Federal Minimum Wage Increases Today
Effective today, July 24, the federal minimum wage increases from $6.55 to $7.25 an hour. This is the third and final increase in a three-part process that began in 2007 when minimum wage was $5.15.
BSCs customarily dealt with a minimum wage increase by modifying customer contracts to account for the difference, but renegotiating is more difficult today. Customers are already looking to reduce spending and many are cutting cleaning services. An increase in cleaning costs stretches a tight budget even further.
Jim Peduto, president, Matrix Integrated Facility Management, Johnson City, N.Y., suggests that BSCs have candid conversations with their customers about increasing costs.
Based on the conversation, BSCs may consider absorbing the cost of a wage increase. However, this cuts right into the company’s bottom line.
Or, BSCs can increase prices, essentially passing the new wages out to customers, but this creates a risk that clients will try to solicit competitive prices from other contractors.
The increase in minimum wage will also have repercussions for BSCs’ staff. Many BSCs pay their janitors more than the minimum wage. However, the pay scales were predicated on a premium they were paid above the national minimum wage, says Cody Gulley, owner, Dusters Plus, St. Petersburg, Fla. To hold the wages at a premium, BSCs will have to increase wages for all employees.
In the past, if employers did not adjust wages for workers already making more than the minimum wage, employees would be inclined to look for another job with pay above the new minimum wage. However, this current economy may benefit BSCs who can’t afford to increase pay scales across the board; with the deflated job market, employees are less inclined to leave, says Peduto.
Many states have a state minimum wage that's already higher than the new federal rate. But, Mississippi is one state where workers will see in increase in their wages.
According to the Clarion Ledger, economists estimate that less than 5 percent of Mississippi's work force will see wages go up. Still, the federally mandated increase could mean as much as $120 more each month for the thousands of food-service workers, retail employees, janitors and others who have been making the $6.55-an-hour minimum.
About 9,000 Mississippians - 3 percent of workers - are being paid minimum wage, according to the most recent information from the U.S. Bureau of Labor Statistics. At that rate, most are bringing home less than $15,000 a year.
While the minimum-wage hike may not have a direct effect on the majority of Mississippians, business owners have expressed some concern, noting the increase comes at a time when the U.S. economy is in a recession and the unemployment rate is rising.
Carlos Hernandez, owner of Jackson-based DynaKleen janitorial services, said his employees already are paid more than the current minimum-wage level and isn't bothered by the hike.
Because of the new mandate, some DynaKleen workers could see pay increases of about 35 cents an hour, he said.
"I think it's a good thing," Hernandez said. "Prices are going up, especially gas prices, so people need to have more money to work with."
He said his business has been fortunate in that it hasn't taken a hard hit from the economy.
"Buildings still have to be cleaned," he said. "Overall, I'd say we've probably grown a little."
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