power, and less water than before.

Smart Cleaning Can Reduce Commercial Cleaning Prices Without Service Drop Off

What is Smart Cleaning and how can it help push back on the rising costs of janitorial labor? Smart cleaning is essentially the process of strategically reducing services.

We say strategically because if your services simply drop off, you will be inundated with complaints and issues. Smart Cleaning requires two things: an experienced commercial cleaning company that understands where services can be reduced without risk, and a janitorial company willing to take the time to truly understand your building and usage patterns.

Successful Smart Cleaning requires a great deal of thought, customization, innovation and commitment. With Smart Cleaning, you and your janitorial services company decide which services are essential, which are important, and which you can stagger or intermittently go without.

In the hands of an experienced cleaning company, Smart Cleaning offers one of the best ways to cut costs. With a less experienced office cleaning company, however, it can simply look like your cleaners are doing less. The most strategic Smart Cleaning reduces janitorial hours without a very noticeable drop-off in service.

Low Janitorial Turnover Creates Efficiencies & Helps Hold Janitorial Pricing Steady

People are the most important element in any service business. The janitorial industry already has significant turnover. When you find companies that work hard to keep their employee turnover significantly lower than the industry average, you are likely to save money.

Why? First, the costs of bringing on a new employee are expensive: recruiting, screening, hiring, training and more. The more janitorial turnover, the more frequently a commercial cleaning company must incur onboarding costs, and you can bet those added costs are eventually passed on to you, the customer.

Second, the longer a cleaner has been an employee the more consistent their work is, the more efficient their work is, and the more quality training they have been exposed to. Long-term cleaners can often complete the same work quicker and better than new hires.

Open Book Pricing Shows You Exactly What You Are Paying For

Open Book Pricing is when a janitorial company literally opens their books and shows you how they break down costs and profit. In this way, you can see both that you are getting what you pay for and that there are hard costs to cleaning that are largely outside of your cleaning company’s control.

Typically, janitorial pricing is based on the following items:

• Labor
• Insurance
• Taxes
• Employee Benefits
• Direct Costs (cleaning supplies, paper products, etc.)
• Management Fee
• Profit

Labor is the single greatest expense in a janitorial service, so it follows that when there is an increase in the Michigan minimum wage, it becomes very challenging to keep prices static.

The most effective, responsive janitorial companies will look everywhere within their business to make processes leaner to avoid passing on additional costs to the customer, including things that reduce labor hours like Team Cleaning, Smart Cleaning, and efficient equipment.

But if your facility requires a certain amount of fixed labor hours, the costs of those hours will increase with a rise in the state’s minimum wage. The goal is to hold costs, or at least keep price increases as low as possible, and understand exactly where any increases are coming from. Leaner processes can help keep prices steady as Michigan’s minimum wage continues to rise, but the impact on the labor component of janitorial pricing is unavoidable.