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  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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