Dr. Mike Walden, NCSU COLLEGE OF AG & LIFE SCIENCES, 3/5/14
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Host Mary Walden asks about the low level of wages paid by many companies.
Some argue that such companies are hurting themselves. These folks say
companies could actually pay their workers more and at the same time reduce
their costs and increase their profits. Her husband, N.C. State University
economist Mike Walden describes how this could happen?
Mike Walden: “Well, this could happen in a couple of ways, Mary. One, by
offering a higher wage, the view is that the company could actually attract
better workers who can actually do the job better. Another thought is that by
offering a higher wage the company is going to attract a more motivated worker
who feels rewarded by the higher wage.
“And then finally there’s the thought that by offering the higher wage and
getting better workers — more motivated workers — that’s going to reduce worker
turnover. And that’s very costly to a business. So, if you put all these three
things together, the notion is that by offering a higher wage. the company
actually gets a more productive worker, a worker that is producing more per
hour, and that extra productivity, the view is, could compensate and perhaps
maybe even more than compensate for the higher pay.
“So, why don’t we see all businesses do this? Well, I think whether this
works or not is really going to depend on the particular business. We already
see some businesses engaged in doing this. But I think the important thing here
is for a business to think about this. And if they’re not happy with their
current employee staff and they think turnover is too high and motivation is
too low, they may actually want to consider what might be counter intuitive and
offer a higher wage.”