Prices are rising. If you’ve bought groceries or filled up your car lately, you have noticed that things just cost more these days. We’ve all felt the impact of $3 plus a gallon of gas or shelling out more cash for a box of cereal. But price increases aren’t just confined to the grocery store and gas station. You may begin to see significant increases in the prices of goods and services that you buy for your business. That includes your janitorial service. Janitorial service is very price sensitive. Potential clients often choose janitorial services based on price. To compete, janitorial service companies try hard to keep prices as low as possible. That often means paying low wages to employees to keep expenses low. In addition, janitorial service providers have absorbed increases in minimum wage, even sometimes at a loss, to prevent having to raise their prices. However, things are changing that will make offering rock bottom prices and absorbing increases in operating expenses, a thing of the past for janitorial service providers. There are four major things happening right now that could result in significant increases in what your business pays for janitorial services. Many of these factors are also being felt by your business. Minimum Wage is Increases Over the past few years there has been a huge movement to raise the minimum wage. In November 2020, Florida voters agreed and overwhelmingly voted to approve an amendment to the Florida State Constitution to raise the minimum wage to $15 per hour by 2026. The Florida minimum wage will increase one dollar per year beginning in September of 2021 until the minimum wage reaches $15 per hour. This past September, the minimum wage in Florida was increased to $10 per hour. In September 2022, it will increase again to $11 per hour. An increase in mandatory minimum wage not only affects direct payroll expense. These wage hikes also cause an increase in unemployment taxes and Worker’s Compensation Insurance premiums. That’s because these are connected to employee wages. The more an employee earns, the more an employer will pay for unemployment taxes and Worker’s Compensation premiums. Janitorial service is very labor intensive. There is no cleaning without janitors. Janitors must be paid for every second they spend working or in some cases even travelling. While raising minimum wage is a great win for workers in the state of Florida, it also means that employers must adjust to be able to pay workers an increased wage. That could mean passing the increase in labor expenses on to clients, resulting in increased janitorial service prices. There is a (serious) Labor Shortage Call it The Great Resignation or the Big Quit, or any other name floating around on the web, it all means the same thing. Hiring is hard and employees are even harder to come by. All employers are saying the same thing, they cannot find employees to hire. Janitorial services are not immune to these hiring difficulties. With so many employers all fighting for the same small pool of employees, employers are having to up their game to complete. That often looks like paying more than other employers and offering incentives like signing bonuses, just to get people to show up for interviews. Many employers are paying close to or even more than $15 an hour right now to attract workers. Increasing pay to win and keep employees doesn’t seem to be halting anytime soon A recent survey found that companies are planning to set aside 3.9% of their payroll budgets for raises in 2022. Pay increases of that amount have not been seen in over ten years. Also, the labor shortage doesn’t just affect the pay of employees new to the business. To keep clients serviced, many janitorial service providers are asking current employees to work longer hours. These increased shifts and longer hours result in expensive overtime pay to janitors. Janitorial services may also offer pay increases to keep their good employees on board when higher pay is so easily available now. A shortage of labor and tough competition recruiting workers can all contribute to an increase in janitorial costs for commercial facilities. Inflation is stressing operational budgetsTransitory or not, the fact is everything costs more. That includes the products that are needed by janitorial services to run, like cleaners and disinfectants. Janitorial services are also seeing real increases in the cost of consumable products like toilet paper, paper towels and trash can liners. Rising costs of gas have made it more expensive for janitorial services to even get staff to locations to clean. These are all necessities for any commercial facility. However, when the cost of these products rises sharply, janitorial service providers may have to raise prices to keep up with true operating expenses. The Pandemic Just Won't Let Us GoAs much as we can’t wait for COVID-19 to become a far distant memory, it is still very much a part of our present reality. Employers all over the country are still dealing with the effects of COVID-19. Many are still trying to recover from 2020, which was a hard year financially for many businesses. Employers are still having to buy personal protective equipment like gloves and masks for employees in a n effort to keep them safe. Or pay employees to be off work after being vaccinated or sick with COVID. Also, businesses are beginning to request adjustments to their scope of work to include more disinfection of surfaces or added cleaning days. These are all reasons that you may see a price adjustment as a result of the pandemic. The extent to which your business will be affected by these ongoing factors will depend on multiple things. If your janitorial service does decide that an increase is necessary a few things may determine the significance of that increase. The length of time since your last increase and cost reduction options that are available to your janitorial service are among the determining factors. The best approach is to be proactive. Reach out to your janitorial service provider and have a conversation about how these challenges are affecting them. Be prepared with ideas to reduce expenses such as changing your scope of work or service frequency. Doing so will prevent a surprising price increase and help your business prepare for the change.
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