Articles

The Public Policy Impact on Labor

Categories: Business Management, Government Affairs

Simply put, the labor market is tight. Unemployment is low, wages are increasing, and there are more open positions than workers looking for jobs.

While most of this is due to the economy, some of the labor issues affecting the cleaning industry are a result of government actions. Based on surveys and feedback from our members, we know that labor issues are a top concern for the industry.

Some of the most relevant legislative and regulatory issues impacting the cost and availability of labor include the broken immigration system, minimum wage laws, as well as new proposed overtime rules.

On the bright side, some businesses are optimistic that criminal justice reforms, such as the federal “First Step Act,” and the increased success of ex-offender re-entry programs, may help relieve some of the pressure on the labor supply.

Immigration

There is no larger hot-button labor issue than immigration. No matter one’s personal position on the issue, most generally agree that the current system is broken. 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, is contributing to the cleaning industry’s struggles to fill and retain workers. Without necessary reforms, our members cannot fulfill the needs of their customers.

In April, ISSA signed onto a coalition letter with other trade and business associations, in support of a permanent solution for the Dreamer population and participants in the Temporary Protected Status (TPS) program.

Minimum wage

Over the last few years there has been a national push to increase the minimum wage at the federal, state, and local levels. While the federal minimum wage rate hasn’t been increased since 2009, dozens of local and state governments have increased their minimum wages to as high as US$15 per hour.

Since labor makes up roughly 90% of the costs of cleaning, these wage mandates disproportionately impact our members. As a result, any policies related to increasing the cost of labor will have a significant impact on the industry. ISSA supports competitive market wages for all workers but opposes one-size-fits-all wage mandates that harm businesses and employees. For instance, many state minimum wage laws don’t make a distinction between rural and urban areas, where the cost of living could be vastly different. This puts smaller businesses at a distinct disadvantage to larger competitors.

Minimum wage hikes can also have a negative impact on workers. A University of Washington study of Seattle’s $15 per hour minimum wage increase found the number of low-wage jobs was decreasing and, as a result, employers were hiring fewer, more experienced employees instead.

These added labor costs are compounded by the fact that the cleaning industry is already struggling to find enough employees to meet demand. Because the cleaning service provider industry is incredibly competitive with more than 850,000 businesses nationwide, most of which are very small, they are more adversely impacted by regulations than other industries. ISSA will continue to monitor and report on this issue to our members.

New proposed overtime rules

On March 7, 2019, after months of delays, the U.S. Department of Labor (DOL) released a new Notice of Proposed Rulemaking (NRPM). Their rule will formally rescind the Obama rule, which is important because it will protect employers against potential retroactive enforcement of the rule.

Since 2014, when President Barack Obama first directed the DOL “to modernize and streamline the existing overtime regulations,” ISSA has been active in pushing for more reasonable overtime rules than proposed. In our 2015 comments to the DOL, ISSA pointed out these regulations would cost our members “$100,000 to well over $750,000 annually, depending on the size of the company and the number of employees.”

ISSA was actively submitting comments to the DOL and being a member of the Partnership to Protect Workplace Opportunity (PPWO), a diverse coalition of associations.

As a result of these advocacy efforts, the new proposed rules have a significant reduction of the salary threshold from $47,000 down to $35,308, not implementing automatic increases to the threshold, and not changing the duties test. Each of these provisions, if left unchanged, would have been detrimental to our members.

On April 11, 2019, ISSA participated in a roundtable hosted by the U.S. Small Business Administration, Office of Advocacy, on the issue. In response to questions, the DOL officials said that they hope to finalize a rule by January 2020. Department staff also said that they do not plan to set different salary thresholds based on business size.

Criminal justice reform

In 2018, President Donald Trump signed the bipartisan “First Step Act”, which gives judges more flexibility in sentencing offenders for nonviolent crimes, as well as directing resources towards the rehabilitation of ex-offenders. Similarly, states have been passing criminal justice reforms that are already making the hiring of ex-offenders more common among employers.

According to the Society for Human Resource Management (SHRM): “Nearly 700,000 people are released from prison each year and are locked out of the job market. Those who have served their time should not be ‘re-sentenced’ by employers, especially when businesses are experiencing a human capital crisis.” The SHRM’s “Getting Talent Back to Work” initiative has attracted more than 700 individuals, companies, associations, and nonprofits, willing to hire qualified applicants with a criminal record.

What’s next?

One way that cleaning service providers and facility managers are addressing labor issues is by looking at alternatives to traditional worker intensive janitorial services.

In April of 2019, Walmart announced it would begin rolling out more than 1,500 autonomous floor cleaners from Tennant Co. The increase in the cost of labor, a tight labor market, and advancements in technology are all contributing to changes in the cleaning industry. In the future, janitorial workers may be asked to focus on more specialized aspects of the job, or cross trained, as technology frees them up from some less technical aspects of the job.

To hear and learn more about the state of labor, please join us at the ISSA Show North America in Las Vegas on November 20 for a presentation on the subject. ISSA will continue to educate and engage members on policy issues impacting the cleaning industry now, and those that might be coming on the horizon.

During the coming months, ISSA will be expanding its advocacy efforts, rolling out new resources, and engaging policymakers on this, and other issues, affecting the entire cleaning industry.

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

About the Author.

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