CRUMMY RETAIL JOBS ARE A CORPORATE CHOICE, NOT A LAW OF NATURE

Right on the front page of Sunday’s New York Times there was a story about part-time work in retail.  Steven Greenhouse, a Times reporter, and author of The Big Squeeze, highlighted the tough working conditions for part-time employees, especially their struggles with too few hours and ever-changing schedules.

As someone who has been studying retail for a while, I was not surprised by what I read.  But looking through the readers’ comments, I saw that many were surprised and upset.  Some likened the work conditions Greenhouse described to slavery and some blamed capitalism and greed for producing these bad jobs.  But other readers pointed out that bad jobs are the price society pays for low prices.  If companies were to pay more money to their employees or provide better working conditions, then the prices we all pay would have to go up. 

For example, a reader from Manassas, VA wrote: ”If ‘we the people’ demand that companies such as Jamba Juice and Fresh and Easy (and Walmart) hire more full-time and near-full-time employees, we should not be surprised when the prices charged to us go up to cover additional employee costs. We have demanded lower and lower prices for years now. As a result, the working conditions at companies have been squeezed, the benefits packages have been nearly slimmed out of existence, and the hours allotted to each worker have been cut.”

The problem with this very common view is that it assumes that an employee working at a low-cost retailer can’t be any more productive than he or she currently is.  It’s mindless work so it doesn’t matter who does it.  If that were true, then it really wouldn’t make any sense to pay retail workers any more than the least you can get away with.

One reader from Austin, TX was angry enough to call for a boycott, but even he bought into the bad-jobs-for-low-prices assumption: “We have a civic responsibility to boycott establishments that abuse their workers in the name of efficiency, even though this will mean higher prices.”

But this assumption is plain wrong.  Even low-cost retail work is not trivial and how you perform that work makes a big difference for the company’s bottom line.  This is not just my opinion; there are successful low-cost retailers that prove it.  These retailers invest in their employees and complement that investment with a particular set of operational decisions that I have identified.  That way, their employees are more productive. Far from being a mere cost—a drag on profits—these well-paid employees, with all their expensive benefits and training, are seen as an asset—a generator of profits.  These companies demonstrate that there is no need to choose between low prices and good jobs. It is possible (though nobody said it’s easy) to provide the lowest prices to customers and much better jobs for employees and great returns for shareholders, all at the same time. 

Let me give an example that is related to part-time work.  As Greenhouse’s article mentions, some retailers operate with 85% part-time workers. Their excuse is that they need that much “flexibility.” Sure, some flexibility is needed in retail.  The nature of most service industries is that customer traffic varies greatly.  Sometimes the store is crowded, sometimes not. But flexibility for 85% of the employees?  That’s just ridiculous!  

How do I know it’s ridiculous? Mercadona, Spain’s largest supermarket chain, offers the lowest prices in the country and it does so with over 85% of its employees full-time and even salaried, with very predictable schedules that are provided one month in advance.  Yes, these are the same employees—cashiers, people bringing bananas out from the stockroom—that other companies need to be so “flexible” with.

Don’t Mercadona customers visit the stores at different times?  Don’t the stores need flexibility?  You bet they do.  Go into a Mercadona store in the afternoon and it’s almost empty.  It’s the siesta time, I guess.  Go back in the evening and it’s full of people.  But pretty much the same number of workers are there throughout the day.

How does Mercadona get away with this? It invested in its employees.  Mercadona spends about €5,000 per new employee in a four-week training program which includes cross-training. So when traffic is high, employees help customers and when traffic is low, those same employees shelve goods and order merchandise.  There’s always something productive to do and pretty much any employee has been trained to do it well. That’s Mercadona’s idea of flexibility.

And by the way, Mercadona doesn’t do this for charity.  It’s highly profitable.  At a time when Spain is struggling (to put it mildly), Mercadona is thriving!

So it’s not the need to offer low prices that produces the kind of job Steven Greenhouse describes in his article.  It’s the choice made by companies to offer bad jobs.  We should all be outraged to see so many companies making the choice to rely on bad jobs.  It’s the biggest waste in so many ways. It’s a waste of human talent and human dignity.  It’s a waste of corporate profits and shareholder value. And it’s totally unnecessary. We all need to do our part to stop all this suffering.  How?  See my previous post.