The Motley Fool: Maybe it’s Time to Sell Loblaw Companies Ltd.

By Will Ashworth
The Motley Fool, July 31, 2017

... A living wage is good business

The idea of a living wage is not going away. We were not returning to the beginning of the industrial revolution when child labour was a common practice.

Loblaw is not a small business. It’s a giant food conglomerate controlled by one of Canada’s richest families. I doubt any of the Westons have trouble paying for their grocery bills at Loblaw, but many in-store employees probably do.

Putting more money in the hands of its lowest-paid workers will add revenue typically lost to lower-priced grocery chains while also adding productivity through a happier, engaged workforce.

“Raising the minimum wage boosts the economy, as low-wage workers are the most likely to spend any additional pay,” said Holly Sklar, founder and CEO of Business for a Fair Minimum Wage, a network of U.S. business owners and executives who believe a fair minimum wage makes good business sense. “Their increased buying power translates into more purchases at businesses large and small, and helps boost aggregate consumer demand.”

Costco Wholesale Corporation knows a thing or two about living on razor-thin margins. Its gross margins are half those at Loblaw, yet its operating margin of 3.1% in the last 12 months was only 150 basis points fewer.

Costco in the U.S. and Canada has consistently paid its in-store employees higher wages than its peers, resulting in happier staff who remain with the company for years, reducing its cost of training new hires. ...

Costco pays its hourly workers more than it has to because it makes good business sense. It remains one of a handful of large companies that are still loyal to its employees.

“Until 1980, increases in productivity were shared with the workers who had created those gains,” wrote Forbes contributor Steve Denning recently. “After 1980, almost all the gains went to the shareholders and the executives.” ...

Copyright 2017 The Motley Fool

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