What a Tight Labor Market Means for the Cleaning Industry
In August of this year, approximately 201,000 jobs were created in the U.S. That stronger-than-expected gain knocked the unemployment rate down to an 18-year low of 3.9 percent, putting a tight squeeze on the labor market.
A tight labor market means businesses, including cleaning companies, are going to be working extra hard to attract top-quality employees while retaining and engaging the employees they have. Workers have the upper hand. They can demand more, not only in wages but also in “extras” from their place of employment.
In an interview with Bloomberg Law, Gary Burnison, CEO of executive search firm Korn Ferry said, “A tight labor market continually raises the stakes for employers. The advantage is clearly more toward the employee.”
But what does this really mean for the cleaning industry and what can facility managers expect?
- Wage Increases
According to the Bureau of Labor Statistics, the demand for contract cleaners is expected to grow 12 percent through 2022. More jobs mean people have choices. And, it’s an economic reality that as unemployment goes down, wages go up. If a company’s salaries aren’t in line with the current market, it’s going to be tough attracting and retraining any employees, let alone the best ones. Companies that stay ahead of the curve and offer top wages will attract the best people to begin with, and for facility managers that may mean increased labor cost.
It’s important to keep in mind that compensation also varies by locale. Generally, facilities in urban city centers are going to be easier to staff than those in more affluent, suburban areas. Building managers must be even more prepared to adjust their pay rate to accommodate the financial demands of workers in these higher income and less dense neighborhoods when the labor market is tight.
- Shifting Labor Pools
In a shallow pool of unemployed workers, it’s more difficult to find talent to hire. Companies are starting to look to alternative labor pools to fill employment vacancies.
With unemployment rates as low as they are, the talent war has reached ‘a fever pitch,’ said Paul McDonald, senior executive director for Robert Half. To adapt, businesses are taking alternative approaches to hiring, according to a Robert Half survey.
When the need becomes critical, companies tend to look outside the typical demographic and skill level for staff. That means superior training takes on even greater significance when hiring those who may be a cultural fit but may never have been employed in the cleaning industry before. Employing the best possible workers is key, and janitorial companies that train well and quickly will always come out ahead.
For facility managers, this means ensuring you communicate detailed cleaning specifications and KPIs to your cleaning company so you continue to receive top quality work from skilled janitorial workers. It may also mean an increase in labor cost due to increased training.
- Competition Among Industries
Game on! When jobs are plenty and available workers are few, there is increased competition among industries to attract employees. In addition to attractive wages, cleaning companies must do what they can to stand out and become more enticing to the shrinking labor pool. Here are three ways companies can stay on their A-game:
• Retain employees. When employees don’t leave, you don’t have to replace them. Employee turnover is costly, averaging around 200 percent and sometimes reaching 400 percent annually. Cash is always king when it comes to retaining employees, so offering competitive or better than average wages should be a no-brainer.
• Engage employees. Retention and engagement are not the same. Engaging employees means making them want to stay, not just for monetary reasons; making them feel like they make a difference, that management cares and wants them to succeed.
• Optimize benefits. Competitive benefits packages are second only to wages when it comes to keeping employees around and attracting new ones.
With U.S. job openings jumping to a record high in January of this year, cleaning companies are striving even harder to find qualified employees. Even in this tight labor market, at 4M, our turnover rate currently averages only 87.76 percent companywide, well below the current industry average of 256 percent. That means we are retaining and engaging top cleaners and is just one of the reasons why we deliver the best, innovative, safe and sustainable cleaning and service solutions for your business. To learn more, give us a call or CLICK HERE to contact us.