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Thursday, 16 April 2015

Is change emerging regarding the “race to the bottom” for salaries and wages in the United States and beyond? Or is it still too early to raise the flag?! Anyway, there are some hopeful signals!

Only a few days ago, I wrote a pessimistic article about the treatment of employees and workers with flexible and temporary contracts in The Netherlands:

The ideal workers are people, whose knowledge and skills would always be fully up to date. They would not be overly ambitious and would never become bored by their jobs, even when their jobs would be boring, as a matter of fact.

They would be fully skilled and trained at any given moment, and in possession of the latest knowledge and techniques, regarding all important working areas and technical developments. And companies would not have to invest one penny in them, with respect to courses, workshops and trainings!

These workers would only require a moderate salary or hourly fee and when their services would not be required anymore, they would leave the company instantaneously.

Hence: the ideal worker does not require anything special, does not ask for anything and gives his very best on a daily basis, until his services have become superficial.

And an optimal labour market – to the eyes of many entrepreneurs – would be akin to the physical Law of Communicating Vessels: a labour force, which is so flexible that it always appears at the place and time where and when it is needed most. High demand for labour would immediately lead to high supply. Low demand would immediately lead to a magical disappearance of the labour supply…

While I’m still very much behind the contents of this article, with respect to The Netherlands, I have lately noticed that there is a contrary movement going on in the United States.

There, suddenly all kinds of companies – seemingly especially the ones which happened to administer extremely low paychecks to their personnel on the workfloor – started to pay their personnel better wages, in exchange for their services. The – probably incomplete  list of names contained, in no particular order (thanks to Robin Fransman (@RF_HFC on Twitter)):
  • Aetna
  • Gap
  • Walmart
  • Ben & Jerry's
  • TJ Maxx
  • McDonald's
  • Ikea
  • Starbucks
  • Costco
  • Shake ‘n Shack 

It seemed as if these companies finally understood that their basical (i.e. minimal) wages had “dropped” to truly embarrassing levels – either through inflation or (involuntary) wage reducation. In some cases, this forced their personnel to take two or three subsequent jobs, in order to earn enough money for a decent living for themselves and their family. 

At the same time, the salaries and remuneration for the executives of these and other companies had risen to equally embarrassing levels, the other way around.

For me, it would be a very hopeful event when the race to the bottom for minimal wages would indeed have ended, with respect to the lowest wages in the United States. This race to the bottom is a race with only losers among the personnel AND the company itself.

One of the most heartwarming events of late – although it could be a kind of marketing stunt with a limited duration – was the action at the American company Gravity. The following snippets are from De Telegraaf:

Dan Price, CEO of the American company Gravity, is going to pay his personnel at least $70,000, irrespective of their activities.

The CEO surprised his total staff of 120 employees with the announcement that their salaries soon would be raised to $70,000 per annum; even for the lowest in rank or for the simplest activities.

The trigger for this event was a research study into happiness, read by Price, in which the conclusion stated that people, who break through the boundary of $70,000 per year, enjoy much more opportunities and happiness in their lives.

In order to pay for this massive raise, the CEO reduced his own salary to $70,000 per annum from $1 million. The remainder should be paid from the annual profit, which amounted to $2 million last year.

I know that there probably are many people, who will call this man Dan Price a lunatic or a dangerous “communist”. I, however, give him a big round of applause, for acknowledging the fact that ‘it are all the bricks, which form the foundation in a company’ and not only the top bricks.

Of course, I am not adamantly against differences in salaries, as some jobs do require much more knowledge, experience, insights, stamina and wisdom than other jobs. 

Nevertheless, I love the signal that is emitted by this very action: “You are my staff and I see you all as equally important for the success of my company, as I am”. This is a very strong signal indeed.

During the crisis years from 2008 until 2014, many commercial services and food & beverage companies took their lowest ranked staff for granted and ignored the fact, that these people could not live a normal life from the very size of their paychecks. And that, while knowing that this is exactly the personnel, which forms the bill board for their companies; people, whose smile, politeness and kindness can make a difference for their customers every day.

It would be great when this is indeed the beginning of a turnaround development in the USA and I hope that Europe and many other countries will follow this new development.

A company for whom this development is yet ‘a bridge too far’ is the Dutch, multinational supermarket chain Ahold / Albert Heijn. The CEO of this company, Dick Boer, was in for a big surprise during an official shareholders’ assembly today. Again De Telegraaf: 

There was an unusual event, during the Ahold’s shareholders’ assembly of today. Soufian, a 19-year old merchandiser working at Albert Heijn, straightforwardly asked Dick Boer the CEO of Ahold  for a bigger paycheck.

The merchandiser represented 50,000 signers of a petition, coming from the labour platform Young & United. Labour unions and socialist youth organizations demand that staff, aged 18 or older, will receive a paycheck with a normal minimal wage amount, instead of the minimal youth wage.

On behalf of the younger employees, Soufian asked for ‘mature wages’. Soufian: “Mr. Boer, in 2013 you earned around €3.7 million. That is about €1600 per hour. I earn €5.96 per hour, which is 60% of the minimal wage for adults. In comparison, Mr. Boer, in order to match your remuneration for 1 year, I have to work 299 years, fulltime. Yes, that is 299 years!”.

Ahold CEO Boer remained untouched from Soufian’s plea and referred his question to the negotiating table for the collective labour agreements.”I understand your question and I sympathize with all the employees working at Albert Heijn, but the shareholders’ assembly is not the place and time to ask for this”.

Dick Boer, on his behalf, is right that the shareholders’ assembly is NOT the right place for such an action, but of course Soufian is right that he could not have picked a better place and time for his action. I give him a tip of the hat for that.

I truly hope that Dick Boer and his peers understand the strong signals coming from the US and from people, like Soufian. It is now the time to end the race to the bottom and increase those minimal wages and make that all employees earn a decent paycheck.

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