This document discusses organizational issues related to wages. It introduces concepts like living wage, minimum wage, and the role of CEOs and corporations in ensuring fair wages. Several myths about low-wage jobs are debunked. Case studies on McDonald's wage crisis and components of employee satisfaction at Costco, Zappos and Whole Foods are presented. The discussion centers around business responsibilities to pay living wages and whether higher prices would be acceptable to compensate higher employee wages. The conclusion is that firms investing in employees outperform and companies like McDonald's could afford small wage increases to benefit workers.

1. Organizational Issues & Case-Studies:
Wages
By: Preeti Rana

2. Introduction
 Fair Wage
A Living Wage- refers to a threshold that allows workers and their families to have a decent living
standards.
A Minimum Wage- represents a wage floor in the country below which no workers should normally be
paid, unless the legislation provides exceptions.
 Role of CEOs and Chairpersons
Employees not been given fair share of annual profit
 CSR Responsibility towards Society
Corporations focusing on short term benefits by reducing labor cost undermining the market
 Employees (Key stakeholders) relationship with the firm
Effecting overall wage growth. Employees = Consumers

3. Myths about Wages
MYTH: Low-Wage jobs are the ones you see in your neighborhood Fast food jobs.
FACT: Fast food jobs constitute less than 5% of all low-end jobs. Low-wage, low-reward jobs are
all around us.
MYTH: “low--wage, low-skilled”
FACT: Low wages jobs require knowledge, patience, care and communication.
MYTH: Most low-wage workers are teenagers, illegal immigrants or high school dropouts.
FACT: Teenagers comprise only 7% of the low-wage workforce, America’s low-wage workers are mostly
(nearly two- thirds) white, female, high school educated and have family responsibilities. Women
make up 60 percent of the lower-paying workforce.

4. Issues
Employees are the last one to get net profit share
Asset Vs Cost
Moral damage to remaining employees
Productivity Loss
Firm focusing on short term goals
Acceptable wage rate
A minimum wage by Govt.
Average rate for job and industry (Market)
A living wage (by Non-Profit/ NGOs)

5. In business for yourself, but not by
yourself
McDonald’s franchisees;
McDonald’s suppliers; and
McDonald’s employees
Ray Kroc's vision for McDonald's
McDonald’s core principles: Quality,
Service, Cleanliness and Value

6. Case study: McDonald's Crisis
 McJob – A low- paying job that requires little skills & provide
little opportunity for advancement (Oxford Dictionary 11th
Edition)
 After widespread criticism of low wages, McDonald's announced
a pay rise for US workers (April, 2015). But only 90,000 staff in
company-owned stores would benefit. The majority of workers at
franchised McDonald's will still get the state and federal
minimum wage.

7. Around the World

8.  What comes "First" - Corporate Profits vs. Worker's Pay
Fast food labor is unskilled labor. You don't even need a high school diploma to work
 Fast Food Jobs = Short term + Minimum Wage Work
 Employers take - Employees lack the kind of professionalism and personal responsibility for higher pay rate
 Employees take - If they got paid by $15 / hour rate, they would have taken their jobs more seriously
 http://www.theguardian.com/business/video/2015/may/04/mcdonalds-fight-for-15-protest-video
McDonald's Minimum Wage Crisis

9. Business Structure
A study by Weil and Min Woong Ji in 2012, found that franchise-owned stores were 24%
more likely to violate laws and owed 50% more in back wages per employee.
National
Corporation
WorkersFranchise
Owners legally responsible for
hiring
Collects fees for company’s
brand and products;
Dictates the look and
Operations

10. Components to Employees Satisfaction
 Costco
 Better Pay = Longer stay, Efficient and Productive employees
 Zappos
 Employee commitment is their priority
 Whole Foods Markets
 Known Pay
 Seniors get 19X of average wage.
 Peer appraisal voting

11. Discussion
 Do businesses really have the responsibility to pay each employee a living wage?
If yes at what cost?
 Does a fair wage can be unfair for others?
 Do you think Pay-Scale ratio like in Whole Foods Markets is a better idea or is it
unfair for managers?
 Are you ready to pay higher prices of all your products if your extra money will
go to the firm's employees' account?

12. Final Take
 Firms that invest in employee development has outperformed the stock
market. Happy workers are the best workers!
 Companies such McDonald's can afford to increase their minimum wage
slightly to benefit their employees and should strictly pursue labor
violators.
 For employees - work on improving your job skills and professionalism. As
you raise your value to potential employers, you raise your job prospects
and take-home a good pay.