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The Business Case for Paying Service Workers More

MIT's Zeynep Ton explains the theory behind the Good Jobs Strategy.
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Last month, the fashion retailer Gap, Inc. pledged to raise wages for 65,000 of its lowest-paid employees, to $10 an hour, by 2015. As the company explained on its website, the decision wasn't a mere publicity stunt. It was motivated by an underlying economic driver: Higher wages will allow their stores to “attract and retain great talent,” ultimately leading to a far better experience for customers.

For Zeynep Ton, a leading scholar on the connection between wages and profits at retail and service companies, the Gap’s decision to increase wages came as no surprise. Ton has spent the last few years studying how upgrading traditionally low-prestige, low-pay service-class jobs can benefit workers, the businesses that employ them, and even customers.