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One of the biggest economic problems in the United States right now is the growing disparity between rich and poor.
And one of the factors that is exacerbating that problem is the loss of good-paying middle-class jobs, which have been replaced by low-paying retail and service jobs.
Retail employees at Walmart (WMT), for example, make about $12 an hour, a wage that leaves full-time employees at one of the most successful companies in the world earning a salary that is close to the poverty line. And given the number of Americans employed in these jobs--Walmart alone employs about 1.4 million Americans, or about 1% of the adult workforce--the low wages reduce consumer spending power across the economy as a whole.
One big successful retailer that pays better than Walmart is Whole Foods (WFM).
Walter Robb, Whole Foods' co-CEO, says the company's "Team Members" make an average of $15 an hour. The majority of them also get benefits and stock options, which many retail employees don't.
This wage is more than double the national minimum wage, but it still amounts to just north of $30,000 a year, a salary that is very hard to support a family on in many parts of the country. Robb is proud that Whole Foods pays its employees more than it has to, and he says this helps reduce turnover and makes Whole Foods a much better company. He also says he wishes the company could pay its employees even more.
Unlike the big manufacturing companies that provided many middle-class jobs a few decades ago, the employees at Whole Foods, Walmart, and other big retailers do not have unions, which may contribute to the relatively low wages they are paid. (Importantly, this is not a "skill" issue. Plenty of these jobs require just as much skill as operating a particular machine on an assembly line.) For understandable reasons, these big companies are opposed to unions, and Whole Foods, at least, is trying to treat its employees well enough that they don't feel the need to unionize.
Specifically, Whole Foods is trying to practice a philosophy it calls "conscious capitalism" in which the interests of three different groups of "stakeholders" in a company are balanced: shareholders, customers, and employees. In many companies, the emphasis is almost entirely on the interests of shareholders and customers, with employees viewed as a "production cost." The problem with the latter philosophy is that, while it may produce short-term profit gains, it ultimately hurts the entire economy. This is because the most important customers in the economy, the hundreds of millions of mass-market consumers who work as employees, get starved of wages that would otherwise quickly be turned into purchasing power and, thereby, revenue for other companies.
Whole Foods' philosophy is one that many more American corporations need to adopt if the U.S. economy is to become strong again. Even Whole Foods has a ways to go, obviously--$15-an-hour jobs won't create that much purchasing power--but the company's attitude is much healthier and sustainable than that of many other American corporations.
SEE ALSO: Here's How American Companies Can Fix The U.S. Economy.
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Source: http://finance.yahoo.com/blogs/daily-ticker/whole-foods-ceo-why-pay-employees-more-131203168.html
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