The Good Jobs Strategy

Cutting Labor Costs Backfires

Salespeople and cashiers hold the two most common jobs in the United States – yet they earn far below the median wage for US workers. The salary of a typical full-time retail sales worker falls below the poverty line for a family of four. Part-timers have it worse: Not only are their wages lower, but their employers often schedule them to work so few hours that they can’t make a living. Schedules fluctuate without warning – day shift one week, night shift the next – so workers cannot go to school or hold a second job.

In the US, such low-wage jobs are among the fastest-growing employment sectors. Low-paid workers and their families bear the costs, as do customers who encounter retail workers with too much to do or too little training to help them. Taxpayers feel it when underpaid workers require public assistance. Low-paying retailers create their own problems: falling employee engagement and rising turnover.

Caught in the “Vicious Cycle”

Retailers fail to invest in their workers because most believe keeping labor costs low drives profitability. Discount retailers, especially, cling to that belief because their strategy ...