andyt andyt:
Of course not. What it does show is that paying people more, within a business's capability has positive benefits.
I totally agree. In my stint in the restaurant business I got to try an experiment where a new restaurant opened up and while the minimum wage was $4.25 I started everyone at $7.50 and told them there'd be no raises and if they wanted to get a raise they'd have to promote up.
Employee turnover at the other shops I was in charge of ran around 110% to 150% annually. At this location turnover was about 18%.
Part of why this was so was because none of my staff could afford to quit and start at another fast food place where they'd start at $4.25. Even if they HATED the job they couldn't afford to quit. One employee called it a "Velvet Trap" - a term I've sometimes used since then.
Due to retention and growing expertise the restaurant ran with targeted labor cost and we also promoted a disproportionate number of staff to management.
When the company sold the shop the experiment ended.
My lesson was that if I paid people more than they could ever make somewhere else I'd retain them and benefit from their expertise. The shortcoming of the idea was that if every other fast food place did the same thing then the advantage of doing it would be lost. Meaning that a legislated increase to $7.50 would not have done me any good at all.
So perhaps this guy can make his $70,000 idea work but if too many others do the same thing then his advantage will be lost.