December 3, 2012

Snobby Press Ignores How Biblically-Based, ObamaCare-Challenging Retail Chain Grows and Pays Employees Well

Just before Thanksgiving, the leftist think tank Demos issued a report by its own Catherine Ruetschlin advocating a $12 an hour minimum wage (stated as $25,000 per year by her) for those who work full-time in retail.

What’s interesting about Ruetschlin’s suggestion is that there is already a retailer out there which is actually doing that and more — and it’s not Costco, which “pays starting employees at least $10 an hour.” To be fair to Costco, rapid wage advancement is apparently quite common there, but that’s off-topic. Perhaps surprising to the press, the company involved starts its full-time employees not at $12 an hour, but at $13. Perhaps if it spent less time trying to figure how to discredit this company, the establishment media might instead focus on how this company is able to be profitable under such a wage structure. Before identifying the firm after the jump, we’ll first see in an open letter from its CEO why it’s not getting favorable press attention (in full; bolds are mine):

When my family and I started our company 40 years ago, we were working out of a garage on a $600 bank loan, assembling miniature picture frames. Our first retail store wasn’t much bigger than most people’s living rooms, but we had faith that we would succeed if we lived and worked according to God’s word. From there, _____________ has become one of the nation’s largest arts and crafts retailers, with more than 500 locations in 41 states. Our children grew up into fine business leaders, and today we run ___________ together, as a family.

We’re Christians, and we run our business on Christian principles. I’ve always said that the first two goals of our business are (1) to run our business in harmony with God’s laws, and (2) to focus on people more than money. And that’s what we’ve tried to do. We close early so our employees can see their families at night. We keep our stores closed on Sundays, one of the week’s biggest shopping days, so that our workers and their families can enjoy a day of rest. We believe that it is by God’s grace that ____________ has endured, and he has blessed us and our employees. We’ve not only added jobs in a weak economy, we’ve raised wages for the past four years in a row. Our full-time employees start at 80% above minimum wage.

But now, our government threatens to change all of that. A new government health care mandate says that our family business MUST provide what I believe are abortion-causing drugs as part of our health insurance. Being Christians, we don’t pay for drugs that might cause abortions, which means that we don’t cover emergency contraception, the morning-after pill or the week-after pill. We believe doing so might end a life after the moment of conception, something that is contrary to our most important beliefs. It goes against the Biblical principles on which we have run this company since day one. If we refuse to comply, we could face $1.3 million PER DAY in government fines.

Our government threatens to fine job creators in a bad economy. Our government threatens to fine a company that’s raised wages four years running. Our government threatens to fine a family for running it’s business according to it’s beliefs. It’s not right. I know people will say we ought to follow the rules; that it’s the same for everybody. But that’s not true. The government has exempted thousands of companies from this mandate, for reasons of convenience or cost. But it won’t exempt them for reasons of religious belief.

So, __________ and my family are forced to make a choice. With great reluctance, we filed a lawsuit today, represented by the Becket Fund for Religious Liberty, asking a federal court to stop this mandate before it hurts our business. We don’t like to go running into court, but we no longer have a choice. We believe people are more important than the bottom line and that honoring God is more important than turning a profit.

My family has lived the American dream. We want to continue growing our company and providing great jobs for thousands of employees, but the government is going to make that much more difficult. The government is forcing us to choose between following our faith and following the law. I say that’s a choice no American and no American business should have to make.

The government cannot force you to follow laws that go against your fundamental religious belief. They have exempted thousands of companies but will not except Christian organizations including the Catholic church.

Since you will not see this covered in any of the liberal media, pass this on to all your contacts.

The letter is from David Green, CEO and Founder of Hobby Lobby Stores, Inc.

The company continues to grow. Some of its planned 2013 openings include Duluth, Minnesota; Federal Way, Washington; Tucson, Arizona; and East Haven, Connecticut.

Starting pay of 80% above the federal minimum wage of $7.25 an hour works out to $13.05.

Mr. Green is absolutely right that good aspects of his company, including how he pays and treats his employees, which the press would trumpet as enlightened if practiced at a secular company (e.g., Costco), is being ignored. A 9 p.m. ET Google News search on ["Hobby Lobby" "minimum wage"] (typed exactly as indicated between brackets) returns seven items. A Google News search on just “Hobby Lobby” (in quotes) returns 127 items (at first, it looks like over 8,000, but it’s really 127).

Hobby Lobby is the kind of firm (there are many others in similar circumstances, I’m sure) with which the Obama administration and the Democratic Party have chosen to go to war in passing ObamaCare and attempting to force them to betray the principles which guide their owners’ and executives’ lives. Shame on the press for trying to portray people like David Green as the bad guys.

Cross-posted at NewsBusters.org.

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7 Comments

  1. Great story, but does this mean you no longer think a $12 an hour minimum wage for retail is a bad idea because Hobby Lobby does it and (so far) it seems to not have hurt them?

    Comment by zf — December 4, 2012 @ 12:32 am

  2. No, it means that there are ways to treat employees better and make money. I suspect a lot of it involves higher productivity and lower turnover relating to following Christian principles on a daily basis. Other companies voluntarily going this route might be able to duplicate it, but shouldn’t be forced to.

    Comment by Tom — December 4, 2012 @ 7:33 am

  3. #2, Well, I see your point, though I myself don’t see lower wages in and of themselves as treating employees badly.

    My concern was that people like Ruetschlin would look at HL’s success and say, “see, they pay 13 an hour, that proves that all the other stores are evil and greedy!”

    My opinion is that as HL grows, such a high initial wage will become harder to maintain especially if many more employees are hired. Right now, HL is relatively small as a chain and it’s individual stores also are relativity small. Also, HL is a niche store, it caters to arts and crafts exclusively, whereas Wal-Mart, Costco, Target and the like sell just about everything. For them, taking Sundays off, closing early, and paying a starting wage of 13$ just isn’t feasible and since it’s customers are much more broader based in regards to needs, things like higher prices due to the higher wages won’t be as tolerated.

    Comment by zf — December 4, 2012 @ 9:11 am

  4. Virtually very company has used this model of worker compensation during the year. It’s called overtime. I’m not saying Hobby Lobby is running lots of overtime, but they are using it’s core logic.

    Why does any company pay time and a half to employees when it raises their hourly labor cost? The point of overtime is to NOT hire more employees thus avoiding the ancillary cost of more full time workers. This does not bode well for all the currently unemployed. What this means is just as the auto companies shaved 30% of their work force because of high wage demands by the UAW, so too small businesses will do the same thing. The auto companies did this via automation, Hobby Lobby did this via cherry picking the type of employee they hire and retain.

    High relative wages come at a cost – fewer employees. This ties in with my observation that ObamaCare is going to bifurcate the labor market between part timer workers and full time managers with few full time workers in the middle.

    Specifically what is Hobby Lobby mix of part time to full time workers? At a typical store they have how many managers, how many workers, who is a part timer and who is a full timer? What are the business hours? Are they open 6 or 7 days a week? Knowing the answers will tell us what the future of the labor market will become.

    They very well may be replicating what happened in the European labor market when their economies tilted into socialism. A typical German small business is closed on Sundays, and open limited hours to force customers to shop within a narrow time band during daylight hours of around 9 a.m. to 5 p.m. (Saves on total labor hours and electricity to keep the store open) The American business model is to capture every possible sale by staying open from 7 a.m. to 10 p.m. seven days a week. 24/7 hours are a rarity in European businesses, as in virtually unheard of. This has huge implications on the US labor market. Under this paradigm, McDonalds can pay $12+ an hour by slashing its work force 40 to 50% and utility expense by a lesser amount. Imagine EVERY small business adopting the European model! That’s the stuff of nightmares.

    Comment by dscott — December 4, 2012 @ 9:13 am

  5. #3, Good points. One note, though:

    “My concern was that people like Ruetschlin would look at HL’s success and say, “see, they pay 13 an hour, that proves that all the other stores are evil and greedy!’”

    Nah. She’d have to admit that their Christian outlook is a major factor enabling them to do that. She wouldn’t dare.

    Comment by Tom — December 4, 2012 @ 10:16 am

  6. #4, I suspect that like others in retail, Hobby Lobby avoids overtime like the plague.

    They are closed on Sundays like Chik-fil-A for religious reasons. On balance as the CEO explains in his letter, it’s a potentially very costly decision.

    You are right that retailers would have to curtail hours if they didn’t get quantum productivity leaps from their employees at the same time as paying them all $12 per hour or more.

    Comment by Tom — December 4, 2012 @ 10:24 am

  7. #4, I agree if every or most businesses went the HL route it wouldn’t be good, but I do like where HL is coming from and I don’t think they are doing what they are to save money (the money you save from closing on Sunday and closing early is NOT on net going to offset the amount you lose by not doing business, at least not in a non socialist economy) but because of their principles.

    I don’t want my comments to be misconstrued as anti-HL, it’s more to show why most other retailers aren’t evil because they don’t go the HL route. HL is a unique case for several reasons.

    #5, I didn’t think of that! Sadly I believe you are right.

    Comment by zf — December 4, 2012 @ 11:16 am

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