It’s time to rethink wages

For the last year or so, there’s been a significant amount of news coverage around the wages paid to low-income earners, such as those working at fast food outlets and in retail stores. There have been public protests, calls for boycotts, and legislation to raise the minimum wage in some states.

Most recently, the International Monetary Fund (IMF) urged the U.S. to raise the minimum wage. The IMF said “Increasing the minimum wage … would help raise the incomes of millions of poor, working Americans,” and that it “would be helpful from a macroeconomic point of view.”

It would be easy for business owners (or shareholders) to dismiss any discussion of raising wages as being just an altruistic effort, insisting that low wages help companies keep costs down and prices low, resulting in better profits. But that thinking is, in fact, wrong. 

Zeynep Ton, Adjunct Associate Professor of Operations at MIT Sloan School of Management, has researched this issue extensively and has concluded that there are ways companies can design and manage their operations in a way that everyone—employees, customers, and investors—wins. The research, which is the foundation of Ton’s book, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, makes a compelling case that even in low-cost settings, paying low wages and forcing employees to have “bad jobs” is a choice, not a business necessity.

Ton shared her research—including real-world examples—in a recent webinar, and provided the following takeaways:


  • What a “good job” really means

  • Common retail execution problems that result from bad jobs

  • What successful retailers—and leading companies across other industries—do differently

  • Why having more employees than you need can reduce costs and boost profits

  • How companies can simultaneously standardize work and empower employees

  • How offering fewer products can increase customer satisfaction


You can watch a recording of the webinar or download a PDF of the presentation slides.

Zeynep Ton is an Adjunct Associate Professor of Operations Management at MIT Sloan and teaches in Developing a Leading Edge Operations Strategy and Strategies for Sustainable Business

Comments (1)

Anonymous

Posted: 3 months and 13 days ago

Interesting blog post 1

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