It is not uncommon for businesses to invest heavily in satisfying their exempt employees, while denying their hourly or low-wage workers comparable benefits and perks. At first glance, the disparity between the benefit packages of exempt and hourly workers makes sense as a simple issue of supply and demand. Workers with professional or technical skills are generally harder to find, keep and replace than their low-skill, hourly counterparts. In reality, however, creating an effective organization is far more complex than hard-and-fast economic rules might imply. The work of hourly personnel, after all, often has the most direct impact on the bottom line. For example, retail salespeople and customer service staff are a business’ public face and therefore affect customer loyalty. Similarly, the productivity and work quality of manufacturing workers directly impacts the financial performance of any company that produces a good. If these workers suffer from low morale or are unable to focus on their work due to personal conflicts, it adversely affects business performance. Thus, there is a very strong case for extending the same kinds of benefits most commonly enjoyed by exempt staff to hourly employees.
New research from the Boston College Center for Work & Family lends credence to that argument. According to their recent study, “Increasing the Visibility of the Invisible Workforce,” programs that address the well-being and development of hourly and low-wage workers have a positive impact on the bottom line. The report looked at the best practices of 15 organizations, including Eddie Bauer, Levi Strauss & Co., Bank of America, and Wachovia Corporation. Findings covered programs dealing with a wide variety of issues, including dependent care, employee development, financial assistance, incentives, and flexible scheduling.
Respondents reported that they derived a number of financial benefits from offering these kinds of programs to their hourly personnel. First, they helped attract and retain employees. For example, representatives of Wachovia Corporation reported that they’ve been better able to fill entry-level positions since they implemented a series of flexible work programs. Similarly, work/life programs have proven to reduce unscheduled absences and allow workers to better focus on their job responsibilities.
What’s more the companies studied have benefited from higher productivity. For example, Eddie Bauer provides their hourly workers with a bonus equal to 6.5 percent of their base pay if store goals are met. Managers and employees alike are enthusiastic about the program, and thus far, it has been a big success. In 2003, 95 percent of the organization’s stores achieved their monthly goals at least once. Thus far this year, 84 percent of Eddie Bauer’s stores are regularly meeting or exceeding sales goals.
But this issue goes beyond business performance and to the heart of what kind of society we want to live in. It is already quite clear that for far too many people, the current inequity between exempt and non-exempt employees is untenable. Food lines are an increasingly common sight these days. While many of the people gathering at local food banks are unemployed, more and more are among the working poor.
According to a recent study by the Center on Budget and Policy Priorities, a Washington think tank, 43 million people are living in low-income working families. Government data shows that the number of citizens living below the official poverty line grew by 3.5 million people between 2000 and 2002, to 34.6 million. Thus, it appears, for a number of reasons, the working poor’s ranks are swelling.
One key reason is the kinds of jobs that today’s economy is creating. The United States has suffered a net loss of around 1 million jobs in the last four years, and the new jobs being created are lower paying, hourly positions, most often in the service sector. According to an analysis of Labor Department payroll numbers by economic research firm Economy.com, industries ranked in the bottom fifth for wages and salaries have added 477,000 jobs since the beginning of this year, while industries in the top fifth for wages have not increased. According to “Increasing the Visibility of the Invisible Workforce,” 16 of the 30 fastest growing professions are low-wage, hourly positions.
For the majority of low-wage, hourly workers, their jobs are a dead end, providing little hope for the future. Businesses play an important role in making good on the capitalist ideal that work will provide opportunities and a better way of life for those at the bottom of the economic ladder. When, in 1996, President Clinton reformed welfare with the Personal Responsibility and Work Opportunity Reconciliation Act, the move was meant to provide those who relied on government assistance with opportunities to break the never-ending cycle of poverty they faced. Today, as more and more join the ranks of the working poor with little hope for the future, the promise of those reforms seem more distant than ever.
If nothing else, businesses should provide employees with opportunities to better their skills and move up within their organizations. What’s more, training and development is not exclusively a goodwill gesture; it is sound business practice. Companies who offer their hourly staff training programs benefit from a more competent workforce and a stable of employees who can grow with the organization. Learning and development programs have also proven to improve customer service, resulting in greater customer loyalty.
Over the last couple of years, we have encountered a number of small businesses who have benefited from offering their hourly staff training and development opportunities. Chicago-based Eli’s Cheesecake offers employees English as a second language classes to its ethnically diverse manufacturing staff. The program has improved communication and lead to a more efficient operation. Similarly, companies such as Decardy Diecasting and ShoreBank provide their people with a number of formal and informal training programs, providing workers with a defined career path while reducing turnover. In the case, of Decardy, the Chicago-based tool and die manufacturer has reaped the benefits of higher productivity, less defects and a better safety record. ShoreBank has managed to improve the quality and consistency of their customer service through better retention and development of their entry-level personnel.
Perhaps the most important act of corporate citizenship is to provide workers with opportunities to grow as professionals and human beings. Business leaders should create an environment where employees can succeed, where their accomplishments are rewarded and where workers have an opportunity to learn and grow in their professions. If they do so, they not only better workers’ lives but create better businesses. More importantly, they contribute to the creation of a better, more equitable society.