Better Wages, Better Workers

Although countless people believe that product prices and business expenses skyrocket in direct correlation to employee salaries, many companies prove the exact opposite is true.


| January 2017



Job interview candidates

Long term, profits go way up when employee turnover is minimized; their productivity, commitment, and loyalty are heightened.

Photo by Fotolia/ty

The debate over minimum wage has been a long one in America’s recent history. Many employees cannot live on the salary afforded to them by their companies. So, now, more and more voices rise up, clamoring to be compensated more fairly for the work that they do. In The Fight for Fifteen (The New Press, 2016), David Rolf documents not only this ongoing battle for higher wages but also its various points and successes, compelling readers to understand that a simple fifteen dollars could be the first step toward better things.

For more books that pique our interest, visit the Utne Reader Bookshelf.

Against The Stereotype: How American Companies Are Committing To Higher Wages and Still Succeeding

The conventional wisdom seems to be that many companies have no choice but to offer bad jobs. It’s globalization, it’s competition, it’s high input prices, it’s uncertainty, it’s the need to please the stock market, it’s poor demand ... It’s always something. Especially for retailers with business models that are all about low, low prices, jobs that pay low, low wages are just assumed to be part of the deal. Their hands are tied; they can’t raise prices or they’ll lose customers. So it’s easy to conclude that firms that offer higher wages can do so only because they cater to more elite clientele — their customers are willing to pay higher prices.

But according to a growing number of business experts like Zeynep Ton of MIT, the presumed conflict between employee compensation and low prices is a false one. High-performing companies like QuikTrip convenience stores and Costco wholesale clubs “not only invest heavily in store employees but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors,” says Ton. “They have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity but a choice. And they have proven that the key to breaking the trade-off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company.”

So it’s not just government policy that matters to wage growth, it’s changing our understanding of what makes a company successful. Decades of management philosophy has pointed toward labor as a cost to be minimized, never placing people on the “assets” side of the balance sheet. This is not just a choice (that can be reversed), it’s a poor choice for corporate growth and long-term profitability.

Let’s dig into some examples of this pro-growth, pro-worker strategy in action.