Living wage: The salvation of the retail economy
While the forthcoming increase in the minimum wage has workers rejoicing and retailers grimacing, the living wage debate continues to fester. Widely demonized as a euphemism for Socialism, the idea of offering entry-level employees salaries that encourage long-term job loyalty may well provide the solution for many of the problems currently plaguing the retail world.The current epicenter of the living-wage debate is the Kingsbridge Armory, a former military installation located in the Bronx section of New York City. Largely empty since 1994, the building's owner -- the city of New York -- is in the process of negotiating its transformation into a major shopping center. As Reliant, the proposed developer, works out the details with city government officials, local activists are pushing for a living wage requirement for retailers hoping to use the facility.
The activists see living wage as a way to maintain a healthy, gainfully-employed lower middle class neighborhood against the fragmenting force of gentrification. The developer sees it as a potential deal-killer for businesses looking to move into the refurbished building. Both sides, however, are missing the true beneficiaries of the higher pay scale: retailers and customers.
In the current environment, entry-level employees, presented with minimum-wage jobs, have little or no reason to dedicate themselves to their work. Just as they are easily replaceable cogs in the retail infrastructure, the jobs themselves are easily replaceable: When store employees are fired because of shoddy work, poor customer service, or layoffs, they can take their minimal housekeeping and register-jockeying skills to the next, equally generic job. The things that drive sales and inspire customer loyalty -- like knowledge of product lines, employee eagerness, and pride in work -- become old-fashioned luxuries that companies feel they cannot afford.
Of course, even the lowest level job requires some minimal amount of training. When poor wages encourage high employee turnover, many companies try to make up the difference by streamlining the job-education process. By massively simplifying the work that they ask their employees to do, the retailers ensure that training becomes the simplest link in the chain.
The standard line about such jobs is that "a monkey could do it." However, as any zoo visitor could attest, monkeys aren't noted for their attention to detail, customer service skills, or tendency toward job retention. By designing work for the lowest-common denominator, retailers encourage their employees to live down to expectation.
American culture is liberally littered with depictions of intelligent, engaged salespeople. From Mr. Whipple, who asked customers to avoid assaulting the Charmin, to Sam the Butcher, who offered the Brady family the best in meat products, the involved, informed store employee is an ideal that underlies the central concept of American commerce.
In this context, the ultimate victims of the replaceable employee system are the customers who must endure its ravages. Whether the end-product is electronics salesmen who don't know about the TVs that they are pushing, clothing store employees who ignore customers, or fast food workers who don't think twice about skipping work, the final result is in-store interactions that are confrontational, time-consuming, and unsatisfying. Customers, in turn, shift their purchases to the Internet, grumble about the good old days, and search hopelessly for the holy grail: stores with employees that are helpful, knowledgeable, and friendly.
Part of the key problem is that many retailers -- and legislators, for that matter -- regard minimum-wage jobs as short-term stints that most workers rely on in the interim between better-paying careers. For much of the population, however, these jobs are, effectively, careers. Faced with the option of long-term gainful employment at decent wages, many workers would be inspired to stay at their jobs, gaining experience and knowledge, and becoming a greater asset to their company. In the current context, however, this sort of devotion is justifiably perceived as a waste of time.
In the Kingsbridge Armory situation, the activists have designated a living wage as $10 per hour with benefits, or $11.50 per hour without. This wage, approximately $2.75 per hour above the new minimum wage, would effectively transforms the Armory jobs from easily-replaceable wage-slave positions to prized careers. For customers, it could turn the Armory into a place with a reputation for superior service, a true shopping destination.
That, of course, would be good business for everyone.
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Reader Comments (Page 1 of 1)
7-17-2009 @ 4:22PM
jeff said...
Treat employees and customers well? What a concept!
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7-17-2009 @ 4:40PM
Tom Walker said...
We have little choice. Raise the minimum wage to $10 per hour; that will eliminate small retailers, who can't afford it, and help the major chains who can: Walmart on down.
Entrepreneurs are emphasizing non-employee businesses to avoid the Obama anti-business regs and costs. So why not go for the $10 per hour, let the chips fall where they do, let entrepreneurs focus on non-people businesses while the rich leave the country (there are lots of nice places to live outside the US).
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7-17-2009 @ 7:46PM
Vinny said...
If 'small business' can't survive without virtual slave labor, then they should be allowed to fail. A pittance wage of $400 (or $10.00 an hour) for a 40 hour week, less Social Security, Federal Tax, State Tax, sometimes city tax, etc, means that the takehome is less than $300 a week. With the average 1 bedroom apartment rent in Atlanta at $700 a month (minimum) leaves $125.00 a week to pay for electricity, gas, car insurance, car inspection and tag, water, gasoline, not to mention food, tolls, clothing, etc. So what is your argument about a $10.00 an hour 'excessive pay'. I just wonder what planet you live on. Guess you Repukes would like to bring back slavery if it were possible.
7-17-2009 @ 6:04PM
Dr Moon said...
Why can't liberals understand when you raise wages companies cut back the number of employees and raise prices. Living Wages won't save retail, instead it will kill it. Small retailers will go out of business, they will cut back employees to the bone and over work the few they have left. The quality of service will suffer and customers will become agitated. In addition theft will increase as there are fewer employees to watch the customers. You must allow the market to dictate wages.
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7-17-2009 @ 7:39PM
Real Deal said...
Dr. Moon, you articulate that particular Limbaucile myth very well. We heard the exact same thing when President Clinton signed an increase of the minimum into law when he was President. You do know that the unemployment rate dropped every quarter when he was in office, including after the minimum wage went up, don't you? You probably don't because that would make you a factually correct right wing extremist and that isn't possible considering the genetic defects you all suffer from.
7-18-2009 @ 11:38AM
cameron3998 said...
Liberals can't understand what you're saying about what happens when the minimum wage goes up because what you're saying isn't true. In April of 1991 the minimum wage went up from $3.80 to $4.25. In October of 1996 the minimum wage went up from $4.25 to $4.75. in September of 1997 it went up to $5.15. In April of 1991 the unemployment rate was 6.7% in December of 1998, after those three minimum wage increases fully took effect, the unemployment rate was down to 4.4%. Your mythological talking points make for great lie swapping on places like the Freepers board but when you step out into the reality based community you just look stupid.
7-18-2009 @ 12:32PM
alex said...
OUCH, that has to hurt a Limbaucile when they get smacked down with irrefutable facts. Good job Cameron, you might have cost Dr Moon his doctorate
7-19-2009 @ 11:44AM
rileychef said...
Fact-free right wing extremists, like Dr. Moon, feel obligated to share their warped views of reality whenever they find a public forum to air them. I'm old enough to remember when they were trying to stop the fluoridating of our water supply, back in the 1950's, because they claimed that somehow it was a communist plot. The things they spew now, such as Obama being a commie, Muslim, non-citizen, etc. are all the result of the same defective gene pool members that have always been insane and wrong about all the issues. Despite their objections, the reality based community has always been able to prevail which is why we have Social Security, Medicare, civil rights, minimum wage increases, and most importantly, they have been reduced to having a power base in some Southern states with minimnla DNA diversity.
7-17-2009 @ 9:31PM
Iridium said...
The point is that every time you raise minimum wage prices raise to absorb the cost. After the last minimum wage increase a Big Mac meal went from $3.85 to $4.75.
Minimum wage jobs at mall retail and fast food chains served the purpose of creating a labor market for young people. They do not have full living costs and need to learn basic job skills. Minimum wage jobs provide this.
What happened was an explosion in the number of minimum wage jobs due to the mass expansion of the big box retailer. They put millions of small businesses out and destroyed the wealth engine of the middle class.
See you used to have streets of individual stores that provided a living wage for a couple of people that managed the store, often times single families. When you multiply that by a few million you wound up with a healthy middle class.
When the Home Depot, Walgreens, and Walmart came in and put main street out of business you lost the ability for many people to make a living wage. Instead hundreds of people were forced to take a $7 an hour job because that was all that was available.
Instead of minimum wage jobs going mainly to the young and inexperienced the middle aged and experienced were forced to take them. In order to make ends meet you needed to have multiple wage earners and that is when the middle class and the United States failed.
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8-13-2009 @ 8:43PM
DouglasH said...
So, by that logic the best way to grow the middle class is to raise the minimum wage enough to drive the big-boxes out of business?
7-19-2009 @ 9:17AM
howard said...
CEO=multi million dollar pay checks-convincing the people on the bottom to suck it up and not stand up and represent themselves. MBA- a degree given to a person to work hard at elimanating his job and yours.
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7-19-2009 @ 6:47PM
dan said...
Raise the wage and the companies raise their prices, and then even the companies that pay more than minimum wage have to raise their prices because their vendors have to. Then the people who make minimum wage ends back where they started and then the people who make 30k or such a year actually make less because the prices of every thing went up. Remember The $2.99 #1 Mcdonalds value meal, well it's almost $6 I could go on but I wont
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7-20-2009 @ 12:35AM
William Bischoff said...
Several "chain" retailers have for many years paid more than minimum wage for entry level jobs. Then also give increases in pay at early and regulary intervals. Their employees ALSO, often received benefits which raised the "actual" pay even higher. Walmart gave employees a share of profits of the company to instill loyalty and get long term workers who were not eager to give up their "vested interest" in the company. When minimum wages were increased, the company STILL increased the pay of employees by the same amount of increase, IT WORKED. Now the pay of employees is calculated differently and employee loyalty is low. A Sam Walton model on how to keep employees happy would benefit even HIS OWN COMPANY today. If it is "socialism" to require employers to pay a "living wage", then bring on the "socialism". What good is having a dream of success and good fortune if IT IS NEVER GOING TO HAPPEN, because you can't even feed or support your family no matter how hard you work? Why are the BIG CORPORATIONS making record profits while workers are suffering great hardships to provide them with those profits?
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7-20-2009 @ 2:02AM
Small biz owner said...
The authors' argument falls flat when he states that "these jobs are, effectively, careers" and then states "this sort of devotion is justifiably perceived as a waste of time." As a small biz owner, I love discovering an "inspired" employee who takes the time to "do the things that drive sales and inspire customer loyalty -- like knowledge of product lines, employee eagerness, and pride in work..." A "living" wage would quickly be an afterthought, as this inspired employee would be promoted rapidly within the Company and $10-$15-$20/hr and more would be easily attainable. However, these "activists" want workers want to be "rewarded" up front with higher wages before they even prove capable of showing up for work on time. Earn your stripes and you will be rewarded...I know of no small biz owner who believes their success is assured by keeping their workers unmotivated and uncompensated, and none that feel they can't afford the "old-fashioned" work ethic "luxuries". The author and the activists are putting the cart before the horse; a couple of dollars more per hour has/will never ensure "long-term job loyalty".
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7-24-2009 @ 1:51PM
Pam said...
Back in the day. A business owner wanted to be known as owning a successful business that the community.... along with it's employees..... held in great regard. But now greed and ruthlessness prevails. There is too much attention on the challenge of becoming bigger and more profitable, with the emphysis of less of a workforce with the lowest payroll as the "grand goal", which is given to the top 5% of it's employees, who are the only ones rewarded with a "comfortable living wage". We surely need to bring back old Mr. Fezzywig. We have to stop thinking, that to be successfull, is to be the biggest and making the most money.
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7-29-2009 @ 1:11PM
Jessica said...
I can understand hackles being up about paying that "pimply teenager" such a huge wage as $7.25 an hour, but what people need to realize is that it's not just teenagers who hold these jobs. Do you never see anyone older than 20 working at your local mall, grocery store, or restaurant? In my opinion, if you have a job and go to work 40 hours a week, you deserve a living wage. If you're doing such a horrible job that you don't deserve a living wage, why hasn't the boss fired you yet? It's not like it's illegal for companies to let someone go for being rude to customers, chronic tardiness, inappropriate work attire, etc. In fact, many states don't require that there be any reason at all, you can fire at will. So I can only think that in a country where so many people are out of work and looking, it would not be difficult to find employees who were capable enough to represent their company of employment in a positive light. Do these people deserve a living wage? Yes, sure they do, but you have to depend on the business owner to reward the attitude and job performance, which as many people have pointed out, might just cut into their own income. So I don't think that it's a given that someone will automatically get a raise they've earned, because there's a human making a subjective decision about that, and how many business owners would choose in favor of an employee over themselves? (Well, sure, Joe thinks he deserves a $1/hour raise, but don't I deserve that extra $40 per week more than him?) Furthermore, the majority of people in the top 5% of our economy "earn" their money while relaxing beachside and collecting interest on their parents', grandparents', great-grandparents' effort. If we want to talk about who deserves what, why not focus on them as well? Success is not all about money, it also has a lot to do with happiness, which can be found with family and friends, in doing something simple that you enjoy, or, if you're lucky, in buying that cruise to the islands with all those family and friends. No one is looking to buy a cruise with a $7.25/hr wage, though, but not having to worry about whether to pay the electric bill or rent could certainly make room for more happiness.
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