Teaching Module on Low-Wage Work in The Coming Economy - Low Wage Costs and Benefits
Author: Johnson, Jennifer
Source: The Aspen Institute Center for Business Education
Year: 2009
Number of pages: 7
Abstract:
WHAT IS A TEACHING MODULE?
A teaching module allows faculty to add a topic to an existing course with relative ease. Teaching modules include case studies and background readings, and may include framing questions or a teaching note for use in leading classroom discussion.
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Competitive Advantage: Costs and Benefits of A Low-Wage Strategy
A primary business concern must be long-term success and the perpetuation of profits, goals often dependent on gaining a competitive advantage. An on-going debate is whether low-wage labor presents just such an advantage to U.S. businesses.
Are low-wage jobs a critical component of corporate advantage in our globalized economy? Possibly, but many low-wage jobs in the U.S. are concentrated in the non-tradable service and retail sectors, in jobs that cannot be outsourced and so do not face direct competition from lower-paid overseas workers.[1] And does low-wage labor allow businesses to compete, or does it cost more than managers expect? This section compares the costs and benefits of low-wage employment and asks which strategic direction on wages wins, the high road or low?
The costs of low-wage jobs to workers are clear, as discussed above, but what of employers? For businesses, low labor rates (wages, salaries and benefits) may disguise higher actual labor costs, which includes both rates and the costs of low-wage employees' behaviors and related expenses. High turnover, hiring and training expenses, reduced productivity and even strikes all contribute to additional costs. For example, in 1999 Wal-Mart reported an estimated annual turnover rate of 70 percent, resulting in approximately $1 billion in turnover-related hiring expenses.[2]
[1] http://wfnetwork.bc.edu/The_Network_News/44/experts.htm, accessed May 7, 2009.
[2]
Wal-Mart's Real Cost of Labor
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