Proposing An End To Dead-End Jobs
Richard Florida writes at Creative Class about upgrading low-wage service jobs into high-paid, family-supporting careers:
...Service work and service workers are not just a necessary cost of doing business, part of the overhead, but a potential profit center. Service workers can produce real value and there's no reason that they can't have real careers.A month or so ago, I met with Zappos CEO Tony Hsieh and his top executives and toured Zappos' facilities outside of Las Vegas. Zappos not only pays its employees a living wage, more importantly it enables them to move up through the ranks of its internal career ladder. I met many workers who had done just that. Zappos views its workers as a source of innovation and its culture and community as a mechanism for delivering better service to customers. Now, Hsieh and his team are moving their headquarters to downtown Las Vegas where they are aiming to develop a mixed use neighborhood that will have more affordable housing options for its workers, strengthening community but also allowing their pay checks to stretch further.
I disagree with him entirely that it's the government's job to encourage people to create paths for promotion for their service workers.
I do think there's benefit to treating your employees well -- both in not feeling like a creep and in how employees who like their jobs and feel they're being treated fairly are more likely to do a good job (in my experience). Of course, this assumes you've hired well to begin with.
If you show companies that it is good for their bottom line to be good for their workers, that's how you get them to change.
The author puts the cart before the horse, assuming that boosting the wages of service workers will boost their productivity. There are a few limit to this guy's argument.
(1) There's only so much a company can increase the pay of employees without raising prices. And when the prices go up, the "living wage" being paid to the workers must be raised to keep up with price increases. And, when the cost of labor goes up again to meet the new "living wage" standards, prices must go up. And when prices go up....
(2) There are limits to how productive unskilled workers can be. If you hire someone to flip burgers, unless he can grow an additional arm, there's a limit to how many burgers he can flip in an hour. And each burger sold must pay for the burger flipper and his human-anatomy-limited productivity.
So, go ahead and insist the company pay that burger flipper a "living wage." But, when the company accedes and raises his pay, be prepared for a $9 Big Mac.
Conan the Grammarian at May 6, 2011 9:44 AM
Bah. I've read some of Florida's other stuff. He's a doctrinaire utopian leftist who thinks that the left-wing chattering classes are the source of all economic activity. I read something where he advocated for a 100% tax rate on all income above, IIRC, $150K. He favors government subsidies for the mainstream media and he thinks that speech on the Internet should be regulated.
Cousin Dave at May 6, 2011 9:51 AM
they point out in the comments over there that when the manufacturing jobs started paying good wages... those jobs started leaving the US. At first it wasn't such a big deal, but it has accelerated in the last 40yrs.
The bottom line is that this is a system that looks for equilibrium... the spot between the cost of a product and what people will pay and profit. Part of the product cost is the wages of the person producing it, vs. the other productions and materials costs. Putting all this in a blender is still a dynamic thing...
and international. How're you going to control for that with a government program. Raise tarrifs to the moon? The tarrif on imported rice in Japan is like 700% to protect their own farmers. That would be one answer, to be entirely insular, and not allow imports, but that genie seems to be out of the bottle long ago.
This is a complex question, that I 'dun think the article writer is looking at all the ramifications of. Ex. IF you raise a wage, and raise the price of the good, what if you can't sell the product becasue it is no longer competitive? You don't sell as many, you don't need as many workers... so one worker makes a career wage. And the others are let go. Eventually the company just goes out of business.
That's not mentioning the rise of automation that makes workers redundant, as in the comments.
Bottom line is innovation drives new jobs for new people, not forcing a higher wage from on high, like some kind of 5 year plan. Those plans NEVER actually work.
SwissArmyD at May 6, 2011 9:53 AM
"where they are aiming to develop a mixed use neighborhood that will have more affordable housing options for its workers, strengthening community but also allowing their pay checks to stretch further."
Doesn't that sound a lot like the old company town that was evidence of an employer's villainy in the old days?
Bill at May 6, 2011 9:53 AM
Decreasing the fragmentation of the service sector, and increasing productivity, will reduce jobs.
I think that it's fair to say that when your best idea is to set up a company town so that your workers can live nearby, that you're acknowledging the limits of your ability to improve compensation.
'Living Wage' is one of those concepts that sounds good, and that well intended people want to believe in, but it falls apart under examination. It's basically a lot of hand waving to justify the plea that low value employees should be paid more than they're worth. It's also extremely discriminatory because it penalizes employees for where they live, and by some models for whether they are married and have kids. The degree of intrusion and social engineering necessary to implement such schemes isn't worth the marginal improvement in compensation that they 'might' provide.
joe at May 6, 2011 11:18 AM
Sorry, but this Zappos thing is bullshit. Zappos may be a great company to work for, but there are fewer and fewer jobs as you move up the corporate ladder. You can desire all you want to move up and may work your ass off, but if there isn't an opening or there is and a hundred people are applying for it, you may not get it. That's reality.
This doesn't just apply to low wage jobs. I have a good software engineer job, but not the best by any means. I'd prefer more pay and doing more what I'm best at, but so would lots of my professional peers.
Incidentally, the "living wage" crap drives me nuts. My teen children are having a real hard time finding minimum wage jobs that they would have easily gotten just a few years ago.
Joe at May 6, 2011 2:19 PM
Zappos selling point - their passion if you will - is good customer service. They aren't competeing based on price, on quality, on luxury, or style. They are competeing based on their customer service; you know that you are going to walk away from a Zappos shopping experience happy. Happy CSRs who really do want to work there are seen as a key component of a happy shopping experience. McDonalds primary effort is consistancy. The food is as cheap as they can make it sure, but their emphasis is on having a fish sandwich in Calcutta taste exactly the same as one in Akron.
McEmployees who are happy to work there and don't want to leave for another job are nice, but hardly critical to McDonald's mission of consistancy. It is incredibly stupid to say "All businesses should run like Zappos," because businesses all have their vision for where they will excel. Some of these visions require being an awesome place to work, but many do not.
Elle at May 6, 2011 3:42 PM
I wasn't able to read the whole article. The link didn't work for me for whatever reason. However, I'll press on with my ill-informed opinion anyway.
Although I completely agree that government has no role in this, I wish that fast food places would value their employees and customers a bit better. That's not to say that they should "put the cart before the horse" as Conan aptly put it. They shouldn't pay their entry level employees more, but they should offer some kind of visible career path that would allow some unskilled person the incentive to treat me, the customer, like I ought to be treated.
I'm not proposing some government thing or any of that. Have you ever gone into a McDonalds or something and had the mouth-breathing, slack-jawed, half-wit just stare at you like you just hatched from an egg?
In this situation, I refuse to speak first. I'll stand there until the silence becomes so very uncomfortable for them that they finally welcome me to the goddamn place and ask me how they can help me. It's fun as hell and you'd be very surprised at just how long it can sometimes take for them to give you this simple acknowledgement.
"Of course, this assumes you've hired well to begin with."
Exactly. Does your employee has a tattoo on their neck? It may be a sign that they don't need to be hired -- for anything.
whistleDick at May 6, 2011 4:45 PM
"Does your employee has a tattoo on their neck?"
Oops, I obviously meant "have".
whistleDick at May 6, 2011 4:47 PM
"I wish that fast food places would value their employees and customers a bit better. "
Well, I do understand where you're going with that. Many moons ago, when I was between high school and college, I worked in a Pizza Hut. One of the things we all learned there was that, at the time, it was simply impossible to get promoted out of the store into a management position. Pizza Hut recruited all, and I do mean all, of its area and district managers from outside the company. If you started in a store, you could get promoted as far as store manager, and that was it. And store manager was not a plum job -- they were on salary and didn't get paid overtime; they were expected to work their asses off, and they didn't actually get paid much better than shift supervisors.
Cousin Dave at May 6, 2011 5:03 PM
That's exactly where I was going with that, Cousin Dave. And it's the customer that suffers for it in the end.
whistleDick at May 6, 2011 5:41 PM
Bah. I've read some of Florida's other stuff. He's a doctrinaire utopian leftist who thinks that the left-wing chattering classes are the source of all economic activity.
I agree Cousin Dave, after I saw that name I refused to even click on the link. There aren't many writers I do that with. Even the extreme left-wing I read for laugh value and contrast. His shtick from memory is encouraging "creativity" etc to increase productivity and happiness. I'd prefer my McDonalds burger made the same as all the others please. Utopian is right.
Ltw at May 6, 2011 7:01 PM
Does your employee has a tattoo on their neck?
At least that employee would be good at translating requests for "I can has cheezburger?" from customers whistleDick!
Ltw at May 6, 2011 7:10 PM
Ltw, LOL. C'mon man, I corrected myself :) You're right that saying "I has an education" would be equally disqualifying :)
whistleDick at May 6, 2011 11:23 PM
The minimum wage and living wage laws have the same effect. You raise the minimum wage, the cost of the burger is going to have to go up.
And McDonald's counts on people not living off the 99¢ menu. If people did -- that store would go under.
Jim P. at May 7, 2011 6:26 AM
The approach that Zappos is taking isn't new. Internal promotion is a long standing practice, and most service firms provide a 'living', if not lucrative, wage past the entry levels. Companies like UPS, Walmart, and Rackspace are contemporary examples of firms that employ such policies.
What Florida doesn't seem to recognize though is that the same promotion and retention policies eventually make companies liable to discrimination claims - if you're promoting internally, you're inevitably establishing a pattern in hiring that demonstrates a bias towards the make-up of the internally promoted group. This is what's happened to UPS and Walmart. That's perhaps the primary reason that such policies are abandoned, where they used to be the norm. Now companies will deliberately avoid favoring existing employees for new positions to avoid the perception, or fact, of discrimination.
moe at May 7, 2011 6:49 AM
I was just thinking about something at my new job and I think it applies here.
I realized that what I will be working will be used by a huge amount of people. I would estimate that 75% of the people reading this will buy something I will have worked on in the next 3 years (assume I stay on the job that long) - not the individual item. The cost of me is split over a huge number of things.
The McDonalds employee...he is working for maybe a few people at a time (assumeing he can really flip some buggers). I would be some what comparable to the person who decides the menu for all the stores.
The biggest problem is as other have said that raising the wage of work to a living wage will mean the cost of the products will go up, thus the living wage will no longer be so. And the spiral begins.
The Former Banker at May 8, 2011 12:59 AM
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