Friday, February 21, 2014

Making Hay Off the Minimum Wage Debate

President Obama has called on businesses to act where our busted, dysfunctional Congress will not; he has taken the lead by offering federal contract workers a raise to $10.10 per hour.  Contrast this to the federal minimum wage of $7.25/hr and it seems like a lot, doesn’t it?  In fact, it’s almost a 40% pay increase.  Okay.  But let’s be frank:  Gross earnings of $400 a week doesn’t come much closer to putting you in a $700/month one-bedroom apartment than $290 a week. 

Do some simple math, people:  I have 50¢.  Dinner costs $1.00.  I’m going hungry.  Wait…I got a raise!   Now I have 70¢.   But dinner still costs a dollar, and I’m still going hungry.

Moral of this story:  let’s not get all puffed up and proud of these minimum wage hikes “all the way up to” $10 an hour.  It’s not enough.

Not enough to put a decent roof over the heads of your family, or put healthy food in your kids’ mouths.  Maybe just enough so that you don’t qualify for federal benefits anymore…

But beyond the president and some “brave” retailers getting good press out of a move that hardly even qualifies as a stop-gap measure, I was interested in what the retail spokespeople had to say when questioned about the “business sense” of investing more money in their staff.  The question itself was posed from a position of tacit accusation that paying people more money was a risky and unsound business practice.  That is, after all, the conventional wisdom upon which our economy has been going to hell in a handbasket since the union-busting eighties.

In an interview with Marketplace’s Adrienne Hill, Jack Calhoun, global president of Banana Republic, posited: 

“We thought it was a great opportunity to make a strategic investment in our employees.   Our front line employees that are really the most important aspect of our business.  These are the employees that interact with our customers every day in our stores…  It’s about attracting great talent and retaining great talent…because when we do that well we win as a company and our customers win.” 
 Well. Duh!

Imagine that!  A retail mogul at least paying lipservice to the concept that those who serve the public in a service business might actually be an important, if not THE most important, cog in the wheel.  That the faces of the men and women behind the counters are the faces of the company—at least, the faces with whom the folks who pay the bills (the customers!) will interact and will remember when they walk out the door.  Dare we hope that a 21st century retailer is actually getting a clue that perhaps the face of an over-worked, underpaid, undervalued and under-trained cashier might NOT be the image you would like the public to associate with your brand?

I will cut Mr. Calhoun a little slack.  You won’t hear anyone at Walmart—the nation’s largest retailer and largest employer—spout this kind of retail apostasy.  (Oh, sure…Walmart will spend millions on ads to assure the buying public that Walmart associates are happy, healthy, valued, motivated, and movin’ on up.  But they won’t spend those same millions on the employees themselves.  Does anybody understand this line of thinking?) 

But Calhoun’s ah-ha moment is still only lipservice. 

Because a true philosophy of “investing in great talent” would result in workers being paid somewhat more than a sub-poverty-level family wage (2014 poverty level for a family of four is $23,850;  raising wages to $10.10/hr would result in an annual wage of somewhere around $21,000—about $1750/month.)  Yeah…you’ve forked over that big, fat 40% raise.  But in a country where rent prices average over $1200/month, your “great talent” now only has to figure out how to pay for food, medical care, clothing, auto expenses, utilities and all the other cash outflow necessary to life in our society, on $18 a day.

Let's all wish them good luck with that…            

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