How Good Jobs Help Workers, Employers, and Communities Thrive

When it comes to jobs, we can all do better by doing “good.”

In my last blog, I said that quality of life often starts with a good job. But what exactly does life look like with – and without – a good job?

Based on the good job scorecards that I previously reviewed, here’s what your experience with a good job might look like:

  • You had an equitable chance at landing the job. No bias, discrimination, or overstated job requirements excluded you from the process.
  • You earn a fair, living, and transparent wage, with benefits that fit your needs.
  • Your workplace provides physical and psychological safety.
  • Work and your schedule are stable, predictable, and flexible.
  • You have clear and attainable opportunities for personal growth and professional advancement.
  • You have a degree of autonomy. Your ideas about your work are invited and respected, and you feel valued.
  • You feel a sense of belonging and a connection to your colleagues; the diversity of your community, clients, and stakeholders is reflected in the people you work with.
  • You see alignment of your purpose and goals with those of your employer.

Research suggests that people whose jobs are characterized by these conditions experience higher levels of wellbeing.

In short, better jobs can lead to a better life.

But, as I also noted in my last blog, good jobs are those that work for the employer as well. Is there a business case for employers to invest in good jobs?

You bet there is!

There is plenty of data to show that better jobs lead to better business outcomes and above market investment returns. But not all business leaders see it that way. And, until recently, most people in the investment community didn’t see it that way either. Which, perhaps, explains why business leaders haven’t been rewarded for adopting quality jobs practices, especially when it appeared to be cheaper to do something else.

So, how do we convince employers and investors that investing in workers and job quality is a worthy pursuit? At IRC4HR, we think it’s by continuing to fund research and support thought leaders who are crafting compelling narratives that make the data-driven connection between better jobs and better business outcomes.

These are from a research paper published by the Workforce & Organizational Research Center (WORC),funded by IRC4HR, and co-authored by Ellen Frank-Miller (WORC) and Tom Woelfel (HCAP Partners).

  • Stable scheduling leads to higher sales: Clothing retailer The Gap tested making staffing schedules more predictable and stable and giving employees more control. As a result, median sales increased by 7% compared to the control group of stores. That’s a remarkable leap in the world of retail, where companies fight for increases of 1-2%.
  • Stable scheduling leads to increased labor productivity. The Gap also found that stable scheduling boosted labor productivity by 5%, which translated into $6.20 of revenue per hour of labor.
  • Reducing turnover lowers call center and warranty costs. A 2020 white paper based on a study of a contract manufacturer in China showed that cell phone manufacturing quality plummeted right after the last paycheck of the month was issued. Why? Because that’s when employee quit rates went up, forcing the company to scramble to cover the assembly lines. Large numbers of lower quality phones drove up call center and warranty costs. By reducing turnover – in other words, creating jobs where workers wanted to stay – the company lowered costs and thus increased profitability.
  • Improving job quality lowers recruiting costs. Studies of high levels of turnover (50-60%) in frontline staff at Quest Diagnostics and UPS both showed that improving job quality led to reduced turnover and cut millions from recruiting costs. They also reduced lost workdays due to work-related injuries and improved customer satisfaction.

Improvements in product and service quality, revenue, and productivity demonstrate that investments in good jobs generate a positive return to customers and shareholders, too.

Speaking of investors, private equity firm Two Sigma reinforces my observation about the investment community’s view of labor costs. As they state in their article, Two Sigma Impact: Finding Untapped Value in the Workforce, “Private equity has tended to view labor as a line-item to be reduced rather than a place to invest, resulting in a large blind spot for the industry. What if there were another, more fruitful way of looking at workforce issues?”

“What if a specific focus on workforce investment – in effect, helping companies create not only more but better jobs – could both benefit workers and unlock previously untapped value for companies?” Using this approach with its portfolio companies, Two Sigma has found positive impacts on multiple measures of corporate performance, including

  • Profit margins
  • Operating income
  • Current ratio
  • Free-cash-flow-to-sales ratio
  • Debt paydown
  • Net debt ratio

But Two Sigma also found that “unless companies understand how to measure job quality from the perspective of workers, they will find it difficult to improve the many facets of engagement” that drive productivity and business results. So, Two Sigma partnered with PwC US to develop The Good Job Score Assessment Tool, “a standard instrument for measuring job quality across companies and industries.”

Consulting company Great Place to Work compiles the annual FORTUNE 100 Best Companies to Work For list. These companies invest in their people and culture. As a result, they have half the employee turnover of their industry peers and earn twice the revenue per employee. Compared to the Russell 3000 and Russell 1000 stock indexes across more than twenty years, the 100 best companies beat the market by more than 300%.

Professor Zeynep Ton of MIT’s Sloan School of Management (and founder of the Good Jobs Institute, which I talked about in my previous blog) has Harvard Business Review articles (here and here) and a recently published book focused on the creation and impact of good jobs. She has numerous case studies of companies increasing sales productivity, growing market share, reducing staff costs, lowering turnover, and boosting customer satisfaction after pursuing a good jobs strategy.

And workers and employers aren’t the only ones who benefit from good jobs. A community – and society – benefits in many ways from a critical mass of good jobs. Here are a few:

  • Greater economic activity: Employees with more economic security are more confident consumers. As more companies offer good jobs, they create more consumers for their products and the products of others, because one company’s employees are another company’s customers.
  • Higher tax revenues: Employees who earn and spend more also generate more in state and local sales, property, gasoline, and other taxes.
  • More stable households: Thanks to the long-term stability of good jobs, people can put down roots, invest in their community, and get involved in civic life.
  • Lower public health and benefits costs: Workers who are financially secure and feel valued experience higher levels of wellbeing and can be more self-sufficient, requiring less public support and services.

Good jobs create healthy communities that support more good jobs. It’s a virtuous upward cycle that benefits employees, employers, and whole economies.

It’s not hard to figure out what happens when workers don’t have the favorable conditions of a good job. For one thing, their productivity and engagement lags compared to those with a good job. 

Employees wanting a better job often disengage from their current role. Some may be “quiet quitting,” (also known as making a more “calculated contribution”), but according to Gallup, 18% of employees are actively disengaged or “loud quitting.” These employees “take actions that directly harm the organization, undercutting its goals and opposing its leaders.” If you sense friction in your company, this might be one source.

Of course, workers are free to look for a new, better position. That doesn’t change the fact that disliking a current job and looking for a new one is stressful. That stress impacts the mental and physical health of workers, which in turn impacts their job performance. And for some employees, looking for another job is a luxury they can’t afford, whether it’s due to time constraints or financial insecurity, so they continue to stay where they are, but with some of the detrimental behaviors suggested above.

The lower pay and economic uncertainty of not having a good job also impacts the local economy as workers avoid, or can’t afford, discretionary purchases. 

For their part, employers might save money in the short term by not offering good jobs, mainly through lower labor costs. And, if the competition carries higher labor costs, this might seem like an opportunity to compete on price and/or to increase profit margins.

But in the long run, companies that opt out of offering good jobs hurt themselves in several ways. One, they are paying extra because of lower productivity, higher employee turnover, more expensive recruiting costs, and higher healthcare costs. They either need to absorb those costs or pass them along to customers. 

If a community or industry opts out of good jobs, then one company’s financially insecure employees become another company’s hesitant or missing customers. 

 On the other hand, if a competing company is offering good jobs, they are in a better position to lure away employees and then win on increased productivity. They get to enjoy the lower recruiting costs, lower healthcare costs, lower workplace safety costs, and higher levels of customer service. They can ride the virtuous upward cycle, just as the Fortune 100 Best Companies to Work For demonstrate.

So, don’t just create good jobs out of altruism (although there is nothing wrong with a moral imperative to do something). Do it because it’s also the right thing to do for business.

In one of her articles, MIT Professor Ton summarizes the impact of good jobs well when she writes:

“Better jobs make for a better society. Employees do higher-quality work when they are knowledgeable and empowered, when they have sufficient resources, and when they and the work they do are respected. Customers — which means all of us — are treated better and are more likely to come away satisfied…An economy with more good jobs is neither inevitable nor utopian. It is a choice we can make.”

Or, as IRC4HR grantee, Ellen Frank-Miller (WORC) says (and demonstrates with her research):

“Better Jobs Mean Better Business®

…But jobs don’t grow out of the ground like trees; we build them, for good or for ill.”

Let’s build them for good.

Jodi Starkman is Executive Director of the Innovation Resource Center for Human Resources.

(Image: “Thriving Chive,” by Adrian Comballey IV via Canva)