Business 101: When paying an employee, you have to pay in line with their productivity.
- If you underpay, you lose the employee.
- If you overpay, you run up losses and lose your business.
- If you raise the hourly wage, you must get more from each employee hour – and you must cut the hours/employees that won’t or can’t rise to the new, higher bar.
You may have seen the following last week, but I didn’t want to let it pass without comment. After raising wages over the last 18 months, Starbucks and its employees have been learning some lessons the hard way:
An online petition accus[es] Starbucks Corp of “extreme” cutbacks in work hours at its U.S. cafes…
[Starbucks] recently introduced technology that allows customers to order and pay from mobile devices. That service aims to…reduce bottlenecks in stores. [ed: reducing the number of employees needed per shift]
Starbucks has a software system that determines labor needs based on business trends…
Comments on the petition painted a picture of broad discontent at the company…
…many signers say they noticed cutbacks in U.S. staffing hours…
One central California store has seen its labor allotment shrunk by about 10 percent, even though sales are up…
“No matter what we do to save on labor at my store, the system tells us EVERY SINGLE DAY that we are at least 8 hours over in labor for the day and have to cut even more,” wrote [a petition] signer…
Like other restaurants and retail companies, Starbucks is wrestling with the effects of local minimum wage increases…tipping has fallen substantially amid broad customer adoption of the “Starbucks Rewards” program, which allows customers to pay with a loyalty card or mobile phones.
Suppose Starbucks gives in and boosts employee hours (arbitrarily; without a matching, widespread sales & productivity gain). What happens then? Operating budget overruns and closing stores. And/or price increases, declining sales, and closing stores. Perhaps eventually, a closing company. Thanks, Blue State lefties!
UPDATE: This oldie from The Guardian in 2014 may help us to see the problem:
The UK Daily Mail has exposed how the Green Movement has enabled the wealthy to become wealthier by using green energy initiatives to extract money from the working class. (This does not come as a surprise to those of us who have long found it curious that all the answers to Global Warming involved giving billions of dollars to organizations run by Global Warming activists.)
And in the USA, the highest paid employee at the EPA has been revealed to be perpetrating a massive fraud. (Two, if you count both impersonating a CIA officer and Global Warming.)
Meanwhile, Lockheed Martin — the evil defense contractor that Left Wing Nut/fat sack of crap Job Michael Moore blames for somehow causing school shootings — has developed a revolutionary desalination process that has the potential to bring clean drinking water to millions of poor people around the world and lessen global tensions over water supplies.
I know there is outrage on the left over the private distribution of water, but, come on. Delivering clean potable water requires massive investment in infrastructure. The private sector, with an appropriate level of oversight, is well-equipped and incentivized to provide this service. And one need look no further than socialist Venezuela to see that putting bureaucrats in charge of public utilities doesn’t work out so great.
In any case, my guess is that due to Green interference, this technology will never reach its full potential.
As diligent readers of this blog now, I am very skeptical of the notion of “equality” as pushed by the various left-leaning gay groups. They tend to want to achieve “full equality” through greater government regulation of our economy — and our lives.
Sometimes, they become so blinded to this notion that they neglect the original goal of gay rights’ movements–to make it possible for us to live freely and openly without our sexuality preventing us from participating in society or advancing professionally. They seem to think we need government to grant us more “rights” in order to effect the needed social change.
A new study seems to show quite the opposite, confirming a point I’ve been making for as long as I’ve been talking about gay issues, that all we need is economic freedom, given that private enterprises tend to respond readily to changes in society. Even in the Bush era, I noted, an increasing number of corporations adopted non-discrimination clauses as part of their employment policies and expanded their benefits packages to include same-sex partners.
Others have also studied how economic freedom helps people like us. Through “Regression analysis of up to 65 countries“, Niclas Berggren of The Research Institute of Industrial Economics (IFN) and Therese Nilsson of the Department of Economics, Lund University; Research Institute of Industrial Economics (IFN) find that
. . . economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. (more…)
Perhaps, it comes from being a writer or perhaps it comes from my own nature, but I do perhaps reflect on experiences a bit overmuch. And have been accused of thinking too much in at least two, maybe three languages. But, there was something fascinating about yesterday’s yard sale, to me at least.
This was, to be sure, not my first yard sale. I had participated in one with the same friend who hosted yesterday’s just about two-and-one-half-years ago in the same place, only I then made half as much money as I did this weekend. Back then, I quickly gathered up a few excess possessions cluttering up my apartment, wanting to help this talented actress raise the funds to finance her head shots.
This time, I collected so much stuff that I barely had room in the car for the ice to keep our waters cold. My goal was to sell enough stuff so that I would only need the trunk to store whatever was left until I could donate that balance to a worthy charity. And there was room to spare when I left the sale–in a trunk which, six hours previously, I’d had trouble closing.
The first forty-five minutes was a madhouse. As I was unloading stuff, people were trying to buy. The word, “vultures” described a few. The better part of them were not buying things for themselves, but to resell at “swap meets.” For a moment, I thought maybe I could charge as much as they would earn as such “meets.” But, then, I realized how much harder they would have to work for that extra buck for every DVD they sell. They wanted to get what they could get from this sale before going on to the next sale and the next and the next. . . for the better part of the morning.
If I priced too high, they would just move on. And those who came later in the day might not be willing to fork out as much.
I just wanted to earn a little extra cash while getting rid of excess stuff. What was supplemental income for me may well have been “bread and butter” to them. (more…)
Pajamas asked me to respond to a piece they had posted on Monday attributing Ford’s financial woes to an American Family Association Boycott based on the automaker’s pro-gay policies.
After reviewing the company’s history over the past few years, I concluded that the company’s financial woes had more to do with the management of its past CEO, William Clay Ford, Jr., great-grandson of Henry Ford than those policies. Here’s the first few paragraphs of my piece. Go to Pajamas for the rest!
In his piece on Monday, Todd Blumer suggests that the American Family Association’s (AFA) boycott of Ford Motor Company for is policy of “giving money to gay rights groups, offering benefits to same-sex couples and actively recruiting gay employees” has led to that American automaker’s downfall and possible future bankruptcy.
Blumer paints a grim pictue of Ford’s financial outlook, noting its declining sales, finding that the “dropoffs at Ford are far worse than those seen during the same time period at the company’s Metro Detroit counterparts at General Motors and Chrysler.” Indeed, his circumstantial evidence is pretty strong. The AFA announced the boycott in May 2005, the company’s sales have pretty much been tumbling ever since.
In 2005, Ford enjoyed a modest profit. The following year, the company would suffer a loss of over 12 billion.
To attribute Ford’s decline entirely to the AFA boycout would require one to ignore other problems impacting the automaker over the past few years. To be sure, that boycott may well have play a part in Ford’s financial freefall, but it was far from the primary factor.
You can read the rest here.
UPDATE: The Auto Prophet offers an interesting post on this issue which echoes some of my thoughts. I don’t agree with all he has to say, but he does note that the AFA chose Ford while other companies are equally gay-friendly and believes they chose Ford because “it’s high profile, American, and in bad financial shape. If the AFA had chosen Dell, for example, their leverage would have been dramatically less.” With that, I agree. Read the whole thing!