Containing the Minimum Wage

By: Julian Hassan

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Kip Tindell, CEO of the Container Store, pays his employees $50,000 a year, that’s twice the national average. In a few months, he is expected to become chairman of the National Retail Federation, an industry group. In this position, he hopes to moderate industry views, so that more companies accept a higher minimum wage. However, what enables Tindell to pay his customers higher wages is his focus on growth and productivity in his particular company. These are the exact characteristics that a forced, blanket minimum wage discourages and works against.

MSN reports:

Tindell then keeps these “great people” by giving them annual raises up to 8% of their salaries, based on their performance. He tells The Wall Street Journal that he has managers rank each of the employees they supervise and encourages them to work toward a pay structure where employees are paid in accordance with their value to the company.

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On the other hand, a higher minimum wage would not be based on the value contributed by workers to their company, only the preening influence of Washington lobbyists. In fact, what Tindell fails to mention is that his 1=3 rule means 1 or 2 out of 3 unemployed:

Tindell explains that the secret to the company’s high wages is what he calls “the 1=3 rule,” meaning that one great employee will be as productive as three employees who are merely good.

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That’s three less “merely good” people he has to hire. If at Tindell’s company one person has to be as good as three, imagine how many skills it would require if employers couldn’t afford to hire more employees due to a higher wage, and one person had to be as good as four or five . Someone just starting out wouldn’t be able to get a job at the Container Store, which is basically a sophisticated Walmart for organization supplies. It works for them, but people need to be allowed to make mistakes. Sometimes you can only be as good as one or two people. That’s how we gain valuable skills and experience for the workplace.