Zeynep Ton, professor at MIT’s Sloan School of Management, explains why “crummy jobs” – jobs that are often part-time, low-wage, and offer few benefits – are not driven by low prices.

These jobs are a corporate choice, and there are plenty of retailers who offer full-time positions with good pay and benefits that are also highly profitable.
In a recent post, Ton explains why good jobs and profitability are complimentary, not mutually exclusive:

Even low-cost retail work is not trivial and how you perform that work makes a big difference for the company’s bottom line.  This is not just my opinion; there are successful low-cost retailers that prove it.  These retailers invest in their employees and complement that investment with a particular set of operational decisions that I have identified.  That way, their employees are more productive.

Far from being a mere cost—a drag on profits—these well-paid employees, with all their expensive benefits and training, are seen as an asset—a generator of profits.  These companies demonstrate that there is no need to choose between low prices and good jobs. It is possible (though nobody said it’s easy) to provide the lowest prices to customers and much better jobs for employees and great returns for shareholders, all at the same time.

Go read the whole thing »