National Consumers League

Rethinking retail


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Lili Gecker, NCL public policy intern You don’t have to be a shopping addict, and it doesn’t have to be the holiday season—we all buy and consume goods pretty regularly. Most of us are aware that Wal-Mart treats workers poorly, but which stores treat workers well and have low prices? Is this even possible? Today, there are nearly 15 million people working in the retail industry, which makes up about 10 percent of the U.S. labor force. According to the Bureau of Labor Statistics, cashiers and retail salespeople were the most common occupations in the entire economy in 2011, with 3.3 million and 4.3 million employees respectively, and representing nearly 6 percent of total U.S. employment. Although many retail workers are well-educated (a study conducted by the Retail Action Project (RAP) found that about 70 percent of front-line retail workers in New York completed some college or a college degree), they are not well compensated. In 2011, the national median hourly wage in the retail sector was $10.88 an hour, lower than the national median of $16.57 for all workers. For the two largest occupations in retail, cashiers and salespeople, the median wage was $9.05 and $10.10. Retail workers often have little control and opportunities for advancement in their jobs. The same study by RAP found that only 17 percent of workers had a set schedule, and only 30 percent reported knowing their work schedule at least one week in advance. The fact that fewer than 5 percent of retail employees were members of unions in 2011 may play a role. These limit in worker control prove especially difficult for people who work other jobs, or who have other responsibilities, including those of a parent. At a recent discussion on the retail industry hosted by the Aspen Institute Workforce Strategy Initiative, MIT professor Zeynep Ton explained the employer perspective: they view employees as a cost to be minimized. When seeking to maximize profits, they cannot always control sales, but they can cut payroll, and when under pressure employers feel they must cut employee hours. When employers cut labor, they see an immediate decrease in cost, but the benefits of stable labor are long-term. In fact, studies conducted by Ton found that if employers had more labor, they would make more money. So why don’t businesses do this? Walmart claims that they cannot afford to treat their employees well and keep prices low. Kim Owens, former Vice-President of QuickTrip Corporation, disagrees. QuickTrip is a gas station convenient store located in 13 states and expanding, and the employer of 13,000 employees. With the belief that retail can be a career, most of QuickTrip’s employees have at least some college education and they promote from within. They invest in their employees from the beginning through one-on-one training for at least two weeks, and by providing a mentor. Starting salary for a night sales manager is $35,000 per year, and some employees who have worked as managers for over 20 years retire with $1 million. They offer benefits such as health insurance, bonuses, and a tuition reimbursement program. QuickTrip is good to its employees, and it benefits the company: they are one of the most successful in their industry. Ton explained that it is not one change a business can make, but a series of operational decisions made by companies to invest in employees that allow everyone to succeed. Simply spending more time on training, or increasing worker benefits is a necessary start, but it is not enough. Americans can begin to transform our business practices through education. Businesses leaders must not view profit maximization as a narrow goal. They should put their employees, customers, and society before investors. Business educators must teach these important values in school: that companies should maximize shared values, not just their shareholder’s values. In addition, we need policies that defend the rights of workers. Carrie Gleason of RAP asserts that the minimum wage is not a living wage, and it must be elevated and indexed to adjust for inflation. This may be a possibility, with the recent introduction of the Fair Minimum Wage Act of 2012. In addition, all workers, including part-time workers, need access to benefits such as health care and family and medical leave. When businesses have an incentive to act in a way that is most profitable, American workers need a strong government to protect their right to work to the best of their ability and earn fair compensation.