Low Pay, Fast Food and High Turnover

1
Low Pay, Fast Food and High Turnover

• Erin White
• Wall Street Journal
• In February 21 Free Press

2
Slow Down Turnover

• When Rob Cecere became regional manager for 8
  Dominos pizza stores in New Jersey 4 years ago,
  his boss gave him a mission slow down turnover.
• Store managers in the region were leaving every 3
  to 6 months. Without a steady boss, workers
  there who answered phones, made pizzas, and
  delivered orders had a turnover rate as high as
  300 annually.

3
Bottom Line

• High turnover hurts the bottom line.
• It costs money to recruit, hire and train people
  and undercuts service when inexperienced
  employees dont work as efficiently.
• Dominos says it costs about 2,500 each time an
  hourly store worker leaves and about 20,000 each
  time a store manager quits.

4
Strategy

• Three entry positions
• Assistant managers _at_ 8 10/ hour.
• Answer phones _at_ 6.15/hour.
• Drivers _at_ minimum wage tips 0.82/trip.
• Firm sought to train managers better take more
  interest in employees.
• Dominos say it is working.
• In contrast, Starbucks say they pay higher than
  minimum wage

5
The Economics
Supply
Demand
Wage

• Essentially, at minimum wage, you have excess
  demand for labor.
• Have to either give them more money, or some
  kinds of non-pecuniary benefits.
• Net wage ?.

W
5.15
L
Labor Force