PeakTrader.com

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PeakTrader:

I’ve visited many firms and never seen a capital appreciation day. However, I’ve seen many employee or worker appreciation days.

Rather than a Capital or Labor Day, maybe we should combine the two and have an Economics Day, to appreciate good economic policies. Here’s a real example, where I was involved implementing economics:

There was a fast growing firm that was also very disorganized, because it was so busy. One of the recommendations was raising the starting wage from $11 to $13 an hour for all factory workers. However, management decided that was a bad idea. One reason was there were always plenty of applicants for $11 an hour, over the prior five year period, and of course, there was concern profits would fall, substantially.

However, roughly six months later, management raised the starting wage to $13 an hour and something miraculous happened.

Turnover rates dropped like a rock, overtime was almost completely eliminated, including six day weeks, injuries fell dramatically, hardly anyone called in sick, damage to equipment and products almost disappeared, including steep declines in reject rates, quality rocketed, moral was lifted, management no longer had to spend enormous time interviewing workers, with related paperwork and training, supervisors no longer had to cover for sick workers, to do their jobs, and had time to actually do their work, and of course, profits soared.

Experienced workers who rejected the job when they learned it was $1 or $2 less than they were willing to work for took the jobs at the higher rate. Management had much more time to manage and supervisors had much more time to supervise. So, operations became much more organized and efficient.

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Sam, Most of the workers had little experience when they were hired at $11 an hour and some had absolutely no experience.

Do you have something against people with experience?

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Ron, your ridiculous and false assumptions are amazing.

So, if someone takes a job at $11 that means his skills are worth less than $13?

In the real world, some workers are worth much more than $11 and some are worth less.

And, you imply everyone is equallly desperate for a job.

Moreover, you completely ignore incentives, whether there are abundant applicants or not, if workers are overworked, etc..

Also, I may add, in the real world, there are other factors why applicants are hired, e.g. timing (when the firm needs workers right away), or if the applicant says what the manager likes to hear in the interview.

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http://www.aei-ideas.org/2013/09/happy-capital-day/#comments

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