Many States Are Raising Their Minimum Wage.

When and Where Does the New Minimum Wage Go Into Effect?

Who Benefits from the Increased Wage Most Significantly?

How will Wage Increase Affect Small Businesses?

Will the New Minimum Wage Be Indexed For Inflation?

Will Cleaning Service Prices Increase Due to Wage Hike?

When and Where Does the New Minimum Wage Go Into Effect?

Multiple states, including Massachusetts, Rhode Island and Connecticut, will raise their minimum wage in 2023. This has been a slow steady multiyear climb for many states. For many, it began on April 27th, 2021, when President Biden issued an Executive Order requiring federal contractors to pay a minimum wage of $15 per hour beginning January 30, 2022. The Order applies to all federal contractor employees working on or in connection with a federal government contract. As noted by the White House Fact Sheet, this includes workers such as cleaning professionals, maintenance workers, nursing assistants, food-service employees and construction laborers.

“I believe no one should work full-time and still live in poverty,” Mr. Biden said in a Twitter post announcing the move.

The pay hikes come as the federal minimum wage, which hasn't seen an increase for more than 11 years, remains stuck at $7.25 an hour — the longest span the baseline wage has gone without an increase since it began in 1938.

This Executive Order, although directed at a specific set of government workers, caused a ripple effect across many states, including Rhode Island, Massachusetts and Connecticut.

Twenty-five states and the District of Columbia announced the raising of their minimum wage in 2021 - (see full list, exact wages and effective dates here)

Who Benefits from the Increased Wage Most Significantly?

More than 4 in 10 janitors, housekeepers and other cleaning workers would see an improvement in pay, according to Economic Policy Institute.

"According to the Congressional Budget Office, the [Raise the Wage Act] will likely raise wages for 27 million Americans, raise almost a million people out of poverty and increase aggregate wages for low-wage workers by over $300 billion over the next decade," said Rep. Dean Phillips, D-Minn.

Some opposed to the minimum wage increase, believe only part-time college students and teens working summer jobs will benefit. That demographic has shifted in recent years. For example, 43 percent of all minimum wage workers have attended at least some college and 28 percent are parents.

Half of Americans in low-wage occupations are essential workers. A $15 per hour federal minimum wage would disproportionately benefit the country’s essential workers.

Economic Policy Institute said the rise in the minimum wage would put an estimated $3,300 more a year into the pockets of affected workers who are employed the entire year. That's a big difference considering that 59 percent of families living below the poverty line would benefit from the change. 

The majority of workers who would benefit are adult women—many of whom have attended college and many of whom have children.

More than half (51%) of workers who would benefit are adults between the ages of 25 and 54; only one in 10 is a teenager.

 

Nearly six in 10 (59%) are women.

 

More than half (54%) work full-time.

 

More than four in 10 (43%) have some college experience.

 

More than a quarter (28%) have children.

How will Wage Increase Affect Small Businesses?

Small businesses have been especially hard hit during the COVID-19 pandemic.  Some feel this is an inopportune time to raise the federal minimum wage, as Democrats in Congress have proposed. But advocates of the Raise the Wage Act say that lower-income workers have been struggling during the pandemic and the federal minimum wage is long overdue for an increase.

Some businesses say higher wages pay off long-term by decreasing turnover and creating higher satisfaction on the job. After one company boosted its starting wage to $17 an hour in 2014, its voluntary turnover decreased 50% from 3% to 1.5%.

Critics claim higher minimum wages can hurt the labor market by depressing job creation — yet recent economic research hasn't found support for that claim. Advocates say a higher minimum wage helps the economy by putting more money in the pockets of workers who tend to spend it on local businesses and services.

Opponents of increasing the minimum wage to $15 argue that it will burden small businesses—making up 99 percent of all employers—with increased labor costs and result in layoffs, expediting automation or going out of business.

When the lowest-wage earners increase to $15 per hour, every current middle-tier employee making $15/hour will justifiably want their hourly rates increased commensurate with their skills, experience and tenure.

Will jobs be lost to machines? Will small businesses in retail, property and facility management, hospitality, banking and beyond, be forced to replace low-income workers with automated machines to manage increased labor costs?

SHRM interviewed Ian MacLean, the owner of Highland Landscaping in Southlake, TX, and chair of the U.S. Chamber of Commerce Small Business Council, who agreed that to mitigate the effects of a minimum-wage hike to $15, "we would fast-track automation solutions and eliminate most of our entry-level and lesser-skilled labor positions."

Will the New Minimum Wage Be Indexed For Inflation?

Yes. Starting January 1, 2023, the $15 per hour minimum wage will be increased annually by the annual percentage increase in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, per JDSupra.

Will Cleaning Service Prices Increase Due to Wage Hike?

There is a fine line between striking a balance between keeping prices low enough to be competitive and paying cleaning staff enough to keep them productive and dedicated.  If your current hourly rate paid to your in-house janitor falls below the state's minimum wage mandate, then yes, costs of salaries will rise and increase your janitorial line item. If you are outsourcing cleaning to a professional provider, your monthly invoices will likely rise to reflect new minimum wages.

Should the cost of commercial cleaning be a marketing line item? During an interview with Services Mag, one service provider said, "when attempting to land a contract, we treat the areas to be cleaned as ‘service-scapes.’ Much like a well-manicured lawn, a clean office, restroom, or lobby adds to the business’ image and ultimately their bottom line."

At System4 IPS, we have already begun to communicate individually with our clientele, letting them know well in advance of necessary monthly increases. Some of our clients have not seen an increase for many, many years, primarily due to the stagnated 2009 minimum wage.

Before the pandemic, essential workers, like janitors and housekeepers, were overlooked, and grossly underpaid. Public opinion surveys show that support for a higher minimum wage has grown during the pandemic across both party lines. Even in a divided country, an overwhelming majority of Americans support a $15 minimum wage.

Concerned about whether you are using the right cleaning service for your workplace? It's imperative to start your search now and find the perfect match. Reach out to other businesses for solid referrals and consult with System4 IPS. 

Talk to your cleaners or professional outsourced janitorial team about the minimum wage increase. Understand their plans and expectations surrounding this subject.

With so many professionals to choose from, which team is best for you? System4 IPS specializes in creating customized janitorial programs that meet the unique need of businesses like yours!