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Proactive approach to rising wages improves quality, performance

February 26, 2019

Across the US, wage rates are rising as cities and states pass new minimum wage laws and large firms voluntarily increase pay rates to attract talent in tight labor markets. The benefit to workers is clear but may be less obvious to many businesses.

Higher minimum wages boost local spending, expand the labor pool, and can mitigate turnover and thus improve customer service and productivity.

A new report from The Aspen Institute Economic Opportunities Program describes how Goodwill Industries of San Diego County responded to minimum wage increases and as a result, increased its revenue by 15% over two years, and increased internal promotions by 46% over the same period.

With labor costs set to rise in 2016, Goodwill made a strategic decision not to cut jobs but to invest in its workforce and adapt its culture and operations to enhance job quality and business performance. Goodwill implemented four key practices outlined in the report, acting to:

  • Raise wages in key positions and address wage compression
  • Create clear pathways to advancement and strengthen associated training
  • Invest in leadership development for frontline workers and store leaders
  • Build a culture that reinforces learning and development

Goodwill’s experience is further evidence that high road employment practices drive business performance, and offers lessons for retailers and other labor-intensive, low-margin industries served by alternative staffing businesses.

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