How Michigan’s Rising Minimum Wage Will Change Janitorial Pricing

In the state of Michigan, legislation has pushed up the minimum wage resulting in the small but impactful raise from $8.15 in 2015 to $8.50 in 2016 to $8.90 in 2017 to $9.25 which went into effect January of 2018, and now again $9.45 for 2019 starting in late March. This is all while the federal minimum wage is just $7.25 an hour. As an industry that is largely pinioned on its employee base, pricing can be severely impacted by an increase in such costs. While we can try to absorb these changes to limit the impact on your business, it is easy to see how challenging manage operational cost increases without passing along some of this price to you, the customer. That being said, you as the Facility Manager are still under pressure to keep your janitorial budgets under control. Let's look at a couple of ways that commercial cleaning companies are responding to higher labor costs to make sure that your cleaning budget isn’t further impacted while maintaining an effective level of service. For many of the most experienced, consistent, effective cleaning companies, it is a combination of some of the industry's best practices like:

• Smart Cleaning
• Open Book Pricing
• Time Saving Cleaning Equipment
• Team Cleaning
• Employee Retention Practices

The Difference Between Team Cleaning & Zone Cleaning

Team cleaning has been demonstrated again and again to be strictly more efficient than the traditional zone cleaning. To zone clean is to divide a building up into areas, assigning a specific cleaner or cleaning team to each respective area. While this may seem like a common sense approach to cleaning it can present a couple of problems, namely duplication and specialization. Take for example the process of cleaning one floor, it must be vacuumed or mopped (or both), dusted, surfaces cleaned, trashes emptied, and restrooms cleaned. This requires a large amount of equipment, consumables, and other products for each cleaner to do their job. Further, to properly complete these tasks, each cleaner must be familiar with the specifics of each task that goes into cleaning a whole section of a building. This is a challenging task and can often lead to incorrectly completed work. Team cleaning instead sends a group of people, each with assigned tasks to do throughout a facility. Each person is a specialist in their own right working on one specific item or process for each room. This way, each individual is better trained in their task and doesn't have to move large amounts of equipment from room to room helping to increase efficiency and decrease overall cost. Similarly, if you have a vacuum specialist, a floor cleaning specialist and a restroom specialist, for example, you do not have to outfit each individual cleaner with the equipment and supplies to do a variety of tasks. It is cheaper and far more efficient.

Industry Innovation Can Help Keep Prices Low

Like every industry, the janitorial industry has gone through a number of technological advances in the past few years. As a result, commercial cleaning has become increasingly more effective and more cost efficient. As an example of, the Clarke’s Boost floor cleaning machine, through case studies, has been shown to reduce labor costs by over 80%. While investing in this technology has a high associated cost, the efficiency it offers and reduction in hours can help keep janitorial and commercial cleaning prices down despite a rising minimum wage. Another technology that drastically changed the industry is HEPA filtration backpack vacuums, which allow cleaning staff to cover more than twice the area in a facility in the same amount of time as before. Additionally, the HEPA backpack vacuums also helped reduce repetitive motion injuries as well as improve indoor air quality compared to traditional vacuums. As you can see, not only does innovation in the commercial cleaning industry reduce labor hours, it also improves the health of your building by implementing greener, more sustainable technologies.

How to Use Smart Cleaning to Keep Prices in Check Without Letting Go of Quality

Implementing Smart Cleaning in your facility can help you keep costs down while living with the rising cost of labor in Michigan. To Smart Clean is to strategically target certain services while reducing others to help reduce the overall cost of cleaning while maintaining a similar, livable level of quality. Strategicallyis of course the key word. If your level of service suddenly drops off you are sure to be flooded with complaints and numerous other ancillary problems. The key to effective Smart Cleaning is two things: first, use a cleaning company that is experienced enough to know what can be cut back on and what cannot. Second, find a company that is willing to take the time to understand the ins and outs of your building as well as your specific needs so as to best implement Smart Cleaning in a way that works well for you and your facility. Smart Cleaning isn’t just a phrase that you can throw at your commercial cleaning company and expect results, it requires forethought, innovation, customization and above all, commitment. By cutting tasks that can go undone intermittently, you can significantly reduce your cleaning costs. When applied by an experienced company, you'll find you can reduce your cleaning hours and cost without drastically lowering the quality of your cleaning.

Janitorial Turnover Can Hurt Your Cleaning and Your Wallet

Any service businesses’ single greatest resource is their people, this is in part why rising labor costs have a big impact on Michigan cleaning companies. Employees are key to delivering quality service but the commercial cleaning industry can be notorious for its employee turnover. So, when you come across a janitorial company that actively works to reduce their turnover rate, you are very likely to benefit from their endeavors. Why is that? Mainly because the cost of bringing in new employees with any degree of frequency is a very large expense as it entails recruiting, screening, hiring, and training among other things. Add to that newer employees are more inefficient as they are learning and mastering their responsibilities. This is of course unavoidable, but if your cleaning company is a revolving door of new hires, they are really always in training mode reducing the quality and value of the cleaning services you are receiving. The higher the turnover rate is, the higher the cost is going to be to you, not to mention that the quality of your cleaning will be reduced by the constant changing of the staff that is cleaning your facility.

Use Open Book Pricing to Your Advantage

Open Book Pricing is when a janitorial company literally opens their books and shows you how they break down costs and profit. The benefit of this type open communication is that you can see exactly what it is your paying for and exactly what the hard costs are for your janitorial company. What you should be expecting to see when it comes to hard costs is the following:

• Direct Costs (often in the form of consumables like cleaners and other paper products)
• Labor
• Taxes
• Management Fees
• Employee Benefits
• Insurance
• Profits

In terms of expenditures, the highest expense will always go to staffing, and with the increase in minimum wage, this number will only go up. The best companies in the industry will look to position their business model in such a way to avoid passing on the cost to you by utilizing techniques like Smart Cleaning and by investing in efficient equipment. However, if you need fixed hours, the cost is going to go up. Taking advantage of industry innovation can help keep prices level, but understand how the rising wage impacts the price of your janitorial and commercial cleaning service provider.

Managing a Rising Minimum Wage Without Sacrificing Service

Inevitably, Michigan’s rising minimum wage will have an impact on costs in a number of industries and the janitorial industry is no exception. Still, there are things to be done with both you and your janitorial company making adjustments to try to keep costs as level as possible and still keep your facility well maintained. Are you looking for better service? Better value? More consistency? Reach out and let us show you how we can make your facility services work for you rather than against you.

Stathakis proudly serves the Southeastern businesses of Ann Arbor, including Detroit, Royal Oak, Farmington Hills, Downriver, Farmington, Dearborn, Livonia, Troy, Auburn Hills, Novi, and Plymouth.