Read here the full transcript of nonprofit leader Zeynep Ton’s talk titled “The Case for Good Jobs — and Why They’re Good for Business Too” at TED Talks 2024 conference.
Listen to the audio version here:
TRANSCRIPT:
I am so excited to be here to talk to you about work that is not glamorous, like cleaning bathrooms, shelving tomatoes, picking up trash, or bathing the elderly. During the pandemic, we called the workers who do this work “essential” because our world literally stops without them. Remember how we used to clap for them?
You know, we’ve been talking a lot about AI robots, but this work is also unlikely to be automated. So these jobs are here to stay. But a lot of people can do this work. So the wages that are set by the market are low. In fact, market pay is often unlivable pay. And tens of millions of essential workers live in a vicious cycle of poverty and lack dignity, which also hurts their companies.
The Struggles of Essential Workers
Take Janet, a full-time hourly manager at a retail chain. Even as a manager, her low income didn’t pay the bills for her and her son, so she had to have a second job. But she couldn’t hold on to her second job because her work schedule changed all the time. One day she might work from 5 pm to 9 pm. The next morning, her shift might start at 5 am. Just imagine her life and imagine how little time she had with her son.
“My life is always in a turmoil,” Janet told me. She couldn’t sleep. Amazingly, though, she still cared so much about doing a good job at work. But even there, she failed in front of her customers all the time. One day she said to me customers were yelling at her because the checkout line was too long. Some walked off, leaving their full baskets.
The line was too long because there weren’t enough workers at the store. And so many of the workers who were there were new, so they were slow and made a lot of mistakes. They put the wrong product on the wrong shelf or left expired milk in the fridge. When customers caught mistakes at the checkout, cashiers had to call Janet for help every time because they weren’t trusted to adjust prices or even solve the smallest problems. Controls like that drove people crazy and wasted everyone’s time.
Janet begged for more staff, but her store’s poor performance meant even a lower labor budget, which meant more mistakes and higher turnover. So she was always starting from square one rehiring, retraining, more firefighting.
The Hidden Costs of Low Wages
You know, these dynamics are so common in labor-intensive services like retail stores, restaurants, call centers, nursing homes, hotels, that it seems like it’s the only way for companies to keep their costs down. But it’s not.
You know, it’s true, Janet’s company isn’t spending the money on labor, but they are spending the money — on rehiring, retraining, on lost sales from long lines, empty shelves and poor service. On all the wasted products and wasted time.
Now I’m an operations management professor at MIT. We can’t stand waste or inefficiency in operations. So that’s the reason that I began researching service operations 25 years ago. But then when I met hardworking people like Janet who weren’t making it, their struggles got to my heart. Especially as an immigrant who believes in the American Dream. So figuring out how to improve company performance and jobs became my work mission.
Success Stories: Costco and Others
Now luckily, some companies have already figured this out. So Jim Sinegal, Costco’s cofounder and my business hero, visits my class. My MBA students are always so curious. They say, how can Costco, the world’s third-largest retailer, afford to pay its workers so much more than other retailers and provide its customers the lowest prices?
Here is how much Costco pays compared to other retailers. Huge difference. And Jim’s answer is always the same. He says, “Paying your fellow workers well isn’t altruism. It’s good business.” Costco’s employee turnover is a fraction of the retail average… eight percent versus 60 percent. And its 20-year stock performance is so much higher than other retailers or S&P 500.
You might say, yeah, but Costco is an exception, Jim Sinegal is brave and brilliant, and that’s the only reason they can keep their costs low and wages high. But it’s not just Costco. Others, like Mercadona, Spain’s largest supermarket chain; QuikTrip, a convenience store chain with gas stations, have also turned what’s typically considered low-wage, high-turnover jobs into good jobs.
Now these companies all pay their workers more because absence of sufficient pay guarantees high employee turnover. But pay alone is not going to make Janet’s job a good one. And if all Janet’s company did was to pay workers more without raising their productivity, then that would mean either higher prices or lower profits. Higher pay requires higher productivity. And higher productivity requires better work.
The Good Job System
Here is how work at Janet’s store would be different if her store operated more like Costco or QuikTrip or Mercadona. Everyone’s priority would be the customer. So when there’s a long line at the checkout, someone shelving merchandise would rush over to open a cash register because they would be cross-trained. When there are problems, experienced cashiers would be trusted to solve them quickly. No need to call Janet for help.
They would also work fast, not just because they have expertise, but because corporate would do everything it can to simplify their work. Janet’s store would also operate with slack, meaning having enough staff to take care of the customer, minimize mistakes, and do improvement. But operating with slack wouldn’t work if there are slackers. Right? So the standards would be high, and with turnover low, Janet would have time to develop her team and improve performance.
Now if you think about the work at the store, it’s still not glamorous.