Janitors: The Big Squeeze

July 14th, 2005 by

Most of us react in horror when blatant safety and health violations are reported in the media. But we have a tendancy to close our eyes when the violations impact our own bottom lines. Sure, the working conditions in China are appalling, but when it comes to buying party favors for my child’s birthday, I don’t want to spend too much money. So I’ll head to Walmart, where the costs are low, low, low — because they put the big squeeze on their oversees vendors and on the sales associate who rings up my purchase.
This is not just a problem with Walmart. What about the people cleaning your office building, or your local supermarkets? In some parts of the country, serious labor violations are commonplace among the janitors and cleaning staff, who all too often are illegal immigrants, in such fear of deportation that they hesitate to complain about their appalling working conditions.
In an article by Steven Greenhouse in the New York Times (registration required), the shocking realities of cleaning work are made crystal clear. There are about 2.3 million janitors in this country (a somewhat dated BLS study can be found here). Some belong to unions, are well paid and receive good fringe benefits. But for the majority, there are unfair and unsafe working conditions. Some cleaners work 16 hour days, 80 hour weeks. Their employers pay them under two names, in order to avoid paying overtime. Sometimes the employers classify their people as “independent contractors” — a blatant and widespread ploy that has become increasingly prevalent in a number of industries. Many cleaners are paid $3.50 an hour — well below the minimum wage, but because they are here illegally, they are afraid to protest.
Low Bids = Big Squeeze
The article points out that the big squeeze starts with building owners, who want to lower their costs. So they award cleaning contracts to the lowest bidder. In doing so, they don’t ask too many questions, such as how many hours do your people work and how much do you pay them? In March, Walmart paid an $11 million fine after 350 illegal immigrants cleaning Walmarts were arrested in a sweep across 21 states. Another suit against Walmart claims that their contractors employ thousands of immigrants, who are forced to work 7 nights a week without proper payments. Of course, Walmart says that it is unaware of any violations — such matters are left to the contractors. Also left to the contractors is figuring out how to make a profit after lowballing the bid to get Walmart’s business.
In a number of postings, the Insider has praised UPS for its strategy of hiring drivers and paying good benefits — in contrast to FedEx, which calls its drivers “independent contractors.” So we were a little surprised to learn in this article that Contract Cleaning Maintenance, the company hired by UPS at its Chicago area sorting center to clean the building, calls its employees “independent contractors” and pays them accordingly: no overtime, no limits on hours worked, no week ends off. A lawyer for Contract Cleaining claims that the IRS once ruled that the company’s janitors were independent contractors for tax purposes. “It shows that these companies have been run in compliance with at least some administrative authorities.” Yeah, right! And of course, UPS denies any knowledge of improper activities.
Due Diligence in Selecting Vendors
I humbly recommend that companies incorporate fair labor standards into their bidding process. It’s deceptive and unfair to squeeze your vendors to the lowest possible price, and then claim ignorance when they abuse their workers to generate their profits. To be sure, the cost of doing business will go up if everyone is paid a fair wage. If janitors are paid fairly, the rents may have to go up. So be it. The Big Squeeze may make billionaires out of a few, but as a business strategy it’s morally bankrupt. We can certainly do better than that.