The U.S. needs good jobs, not just more jobs

Carlos Osorio

Nearly 20 percent of Americans have bad jobs: low wages, few benefits, random work schedules and little prospect of social mobility. We're told that this is inevitable -- if you want to compete on price, the argument goes, then you just can't afford to invest in your workforce. Cheap goods, cheap staff: we may not like it but that's the way of the new globalized economy. The employees working for cheapskate bosses are told they should be grateful and work hard -- even though their dedication won't reap any rewards. Meanwhile, the bosses themselves handily assuage their consciences with the thought that it's all due to forces beyond their control.

But recent research by Zeynep Ton, a visiting professor at MIT's Sloan School, challenges the implicit assumption that in order to be able to offer customers low prices, you have no choice but to offer low wages and lousy working conditions. Highly successful retail businesses -- such a Trader Joe's, Mercadona and QuikTrip -- invest heavily in their workforces. Even the most menial of tasks at least offers the prospect that it could lead somewhere. And, surprise, surprise, these businesses also offer the lowest prices in their sectors and achieve solid financial results, all while delivering better than average customer service to a market that remains loyal. The trade off between decent jobs and decent profits isn't inevitable after all. 

The problem, says Ton, is that most employers look on their employees as a cost driver rather than a sales driver. And managers trying to hit targets find it much simpler to cut costs than boost sales. Managing to those targets makes cost-cutting look effective, says Ton --  but it isn't. Take Home Depot (HD). Under former GE (GE) executive Robert Nardelli, jobs were shed or turned into part-time shifts and profits appeared to grow short term. Longer term, the business lost its only real claim to fame -- customer service. Customers grew disgruntled and, more slowly, sales started to drop. Most managers (and not a few market analysts) see their two choices -- cutting costs or boosting sales -- as though they were equal options, but of course they absolutely aren't: a customer buying more has a far higher lifetime value than any short term cut can hope to deliver.

What Ton's research concludes is startling: a one-standard-deviation increase in labor levels can increase profit margins by 10 percent over the course of a year. Further research shows that for every dollar increase in payroll, a store could see anything from a $4 to a $28 increase in sales. Of course, this potential growth isn't infinite. But Ton's conclusion is clear: the short-term gains of cutting jobs, and cutting investment in your people generally, will come back to bite you. But spending more on your people can mean making more in sales.

This is a vital message for today, when so many executives have lost confidence in their ability to impact the progress of their businesses. It's the easiest thing in the world to blame any number of scapegoats -- recession, globalization, market short-termism, board pressure -- for abusive working conditions that do nothing to develop employees or to enhance a business. What's becoming clear is that there is still enormous scope to grow a business by investing in your people. What we need aren't just more jobs -- but good jobs that reward people who reward companies.

[tonyhdz985]

In the Unites States, workers are discouraged for this same reason.If their were even a few companies with realistic goals for the employees which maintain their companies images, and a government in power willing to create a government organization willing to interfere and actually regulate compensation rules in the private sectors and not just penalize them like the broken I.R.S system in place today, then these low unrealistic statistics the media portrays of the unemployment levels would become inexistent, as more citizens would seek work.Their are too many stories of capable educated workers that are underemployed, meanwhile their managers and employers reap more benefits and revenues.In most cases less qualified then their respective employees and less educated? Wherever you work, their are typically strict guidelines for very simplistic and sometimes demeaning tasks (but not in all cases),time consuming ones at that, too many disgruntled managers ,and a lot more under compensated,seriously frustrated employees who see absolutely no benefits, no self worth in working for them, and a bunch of disgruntled customers that do not help the situation.Employers will ultimately have to provide more freedom, or create more work from home jobs,or high tech jobs they are sending oversees in order to keep employees from seeking self employment or simply becoming frustrated enough to quit if this behavior continues.


Compensation is not always the key i agree.I believe people are just tired of working for others that will never appreciate them, and just tend to see them as expenses.Providing for a family in the United states,while trying to accomplish the task of enjoying life, with little compensation,little rewards.This is whats gotten old in the united states and in my opinion one of the lead reasons the unemployment levels are where the are.Meanwhile the managers literally typically not always are handling personal calls,mistreating other employees, when their respectable employees are servicing all of their customers.Where is the etiquette in this?

The poor distribution of wealth and lack of a commonwealth,need i say it and the uncommon sensed government is what has lead to the abusive behaviors of companies in the United States.But no need to point fingers as this will lead to more of this behavior.As we are each pay cycle we are seen as just a ssn or a direct deposit for employers, they sometimes forget that if the majority quits they might not always be replaceable.Please for example just think when was the last time you said hi to your CEO or they returned the gesture?. As workers become more discouraged, employers will make less profits,simple.Regardless of the financial situation,when workers become so discouraged they stop seeking,we have more government aid being used.Which means they will find new ways to tax citizens the working class usually and their will be less monetary flow.I wish their was a government survey which employees could take monthly.For each company,their would be an honest questionnaire requesting compensation figures,pros and cons of these companies.Multiple choice answers with a short description box provided at the end.

Companies that would be below the 75% satisfaction rating would receive higher taxes,penalties and fees for employee mistreatment and discouragement.We have so many laws for customer abuse,mistreatment, but very little besides discrimination,minimum wages,and insurance laws for employees.Their will need to be a major change in the laws for distributing wealth and treatment and encouragement for employers to re-create or we will be in this cycle of low wage,abusive jobs for decades to come.

The part about providing low wages to keep costs low and competitive,seriously that is nonsense.The harsh reality is that if we were all wealthy enough we would have to create machines to do labor as no one would bicker.A reality i wish for compared to the system in place today.How long has it been since slavery has become inexistent yet we see similar conditions in the workforce today.

[credibility2]

This is so true. The so-called new jobs created are just that...go nowhere, low-paying jobs and usually in the service sectors. This isn't recovery...it's merely accumulating the numbers to make the one type of jobs reporting look good during this election year for the president. The SGS Alternate of the unemployed by the non-partisan Bureau of Labor Statistics is around 22.5% for the real unemployment number, yet sadly, none of the media is reporting this.

[rayward73446]

The business world has known for many decades that a well trained workforce, that is compensated well for their work will make a company thrive. Todays executives have lost sight of this fact or just do not know how to motivate people. Wages have not kept pace with profits since the early 80's, mainly because companies drooled over the higher profits they are reaping. The 'cut employees first' mentality has led to the wide spread distrust of big companies, and a disgruntled, short handed, work force that has no incentive or reasons to buy into the goals of the company is NOT good for business. With mass exodus of employees goes a mass exodus of customers due to poor customer service. There are millions of bad managers in the US, and just as many bad excetutives too.
Business is about service regardless of what you are selling. Too many companies short sightedly think it is about profits. If you provide the service, the profits will follow.