Low Pay, Fast Food and High Turnover Erin White Wall Street Journal In February 21 Free Press

Slow Down Turnover When Rob Cecere became regional manager for 8 Domino’s 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.

Bottom Line High turnover hurts the bottom line. It costs money to recruit, hire and train people and undercuts service when inexperienced employees don’t work as efficiently. Domino’s says it costs about $2,500 each time an hourly store worker leaves and about $20,000 each time a store manager quits.

Strategy Three entry positions: –Assistant $8 – 10/ hour. –Answer $6.15/hour. minimum wage + tips + $0.82/trip. Firm sought to train managers better – take more interest in employees. Domino’s say it is working. In contrast, Starbucks say they pay higher than minimum wage

The Economics 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 . Demand Supply Wage Labor Force $5.15 W* L*