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September 16, 2013 at 7:37 AM
Lessons from Dick’s Drive-In on minimum wage, employee benefits
Every time I walk over to Dick’s Drive-In on Capitol Hill, I have a mass craving for this:
And every time I order something, my eyes fixate on this recruitment sign:
Flipping burgers and making shakes pays $10 an hour to start? Merit raises? Employer-paid insurance? Up to $8,000 for child care or college tuition? A 401(k) retirement program with employer match? Paid time for volunteer service? Up to three weeks paid vacation?
Yes, it’s true. Minimum requirements must be met, but every one of those benefits is available to the 180 employees who work for Dick’s Drive-In. Since the first restaurant opened in January 1954, tens of thousands of workers have started their careers in one of the chain’s six Seattle-area locations.
As local fast-food workers join a nationwide movement for a $15 minimum wage, Dick’s approach is a much more realistic, time-tested model for local businesses to emulate. Mandating a massive increase from Washington’s current minimum wage of $9.19 is too much, too fast for the small restaurants that are hiring inexperienced employees.
So how exactly is Dick’s able to offer more than the minimum wage and a plethora of benefits when its menu charges no more than $2.70 per item?
Jim Spady, the restaurant namesake’s son, company vice president and legal counsel, has surprisingly simple answers based on his dad’s business philosophy. (Dick is turning 90 next month and remains president of the company.)
“Among his special rules is you should make decisions for the long run so long as you can survive in the short run. The No. 1 job of a business is to make a profit. If you don’t, it’s not worth anything. No. 2 thing is to take care of your people. They’re the key to success,” he said. “So once you’ve taken care of your people and you’re making a profit, you should make an investment in your community. And if you have a healthy community, you’ll have a good business in the long run.”
Though they took short-term risks at first, Spady says the original partners adopted the long-term approach of buying rather than leasing property to avoid fluctuating rent. Since Dick’s is still a private, family-owned company, they can be flexible with perks.
“You want the best employees? You should expect the best benefits. Both of my parents were the first in their extended families to go to college, so they’ve been pro-education since,” Jim Spady says, adding Dick’s is the very definition of a “transitional employer” where the vast majority of workers start with no experience and end up going to work somewhere else.
I asked Spady about the recent fast-food strikes. He said the “living wage” movement is well-intentioned, but he’s concerned it will hurt smaller businesses that are still at risk and susceptible to fail because they have less capital and experience with the fluctuating market. Regulations are necessary, but undue burdens will hurt more than help.
“The way to improve the wages of the poorest people is to encourage them to upgrade their skills, not to pass a law that requires we pay X dollars an hour,” Spady says. “Governments can pass laws, but they can never repeal the law of supply and demand. So if you force law abiding businesses to pay more, they will — or they will automate their processes so they use way less labor. Or both. And the people they do hire will be the people who are best in that group. So what these high minimum wage laws do is they help a few people get better wages, but a lot of current people will lose their jobs.”
Upward mobility. That’s the key issue every business and every employee must think about in today’s labor market.
Dick’s Drive-In may seem like an anomaly in a fast-food world dominated by corporate franchises, but every business owner should take a page or two out of Dick Spady’s rulebook. It’s worked for nearly 60 years.
Update 1:25 p.m.: The recruitment sign in the photo below is a bit confusing because it says employees can receive between $3,000 to $8,000 for “tuition/childcare.” Dick’s Drive-In spokesperson Carrie Shaw clarified that scholarships are awarded up to $22,000 over four years to employees who are in school and working at least 20 hours per week for at least six months. Here’s a link to the company’s employee benefit page.