Why companies that pay above the minimum wage come out ahead — Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

From Forbes 

Nearly one fifth of American workers work in retail and fast food, and they have bad jobs. They earn poverty-level wages, have unpredictable schedules that make it hard to hold on to a second job, and have few opportunities for success and growth. These are not just people who are uneducated or unskilled. In 2010 more than a third of all working adults with jobs that did not pay a living wage had at least some college education or a degree.

The conventional wisdom in business is that bad jobs like this are necessary to keep prices low and profits high. If a low-cost retail chain were to pay its cashiers more, then it would either make less money or have to raise its prices. Implicit in this logic is the seemingly self-evident tradeoff between low prices and good jobs. But that is a false tradeoff. Even in highly competitive industries like low-cost retail, it is possible to pay employees decent wages and treat them well while giving customers the low prices they demand.

I studied four retail chains that manage to do this: Costco, Trader Joe’s, QuikTrip (a U.S. chain of convenience stores with gas stations), and Mercadona (Spain’s largest supermarket chain). They offer their employees much better jobs than their competitors, all the while keeping their prices low and performing well in all the ways that matter to any business. They have high productivity, great customer service, healthy growth, and excellent returns to their investors. They compete head-on with companies that spend far less on their employees, and they win.

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General Motors should expect more failed parts — Steven Spear

MIT Sloan Senior Lecturer Steven Spear

MIT Sloan Senior Lecturer Steven Spear

From USA Today

General Motors CEO Mary Barra appeared before a Senate panel once again Thursday to discuss the company’s flawed ignition switches and vowed that GM will “do all it can to make certain that this does not happen again.”

In terms of damage control, much of what Barra and GM appear to be doing right now is positive: fessing up about product failures, bringing in outside investigators and firing employees that failed to take appropriate measures.

And while these are important steps, they amount only to a good, if somewhat belated, crisis management strategy. In fact, these efforts pale against the very real organizational challenges that lay ahead for GM and Barra. In order make good on her promise to Congress, Barra must prevent the kinds of engineering failures that caused the ignition problems in the first place and the organizational failures that propelled the problem to its current tragic magnitude. And that will mean changing the culture at GM.

Engineers like to be right. They like to prove that they have the correct answer.

Highly trained and highly motivated to solve problems, at the point of releasing a design or demonstrating a model or a prototype, everything in them is wired to prove that they’ve arrived at the right answer. The premium is so high on being “right” that even when data starts proving them wrong, they work to show that they are right somehow. They seek to explain what is happening is an exceptional outlier or an aberration; not that it is a sign of a problem. Read More »

It’s not just the economy: Why U.S. job seekers get discouraged — Ofer Sharone

MIT Sloan Professor Ofer Sharone

MIT Sloan Professor Ofer Sharone

From Fortune

As the release of January’s jobs report will likely remind us on Friday, unemployment is a double whammy for white-collar American workers. In addition to experiencing financial stress, many unemployed workers end up fearing that something is deeply wrong with them.

I interviewed more than 170 white-collar job seekers in the U.S. and Israel between 2004-2006 and between 2011-2012 for my new book, Flawed System/Flawed Self: Job Searching and Unemployment Experiences, and I was surprised by how many of the unemployed Americans confided that, in the course of their job searches, they had come to feel “flawed.” Israelis who had gone just as long without finding a job didn’t tend to blame themselves that way; they were convinced it was a flawed system that kept them unemployed. It didn’t seem likely to me that Americans were inherently more self-blaming than Israelis. Instead, my research revealed how the particular and peculiar process of American white-collar job searching — a process I call the “chemistry game” — renders the players vulnerable to a debilitating self-blame.

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Advice for the underemployed class of 2014 — Thomas A. Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From Fortune

Graduation speeches tend to be a mix of advice and calls to responsibility. Most tend to cover a broad patch of issues. Given the difficult job market high school and college graduates are entering today, perhaps a speech that advises and cajoles responsible actions to navigate the labor market is called for.

Here’s my career advice and call to action.

Congratulations! You have heeded your parent’s advice to work hard in school and get the best education possible, with the implied promise that by doing so you will do well when you graduate. You held up your part of the bargain, but unfortunately the economy you are entering is not holding up its part.

You are entering a troubled labor market that doesn’t have enough jobs to go around for all new high school or college graduates. Some of you will do very well indeed, especially those of you who have gained some work experience while in school and especially those of you who were fortunate enough to work in summer or co-op jobs and are now invited to join that organization on a full-time basis working in a career that uses your education and skills. Others with highly marketable technical or so-called STEM (science technical, engineering, and math) majors also face somewhat better prospects than those of you who followed your dreams to study literature, history, or the arts.

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America’s young workers: Destined for failure? — Thomas Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From Fortune

We’ve all heard the message from our parents: If you work hard, get a good education, and play by the rules, you will do well in life. Baby boomers like me were able to turn that formula into the American Dream.

But while we were able to graduate from high school, vocational school programs, or college into an economy that was growing and providing us with great opportunities, we cannot make the same promise to our children and grandchildren today. Instead of hope, the nation faces a widening economic divide; according to Gallup and other surveys, a majority of Americans agree that the U.S. has been going in the wrong direction for at least a decade, and they expect thenext generation will have a lower standard of living than ours.

Is this gloomy outlook inevitable? Have the global economy, ever-advancing technology, and other forces left us with no control over the destiny of future generations? Only if we choose to do nothing. Reversing course is possible, but it will take a cross-generational effort by baby boomers and next-generation leaders to negotiate what I call a New Social Contract that fits and works with the features of the future economy and workforce.

Read the full post at Fortune.

Thomas Kochan is the George Maverick Bunker Professor of Management, a Professor of Work and Employment Research and Engineering Systems, and the Co-Director of the MIT Sloan Institute for Work and Employment Research at the MIT Sloan School of Management.