Why paying above minimum wage makes sense

IN THE WORKPLACE

- REY ELBO

We’re a medium-sized business trying to attract and retain the brightest workers. Our newly hired chief executive officer (CEO) is planning to offer competitive pay and perks. As the human resources (HR) manager, I’m tasked with studying the matter carefully. Please help me navigate this. — Flower Girl.

Good for you and your CEO. Many organizations treat the minimum wage like asacred ceiling rather than a legal floor. They pay workers just enough to keep them from leaving and expect them to work hard enough not to get fired. But that’s a false economy.

However, payroll savings don’t automatically mean saving money. In reality, the logic of paying above the minimum wage can be summarized in one line: you either pay for performance or pay for problems.

In 1914, Henry Ford shocked the business world by doubling his workers’ wages. Competitors thought he was crazy. Within months, turnover dropped, output soared, and the Ford Motor Co. became a productivity legend.

Ford’s logic was simple: paying well is not charity; it’s strategy. He understood that happy workers make better cars — and eventually, more profits. More than a century later, his lesson still applies in factories, offices, even fast-food restaurants.

When you pay only the bare minimum, you attract applicants with the bare minimum credentials. There’s nothing wrong with that — unless you're in business to win, not just survive. For example, a salary that’s at least 50% higher than the minimum sends a strong message:

We want the best and the brightest workers, not the cheapest.