See, what the race-to-the-bottom people forget is one simple fact:
The average cost to replace a minimum-wage retail employee, according to a study by the Center for American Progress, is $3,328. And that’s a lowball. Basically, any time somebody quits or is fired, it costs the company money. A lot of money. New employees are also less productive (because it takes people longer to do things they are less familiar with). Employee churn is very expensive.
The Wal-Mart (and Amazon) model is to consider employees as expendable robots. They completely dismiss the costs of hiring, onboarding, training, reduced productivity during the training period, etc, because “these people are cheap.”
Costco treats employees as “appreciating assets” – that is to say, employees become more valuable over time. Therefore, it is better and more productive to only replace employees who aren’t doing their jobs.
Let’s take a warehouse worker in a large facility. A new worker will waste time remembering which aisle it is, may take a longer route there, etc. Somebody who has been there a year has it down cold. They’ll pick the item far quicker than the new person. This improves productivity, which improves profits.
But for some reason a lot of companies don’t seem to grasp this.
All they see is the paycheck, when the actual figure they should be looking at is the profit a worker produces. That is to say, the difference between productivity and pay. Raising pay causes people to stick around and become more productive, which actually increases the profit in the long term.
We need to stop thinking so short term.
Oh my god. Costco employees get paid better than starting teachers in my school district.
(Which is not to say they should be paid less. We should be paid more.)
i'll apple your turnover 