[SpaceCadetJones]

I wonder if this is different for companies like Walmart / Costco / Meijer where they carry the majority of goods you need day to day. What if they started paying their employees higher wages, meanwhile giving them discounts at the store to encourage them to spend there? Maybe the lowered profit margins could be made up by the increased spending at their store. Not to mention it would also be a good PR move

[tanker]

Obviously, you would have to avoid the "Company Store" problem.

I think it could be a terrible PR move. If you effectively pay your employees less and justify by giving them discounts. A program that begins with good intentions could end badly. Especially if the program is conceived in an era of high profits. In low profits, management makes different decisions. Also, you often get new management.

[SpaceCadetJones]

I'm a bit confused, where does the effectively paying less come from? I suggested they increase their pay while also giving them a discount at the store to give them an incentive to spend their new income at the store.

[tanker]

I communicated poorly. Paying your employees more and giving them a discount is harmless. Lots of employees receive a discount.

I meant you run into problems when you end up effectively paying them less and justifying via a larger discount.

Management could end up doing this gradually as times get tough. For example, a company announces lay offs and pay cuts, but softens the blow with a larger discount.

I guess I'm recommending caution. I would avoid making a discount a major part of employee compensation. A worker deciding to apply for jobs at Walmart and Costco could end up weighing a better health plan against a higher discount on basic goods. That seems problematic to me.

[SpaceCadetJones]

Thanks for clarifying, this makes a lot of sense.

[nradov]

Employee discounts can't be very high or else employees will set up side businesses buying up cheap products and then reselling them on eBay or whatever (arbitrage). This directly hurts the employer's profits. With an employee discount of 10% or so it's usually not worth the hassle. But when discounts go over ~20% it gives employees an incentive to act unethically. Employers can partially counteract that by limiting purchase quantities but it becomes a huge hassle to enforce.