Leader of the minimum-wage pack

December 3, 2013

Marcos Oleynick protests outside Burger King as part of a nationwide strike by fast-food workers on August 29, 2013. (REUTERS/Lucy Nicholson)

On Thursday, fast food workers are expected to strike in 100 cities to raise the minimum wage, igniting what is likely to be the largest protest ever by employees in that industry. A year after the first fast food strikes last November in New York, the issue has gained steam. Union-backed efforts have pulled in workers from retail companies such as Wal-Mart.

There's been a proposal to increase the federal minimum wage and growing efforts by local governments to boost what workers are paid. And controversies have surfaced about the ways low-wage employers counsel their employees to take two jobs or to apply for public assistance.

Yet despite all that bad publicity, the people leading these companies don't appear to be planning many big changes. The industry's lobbying organization has called the protests publicity stunts. They've said increasing the minimum wage would bring more automation and less hiring. And they've pointed out that only a small percentage of workers actually earn the minimum wage, and that many of those who do are under 25. In other words, they appear to be saying: Protest all you want, but we're not going to change how we pay unless we're forced to do so.

There's a real opportunity for the leader of one of these companies to break from the pack. And it's too bad none of them are taking it.

Yes, it could mean an increase in prices, though it's not at all clear by how much. It's certainly also possible it could mean less hiring or more robots. And of course, lower profits are possible--though research on that likelihood is apparently pretty inconclusive, too.

But only looking at the potential negative consequences is pretty one-dimensional. Electing to pay workers more could lower the industry's high turnover rates, driving down the cost of hiring and training new workers. It could bring in better or more experienced workers who are more satisfied in their jobs, leading to better customer service, greater productivity and, therefore, potentially higher profits. And if one of these companies put a stake in the ground and voluntarily boosted its wages at least somewhat, it could prompt competitors to follow suit, potentially letting the air out of the legislative effort to raise the mandated minimum wage even higher.

Most of all, being the first company to choose to voluntarily to pay workers more would bring positive publicity that could lead to an increase in sales. Last week, the Swedish clothing retailer H&M announced that it intends to ensure its garment workers are paid a living wage. While it's unclear exactly what that means, the news generated plenty of flattering news coverage, from an editorial in the New York Times to applause from the Telegraph. (A typical response in my Facebook feed: "I'm shopping at H&M this Christmas.")

Sure, boosting the pay of low-wage workers in Bangladesh or Cambodia may not be the same as boosting the wages of U.S. workers. But the underlying philosophy is the same: Committing to do the right thing before it's forced upon you can be good business. It often leads to more satisfied workers, more loyal customers and, potentially, fewer regulatory demands. And it's especially good business if your company is the one that leads the way and gets all the attention for doing so.

Jena McGregor is a columnist for On Leadership.

Read also:

The beef with low wages

Fast food workers are staying on the job longer--and wanting more

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Jena McGregor writes a daily column analyzing leadership in the news for the Washington Post’s On Leadership section.
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