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Boloco’s bold bet on higher wages

Restaurants like Shake Shack and Boloco that offer their employees above-average pay say they have lower turnover and better customer service.

Andrea Morales/The New York Times)

Restaurants like Shake Shack and Boloco that offer their employees above-average pay say they have lower turnover and better customer service.

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In the standard model for fast-food chains, workers serve low-cost products for low wages; indeed, industry lobbyists would have us believe the Golden Arches will crumble and the Burger Kingdom will collapse if minimum wages increase. But there is an alternative emerging at chains like the Boston-based Boloco burrito restaurants, where employees are paid wages well above the federal minimum of $7.25 an hour and the $8.83 national median for fast-food employees. As The New York Times recently reported, Boloco pays a minimum of $9 per hour and has a median wage of $11.50; similarly, the burger chain Shake Shack pays everyone at least $9.50, and its West Coast counterpart In-N-Out Burger at least $10.50.

These companies are demonstrating that higher wages can benefit employers and employees alike, as they yield less turnover and greater worker productivity. Boloco co-founder John Pepper told the Boston Business Journal in 2011, “If you have happy employees who know that they are being taken care of, they can go back and care more about the food that is served and about the customer.” That approach has not hurt Boloco’s growth or its bottom line. Other innovative perks — such as health care and a 401(k) match at Shake Shack and support for online university education at Starbucks — are also contributing to a more stable fast-food workforce.

The leading naysayer to higher fast-food wages, the National Restaurant Association, says on its website, “Young people across the country look to restaurants for their first jobs. A mandatory wage increase could further restrict opportunities for young and less-skilled individuals.” Chains like Boloco, in contrast, are inspiring workers to make the most out of that first opportunity.

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