...that depressing employee wages at all costs is in their long term best interests.
At first glance, this seems intuitively correct. Wages and benefits are a major cost of doing business, especially in a service industry. But on closer examination, this is often the wrong strategy.
Low wages results in high turnover. What are the costs of retraining employees constantly, both in time and lost productivity?
Low wages result in high sick days. Once again, how productive is an employee if they are not at the business?
Low wages results in low employee morale.
Low wages results in higher theft rates. If you are paying bottom tier wages, you have set up an adversarial relationship with the employee. Why wouldn't they "get even" by taking things like office supplies, free lunches, or even more bathroom breaks that aren't needed. And what about constantly staring at Facebook when they could be working. After all, you are taking advantage of them and they know it.
Low wages results in high external costs to the community. Low wages means the employee can not afford health care unless the business provides it. Many businesses with bottom of the barrel wage structures do not offer healthcare, unless they are forced to by the government. If they do offer a health plan it is as low grade as the wages they provide.
It is time businesses start understanding that it is in their own best interest to pay a living wage. How can people afford your goods and services if they don't have the money to pay for them? Higher wages increases the multiplier effects in the economy as those wages come back to the local businesses in the form of higher sales to employees that have money to spend. In essence, everyone benefits from businesses voluntarily paying a living wage to all their employees.
The proof - when the world's governments created money out of thin air recently to combat devastating economic contraction due to coronavirus lockdowns, sales took off. In fact the increase in aggregate demand combined with the contraction in aggregate supply is what led to worldwide inflationary pressures. In other words, this was proven in real time in the real world across multiple economies and cultures.
To do anything less is extremely short sighted and economically naïve.
To paraphrase someone who taught me about trading the stock market 4 decades ago..."What is universally known, is often universally wrong."
In this case, business almost universally believes that paying the least amount possible for labor is universally in their best interests. This has now been proven to be universally wrong.
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