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their struggle to remain competitive during uncertain economic times, some
companies are holding back on hiring additional staff because they are fearful
of adding more cost to their bottom line. That means that employees will
continue to carry more of the load. To make matters worse, much of corporate
America doesn’t appear to be spreading the wealth created on the productive
backs of their employees.
"We’ve reached a breaking point," says Tony Lee, editor in chief
of CareerJournal.com, an executive career site published by the Wall Street
Journal, about companies pushing workers to be more productive, especially
when they don’t see the extra sweat end up in their paychecks. Corporate profits
continue to rise, and workers aren’t getting their fair share, experts say. A
study put out in March by Northeastern University’s Center for Labor Market
Studies, titled "The Unprecedented Rising Tide of Corporate Profits and the
Simultaneous Ebbing of Labor Compensation: Gainers and Losers from the National
Economic Recovery in 2002 and 2003," tells the story. It found that corporate
profits accounted for nearly 41 percent of the change in national income between
the first quarter of 2002 and the fourth quarter of last year. That exceeded the
share employees got in their paychecks. "In no other recovery from a post-World
War II recession did corporate profits ever account for as much as 20 percent of
the growth in national income, and at no time did corporate profits ever
increase by a greater amount than labor compensation," the report states.
Employees won’t forget. "Once the economy turns around a
bit more and you start to see the hiring demand that’s inevitable, you are going
to see high turnover rates because of the productivity squeeze," Lee says.
In a study conducted by CareerJournal and the Society for
Human Resource Management of 300 managerial and executive employees and 451
human resources professionals, 83 percent of employees polled said it was
extremely likely or somewhat likely that they would actively seek new employment
once the job market and economy improved. In addition, 56 percent of human
resources professionals agreed that it was extremely likely or somewhat likely
that voluntary turnover would rise because of the improving economy.
Money is indeed a great motivator. "The 10 smartest
companies in America tend to pay competitive wages, benefits, etc.," says James
Underwood, a management professor at Dallas Baptist University and author of the
upcoming book What’s Your Corporate IQ: How the Smartest Companies
Learn-Transform-Lead, due out in September. While he won’t disclose the
names of all the firms he highlights in his book, he did provide one: Costco
Wholesale Corp., headquartered in Issaquah, Washington.
Richard Galanti, a spokesman for the membership warehouse
club, says that productivity is a result of high wages and the best benefits
among hourly retail workers. Cashiers start at $10.50 an hour plus health,
dental and vision coverage, and by the fifth year of full-time employment they
earn $20 an hour. With 70 percent of Costco’s expenses going to labor costs, the
firm has been chastised by Wall Street. Galanti isn’t fazed. "When you pay well,
you get a better person who wants to stay longer."
Eve Tahmincioglu is freelance writer in Wilmington, Delaware. To comment, e-mail editors@workforce.com.
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