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I think it’s a good thing, when people are paid a good wage; they're happier and will be motivated to work for a longer period of time. This would result in customers being happy, better quality of food and money isn't wasted on employees overturn.
Or, the costs of paying livable wages is largely made up for by not having to do as much hiring, firing, and training, all of which cost money. You can't completely discount the benefits of having people stick around and do a good job (customers come in more often when the food is better, and it's better when it's made by someone who doesn't hate every second of being there and who has more than a week of experience) just because you feel certain jobs are worthless.
Good businesses realize the value of having people who stay with the company.
This is a myth. People come and go all the times across all industries, all jobs, and all salaries.
the problem is that a lot of people who know nothing just say "oh its great because you save money with less turnover and you will have better quality products and service." these people may or may not be right, but one thing that's for sure is that they are basing their opinion on their ideals not on any business logic. the unfortunate reality for many businesses is that the cost of turnover isn't greater than a significant increase in the employee compensation. id love to see real business cases with numbers, instead of people who no nothing giving their mindless opinions.
Arbitrarily raising wages, without increases in productivity and decreased expenses is not an effective long-term survival strategy.
So how is IN and Out Burger paying so well if is not a long term survival? Not sure what you mean about productivity are you saying people need to work hard because whenever I go to a fast food restaurant I see people working they can only serve who comes in the door.
They will realize that they won't be able to compete paying those wages. If they are able to, something will need to be cut, such as portion sizes, etc.
Not sure about that logic by paying better they will get better employees thus making the customer experience better thus making more money.
You didn't shoot down anything. Wages for factory workers are obviously not the sole determinant of the success of a company.
But go ahead, live in your delusional fantasy world in which treating workers like readily replaceable garbage and paying them crap doesn't cause them to quit or do a crummier job.
The OP is talking about a fast food job. This requires little to no skill; it is easily learned and historically has been a part time job for seniors or high school age workers. And these employees are very easily replaced versus the cardiac surgeon with the excellent reputation.
If you choose to work for a fast food restaurant your commitment to do your best should be the same whether you are making more than the fast food guy down the street or less. If you don't like the pay, leave. I see no evidence of workers being treated like "garbage". You know going in what is required and what the pay is. Take it or leave it. The people I know who previously worked at fast food restaurants have gone on to very successful careers in OTHER areas.
Not sure about that logic by paying better they will get better employees
thus making the customer experience better thus making more money.
Not so much.
Regardless of how wonderful their hamburger may be they still have to operate
within certain parameters: X% for food costs, Y% for rent and such, and Z% for labor.
Wherever that Z comes out to per month... their choices are limited.
At $10,000 it's 20 people at $500 each or 15 people at $667 each and so on.
In the example posted by the OP we seem to have this:
10 people at $1000 each per month ($7.25 for each of their 137 hours)
or 5 people at $2000 each per month ($11.62 for each of their 172 hours)
I'd certainly prefer to be paid more and as an owner I preferred to pay more when practical.
But can the shop get the same volume of work done with (5x172) 860 man hours
vs the "not do generous" shop who has (10x137) 1370 man hours available.
(maybe something in between?)
That's a 1.6:1 efficiency gain in a non technical work situation.
I've always prided myself on efficiency and working smart... but that's tough to beat.
Something else must be going on for it to work.
Reduced operating hours... with concentrated volume?
No manager... with THAT amount split among senior/experienced help?
Something has to be taking it in the shorts to make up the difference.
Last edited by MrRational; 11-13-2013 at 08:45 AM..
Reason: adjusted a math error
Not surprising. When people are paid a livable wage, they're happier, do a better job, and stick around longer. Customers are happier, the food is better, and money isn't being wasted on employee churn.
The problem is that there isn't a lot of profit in fast food restaurants. I don't see how they'd stay in business paying $15 an hour. My guess it isn't going to be sustainable in the long run. Are they going to cut the quality of the food, raise prices, shrink portion sizes to offset the cost of paying $15/hr?
And exactly why should a job that requires no skills or past experience pay $15 an hour? I did my share of working in fast food restaurants in high school and college. But I knew not to expect to stay there and try to raise a family on that pay. I knew I had to go to school or learn new skills or find some kind of path to be able to make more money.
It's now November. I wonder how it is working out.
There is some advantage of paying slightly more than competitors are paying: reduced training costs because of better employee retention and a chance to hire the better workers.
Give an obvious example: Costco pays more than Walmart pays. Both give benefits but Costco pays a couple bucks more per hour. Go into Costco and a checker there can move 3 highly laden flat carts through in about 5 minutes. Get stuck in line behind 3 full grocery carts in Walmart and 15 minutes later, the checker will still be working on the first cart, at a speed that would indicate they are barely coming out of a coma.
If Walmart bumped salaries up to what Costco pays, there would be no benefit to their existing employees, because the current employees, who aren't doing $10 worth of work in an hour, would all be fired and replaced by employees who are willing to do $15 worth of work if they can get a job paying $15 an hour.
Personally, I would much rather be employing the people I see working at Costco, even if I had to pay them more, because they are so much more productive and a heck of a lot more pleasant.
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