If you manage your business well, there is no reason why you cannot have the pick of the litter on the labor market because you can afford to give better pay, better benefits, and offer a better culture to your employees and customers.
By Nathan William
The labor market will give the industry headwinds for years to come. You have the ability to build the right team with the right people when you use the best strategies for your company. This article will shed some light on the current situation and maybe help you with your labor issues.
The Cost of Workers
Over the past two years, labor costs for waste collectors, including those who drive trucks, have increased by 15.56 percent, with an average pay rate of $21.35 per hour in the United States. However, this rate varies widely depending on location, with New York being the highest at $35.52 and Texas being the lowest at $19.46. This information, sourced from BLS.com, highlights the growing labor costs in the waste management industry.
As the baby boomer generation retires (10,000 per day) many people are moving up the career ladder or skipping low level or entry-level positions. In addition, many jobs that were previously outsourced to countries such as China are now coming back to the U.S., creating a need for more workers. Germany, Japan, Korea, and others are moving operations to the U.S. to find workers.
In 2022, people who switched jobs experienced an average increase of 17 percent in pay. This means that workers are likely to switch jobs for better pay, especially if their current job offers little to no benefits. When one of your workers leaves for another waste company, they will be offered extra pay to recruit their best of their former coworkers to come join them.
Photo courtesty of Trash Joes
What Are You Competing Against?
Price increases for water, sewer, and trash collection services have risen by 10 to 11 percent over the past two years (Federal Reserve 3-2023). If your company has been the low-cost operator in the area for the past five, 10, or 20 years, you might have just identified the problem. You may need to raise your prices to stay in business. Customers hate to switch service providers. Raise prices by 5, 10,15, 20, 30 percent over the next three months to a year until 20 to 50 customers quit. You are going to be surprised at how high you can increase prices before that happens. Just ask your customers to choose two of the following three options: Good, Fast, or Cheap.
Some companies that have raised prices by 20 percent in the past year have not lost more than a handful of customers, indicating that customers are willing to pay more for services. It can be scary to raise prices, but faced with the reality of costs, you must do it as necessary.
“I offer health insurance and pay half for the employee!” Great for you, but this is what you are competing against (BLS.gov 02-2022). You are not only competing against other haulers, but also companies of all stripes. Here is what is offered in the broader labor market:
• 57 percent of companies offer life insurance
• 43 percent of companies offer short-term disability insurance
• 43 percent of companies with more than 500 employees offer access to quality-of-life benefits, affordable gym memberships, EAP programs, maternity leave for both parents
• 70 to 90 percent of workers have access to healthcare
• 68 percent of family plans premiums are paid for by the company
• 70 percent of workers have access to matching retirement plans
• 37 percent have non-production bonus
When workers have families, they want and need good healthcare plans that they can affordability use, retirement plans that auto enroll them and that they can see their funds slowly increase, short-term disability for peace of mind, PTO so they can take a vacation, and pay so that they can live and go out once a month for dinner.
What do your employees want? Ask your employees now, not when they are walking out the door. Work out a plan until it makes sense for everyone. Have that plan in place so your employees can explain to their buddy why they might to come work with them. Involve the worker’s spouse or significant other. Learn about your employees’ families and their needs.
Next Steps
First, realize the enormity of the problem and acknowledge that simply saying people do not want to work or are lazy is not a viable solution. Be proactive until it hurts and then do more. Be so proactive that your employees drag their buddies through the door for a job.
Pop Quiz
1. Is the job a springboard or a dead end?
2. Does the job provide supplemental, “nice to have” income, or is it critical to covering basic living expenses?
Answer these questions honestly and anyone can predict your labor turnover or shortage. The question of Good, Fast, or Cheap is the same for your labor force. Pick two; you cannot have all three. The two you pick are what your customers are going to experience.
In closing, small and mid-sized haulers have so many advantages to their favor compared to the “Big Guys.” You know and live in your markets, you have connections to the local labor pool, your overhead should be less, you have a flatter management structure, you get to charge the same price, and you are not cutting a dividend check to a bunch of shareholders. If you manage your business well, there is no reason why you cannot have the pick of the litter on the labor market because you can afford to give better pay, better benefits, and offer a better culture to your employees and customers. The choice is yours. | WA
Nathan Williams is Owner of Trash Joes, offering business tools for haulers that help them get new customers, retain existing customers, and get paid faster. At Trash Joes, they understand the need to convert funds into cash and have developed tools and systems to help. Give them a call or send an e-mail, they will be happy to share some best practices based on your business. Nathan can be reached at (912) 428-5637, e-mail [email protected], or visit www.trashjoes.com.