On Friday, I wrote about Kip Tindell, the incoming chair of the National Retail Federation and his plan to “encourage members of the association to boost wages and rethink their opposition to legislation.” It seems that NRF’s change of direction on wages will have to await Tindell’s arrival. In an op-ed published in The Hill today, current NRF president Matthew Shay attacked minimum wage increases. Shay charged that “many legislators and regulators seem bent on adopting policies that threaten to derail one of the few bright spots in the U.S. economy,” explaining that “[p]olicies like raising the minimum wage may sound good in the context of a political campaign, but they will only result in fewer entry-level jobs in industries like retail.” Shay also attacked the NLRB general counsel’s decision to hold McDonald’s accountable as a joint employer, calling the decision “misguided” and contrary to “decades of established labor law.”
As an initial matter, it’s interesting that a major trade association would air an internal disagreement as fundamental as this one on a policy matter as critical as wages. But, more importantly, the divide between Tindell and Shay illustrates two starkly different approaches to wage policy: what we might think of as high-road and a low-road strategies. The high road, which Tindell has made some strides implementing at The Container Store (and which he writes about in his new book, Uncontainable), involves paying workers a bit more than the minimum permitted by market forces in order to encourage commitment and hard work. This approach takes advantage of what economists call efficiency wages: the basic idea is that the increased amount employers pay in wages comes back through decreased turnover and increased productivity. The low road, captured well by Shay’s attacks, involves paying workers as little as the market will bear.
From a labor perspective, what’s particularly interesting about this divide within the NRF is the possibility that Tindell and the fast-food workers could become allies in the effort to move fast-food (and retail more generally) in the high-road, efficiency-wage direction. Is it crazy to think that management and labor might share a vision for the future of an industry? That labor and management could take the same position on a debate like this one? Not at all. In fact, the Market Basket developments from this past summer offer powerful precedent for such an alliance. At Market Basket, workers joined forces with a management team dedicated to employee-friendly workplace policies and challenged a management team invested in the low-road approach. Consumers leant their support to the workers and their demands, and ultimately, the workers and the high-road management team won.
So, here’s the question raised by the NRF debate: will Tindell build a coalition with fast food workers, and their growing base of consumer supporters, and lead the industry in a high-road direction? If he does, indications are that he’d have a large and powerful block of consumers on his side, in addition to the significant political support that the fast-food campaign has already generated. Of course, if Tindell decides to take this approach, the first step is to create a forum for dialogue between employers and employees. I’ve already outlined the way such a dialogue could be structured in the fast-food industry, and it would be easy to scale up to retail more broadly.