Articles

Cutting the Labor Gordian Knot

Categories: Business Management, Government Affairs

In June of 2019, I wrote in ISSA Today how a tight labor market was creating challenges for the entire cleaning industry. Since then, many of the same forces, such as increased minimum wages and the absence of immigration reform, remain at play. Now, additional pressures related to COVID-19, such as federally enhanced unemployment, fear of returning to in-person work, and increased competition for labor, have made finding employees even harder.

The issue is complicated, much like a Gordian knot, with no easy remedy. Some of the labor issues specific to the cleaning industry are a result of government action or inaction. As such, ISSA’s government affairs department has been tracking and lobbying governments on those concerns. Other issues are more market-based and may require the industry to be more innovative and agile than in the past. Based on surveys and feedback from our members, we know that labor issues have been, and will continue to be, a top concern for the industry and a top priority for our advocacy efforts.

Enhanced unemployment

During the height of the pandemic, cleaning industry workers, for the most part, were deemed “essential” by federal and state governments, and thus continued working. In March 2020, the CARES Act was passed and served as a lifeline for many businesses and laid-off workers. Specifically, it included an additional unemployment benefit of US$600 per week on top of state benefits. For industries that had been shut down, this added benefit was beneficial, but for businesses deemed “essential,” especially lower-paying jobs, it created a disincentive to work.

A July 2020 National Bureau of Economic Research study found, “Janitors who stay on the job may be paid less than unemployed janitors collecting 158% of their prior wage.” In total, two-thirds of unemployed workers were making more than when they were employed. The enhanced benefit was subsequently reduced to $300 per week and is slated to expire on September 6, 2021. However, more than 25 states have decided to end this supplemental payment prior to the Labor Day expiration date. 

These states argue that additional unemployment insurance is disincentivizing work and making it harder for businesses to attract workers. Some states like Idaho have even created “back to work” bonuses for individuals getting jobs and going off unemployment. President Joe Biden has announced he will not push for an extension of the benefit beyond September 6, 2021.

ISSA has been actively lobbying to roll back the enhanced unemployment and supports efforts to incentivize a return to work. 

Fewer workers, higher wages

According to the Bureau of Labor Statistics (BLS), as of May 2021, the unemployment rate is 5.8% compared to pre-pandemic levels in February of 2020 of 3.5%. This is despite the fact there are “now hiring” signs posted all over the place as more businesses reopen fully.

The search for skilled manufacturing and distribution workers, as well as front-line cleaning workers, is as competitive as ever. In the last couple of years, state and local minimum wage increases pushed labor costs up for the industry. Despite failed efforts to increase the federal minimum wage to $15 per hour, many businesses like Amazon and others are offering incentives such as sign-on bonuses in addition to $15 per hour starting wages. In fact, according to the BLS, non-college-educated blue-collar workers are seeing wages rise faster than college-educated ones.

The Wall Street Journal reported, “The share of the working-age population either holding or seeking a job has fallen to 61.6% in May 2021, from 63.3% in February 2020—a loss of 3.5 million potential employees. This may have raised what economists call the ‘reservation’ wage, the lowest pay for which someone is willing to work. Workers without a college degree have increased their annual reservation wage to $61,000 from $52,000 in late 2019, according to surveys by the Federal Reserve Bank of New York”.

COVID worries

Some workers are still worried about returning to in-person jobs like the ones offered in the cleaning industry. This is one reason why in December of 2020, ISSA asked the U.S. Centers for Disease Control and Prevention (CDC) Advisory Committee on Immunization Practices and state governors to prioritize the cleaning industry for access to vaccinations. To date, more than 50% of the adult United States’ population have received at least one dose of vaccine.

Even so, there is still some hesitancy to return to workplaces, especially among front-line workers. This, combined with the increased demand by the public for more visible and frequent cleaning, adds to the stress and strain on workers.

Despite front-line cleaning and manufacturing jobs needing to be in person, the adjustment and normalization of remote work in other sectors contribute to the evolving labor market. According to a survey from ZipRecruiter, “60% of respondents said they would prefer to find a job where they can work from home.” The survey also found the desire to work from home is even higher among women and African Americans. 

Immigration

One way to help add a supply of workers would be to fix what most generally agree is a broken immigration system. Most also agree that the United States needs a strong and robust immigration system that protects the safety of the country and those wanting to immigrate here, as well as one that enables employers to fill their labor needs. The current system has been failing in this regard.

The cleaning industry may be affected much more so than others by the lack of immigration reform. ISSA has members representing the entire supply chain of the cleaning industry, from manufacturers down to janitorial staff. A lack of high-skilled, as well as lesser-skilled essential workers, contributes to the cleaning industry’s struggles to fill and retain employees. Without necessary reforms, our members cannot fulfill the needs of their customers.

One reform ISSA is considering supporting is the creation of a non-seasonal temporary worker program that allows an employer to hire foreign workers when efforts to recruit American workers are unsuccessful. The number of visas available under a new temporary worker program should be based on economic need rather than an arbitrary cap. The Biden administration has signaled that immigration reform is likely to be a key issue during the next few years.

Feedback

ISSA will continue to educate and engage members on labor issues impacting the cleaning industry now, and those that might be coming on the horizon.

What are you doing to fill job openings? What has worked and what has not worked? Are there government barriers or incentives you think ISSA should be advocating for? Please do not hesitate to reach out to me at [email protected] with your feedback.

As the voice of the cleaning industry, your ISSA is at work for you!

PLUS: Looking to add rockstar employees to your team? This special sneak peak gives you a taste of what you can expect from Brandon Vaughn’s  workshop, The Ultimate Hiring Flywheel: How to Attract and Keep Rockstar Employees, at ISSA Show North America this fall in Las Vegas. 

About the Author.

John Nothdurft is the Director of Government Affairs for ISSA. He can be reached at [email protected].