Chipotle’s Ethical Foible: Pay

business_ethics_highlights_2Chipotle gets high marks on ethics from many observers. But this piece points out that on one issue, the chain is simply another fast-food joint, and that’s its rate of pay. The company doesn’t pay what critics call a “living wage.” So who works at Chiplotle? One assumes it’s people without the kinds of skills that could be marketed to an employer that pays more: i.e., people without much education, and perhaps many without much educational aptitude. What would happen if Chipotle raised wages? For one thing, those jobs would suddenly become more attractive, and one possible consequence is that the current crop of workers would have to compete with a whole new class of candidates who up until now have had, and preferred, other options. (This is an effect that philosopher Jason Brennan refers to as “job gentrification.”) Whether the net effect would be good for current employees is an open question. >>>

LINK: If Chipotle Won’t Pay Fast Food Workers A Living Wage, Who Will? (by Jessica Leber for Fast Company)

…The chain’s devotion to sustainable, ethical, higher-quality ingredients consistently wins it amazing publicity and customer loyalty, even when things go wrong…

…But there’s an area where it falls short of its consistent leadership, and that’s in how its humans fare. Traditional fast food chains like McDonald’s and KFC get lots of flack for their low pay, but the truth is that the so-called “fast-casual” industry that Chipotle pioneered is often only slightly better. According to Chipotle spokesman Chris Arnold, Chipotle’s average crew member makes more than $10 an hour, a figure that would equate to about $21,000 to $22,000 annually for someone who works 40 hours a week […] imagine trying to live off either salary in a city like Boston, New York, or Los Angeles….

What do you think?

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  1. Renee Payne

    This is an argument along the lines of “avoiding action that harms those we intend to help,” ordinarily founded upon rigid neoclassical assumptions, as Albert Hirschman explained.

    I appreciate this blog and the associated journal. Do you intend to broaden the ideological framework by inviting contributions from the center and left?

  2. The Editors

    The need to avoid harming others is fundamental to all sorts of moral systems; neoclassical economics is not necessary, here. You’ll have to be more specific if you think our point is off-target.

    For what it’s worth, if you think the editorial team is uniformly right-of-centre, you misjudge. But generally, we do seek balance. Luckily comments are open, so where we fail to find balance, others can correct us.

  3. Renee Payne

    This is, of course, a “free market” assumption: “So who works at Chiplotle? One assumes it’s people without the kinds of skills that could be marketed to an employer that pays more: i.e., people without much education, and perhaps many without much educational aptitude.”

    Contrary to the neoclassical model, individuals sometimes accept underemployment given a shortage of more attractive options. I worked in retail after my Masters degree for several months and returned to graduate school expecting a better labor market in the future. One would probably find workers at Chipote who have untapped skills. A higher wage might enhance their commitment to the enterprise and improve their performance. This is consistent with the Webbs’ concept of efficiency wages.

    Jason Brennan’s gentrification argument is a variation on the standard neoclassical critique of any interference with market forces, at least it seems to me. The harm he infers as a result of living wages would not be foreseen in the context of heterodox economic models. I think it’s important to make one’s assumptions explicit.

    Thank you again for the opportunity to comment.

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