Watching last night’s Illinois Senatorial debate between incumbent Senator Durbin and challenger Jim Oberweis I am reminded of a reoccurring mantra among most Democrats and their supporters, “increasing the minimum wage.” They feel that this is the best solution for struggling workers. Unfortunately, mandated minimum wages misses the mark based upon simple economics of supply and demand. Historically companies, desperately in need of good labor, will reward effective, hard working employees with higher wages. Therefore, contrary to what Dick Durbin professed last night, the best strategy for government is to stay out of the way of progress and instead facilitate company growth (e.g. lower taxes and less regulations), which in turn will add more workers at higher wages.
This is especially true for innovative companies and industries that have an insatiable appetite for cutting-edge R&D, engineering, scientific, technical, IT and manufacturing talent as I reported in such previous articles including:
a) Engineering Innovation, The Real Way To Create More Jobs: Part 1 of 3
b) Engineering Innovation, The Real Way To Create More Jobs: Part 2 of 3
c) Engineering Innovation, The Real Way To Create More Jobs: Part 3 of 3
d) Going For The Gold: Creating New Companies And Jobs With Great Ideas!
e) Norway’s Olympic Success: A Paradigm For R&D, Scientific And Technical Jobs Creation
However, this also applies to traditional companies like The Container Store. Amid the misguided debate over the government being the best protectorate of workers and salaries including raising the minimum wage, the home-organization retailer is paying its front-line workers exponentially more than its competitors at nearly $50,000 per year! The Coppell, Texas-based retailer’s CEO and chairman, Kip Tindell, says this higher pay structure has resulted in higher productivity!
Tindell’s philosophy is captured in his book, “Uncontainable”, which covers the company’s founding, struggles and his personal friendship with his college roommate, Whole Foods Market, Inc. CEO John Mackey. He says that one of his key foundational principles is: one equals three! This means that one great person can easily yield the business productivity of three good people. As a result, Tindell rewards these great workers with 50% to 100% above the industry pay scale! He does so in the forms of both: a) ranking employees in terms of their contributions and b) rewarding those best contributors with huge annual increases related to their company contributions.
The Container Store does not even have an HR department. Furthermore, they rarely use any executive recruitment firms. Instead, every employee is empowered to be an executive recruiter for the company. Each does a great job of recruiting high-performance workers that in turn continues their company growth. All being accomplished without a government mandate for higher wages!
WHAT ARE YOUR THOUGHTS?
