Narrator: Janet, a customer service manager at a major retail chain, crawls on the floor to fix a money order machine, her phone pressed to her ear as a tech support agent walks her through the steps. After seven years of hard work and several promotions, she earns just $11.60 an hour. Her schedule is so erratic—closing at 11 p.m. one night, opening at 5 a.m. the next—that she can’t get consistent sleep. Her health insurance has a $3,500 deductible on an annual income of $22,000, making a recommended surgery an impossible luxury. Meanwhile, Patty, a manager at the convenience store chain QuikTrip, earns over $70,000 a year. She has affordable healthcare, a stable schedule that lets her attend her kids’ school events, and finds deep satisfaction in her work. Both work in low-cost retail. Why are their realities so profoundly different? In her book, The Good Jobs Strategy, Zeynep Ton argues that this difference is not an accident or a necessity, but the result of a deliberate strategic choice that separates failing companies from the most successful ones.

Narrator: The conventional wisdom in low-cost industries is that to keep prices low, you must keep labor costs down. This leads to what Ton calls the "bad jobs strategy," a self-defeating approach that traps companies in a vicious cycle. This strategy is defined by low wages, minimal benefits, and unstable, last-minute scheduling. The story of Janet is a textbook example. Her employer, by underinvesting in her and her colleagues, creates an environment of "mismanaged chaos." Understaffing leads to long lines and angry customers, which in turn demoralizes employees who feel helpless and set up to fail.

This underinvestment leads to poor operational execution: stock is misplaced, promotions aren't set up correctly, and inventory data is inaccurate. These operational failures result in lower sales and profits. In response, management, viewing labor as its primary controllable expense, doubles down on the strategy, cutting hours and squeezing payroll even further. This only worsens operational problems and employee morale, perpetuating a downward spiral. Ton’s central argument is that this is not an unavoidable consequence of a low-cost business model. As she states, "the bad jobs strategy... is not a necessity, it is a choice." It’s a choice that ultimately harms employees, customers, and, in the long run, investors.

Narrator: In stark contrast to the vicious cycle, a handful of "model retailers" like Costco, QuikTrip, Trader Joe's, and the Spanish supermarket Mercadona prove that another path is possible. These companies operate on a "virtuous cycle" fueled by heavy investment in their employees. Patty’s success at QuikTrip is a direct result of this strategy. She and her colleagues are paid far more than the industry average, receive excellent benefits, and are given opportunities for growth.

This investment creates a highly capable, motivated, and loyal workforce with extremely low turnover. These employees, in turn, drive exceptional operational performance. They provide outstanding customer service, maintain their stores meticulously, and reduce costly errors and waste. For example, Costco's shrink rate, or inventory loss, is a mere 0.2% of sales, one of the lowest in all of retailing. This operational excellence leads to higher sales and profits, which then enables the company to reinvest even more in its employees, strengthening the cycle. The financial results are undeniable: these companies consistently outperform their competitors in sales per square foot, labor productivity, and inventory turnover, delivering superior long-term returns to investors.

Narrator: The good jobs strategy is not simply about paying people more. It is an integrated system where employee investment is combined with four specific operational choices that enable high performance.

First, model retailers offer less. Instead of overwhelming customers with endless variety, they offer a highly curated but limited selection of products. Trader Joe's carries only 4,000 products compared to the 40,000 in a typical supermarket. This reduces complexity, lowers inventory costs, and makes it easier for their cross-trained employees to become product experts.

Second, they standardize and empower. Routine, efficiency-critical tasks are highly standardized. At Costco, the two-person checkout process is a rigid routine designed for speed and safety. However, for non-routine situations, employees are empowered to use their judgment to solve problems and delight customers. This combination provides consistency without sacrificing adaptability or employee dignity.

Third, they cross-train. At Mercadona, employees are trained to perform a wide range of tasks. During busy periods, they focus on customers. During lulls, they restock shelves, check inventory, or clean. This provides the flexibility to manage fluctuating customer traffic without resorting to the unstable "just-in-time" scheduling that plagues other retailers and wreaks havoc on employees' lives.

Fourth, they operate with slack. Model retailers intentionally staff their stores with slightly more labor than the expected workload. This counter-intuitive choice prevents the cascading problems of understaffing. It gives employees the time to do their jobs well, help customers, and, most importantly, engage in continuous improvement. At Costco, an hourly employee in Florida had the time to notice the high cost of watering the store's landscaping and suggested digging a well, an idea that saved the company a significant amount of money.

Narrator: The ultimate power of the good jobs strategy is that it provides two critical strategic advantages: the ability to adapt to change and the ability to differentiate from competitors.

The story of Borders bookstore is a cautionary tale of a company that failed on both fronts. In the late 1990s, Borders was plagued by poor operational execution, a direct result of its bad jobs strategy of high turnover and underinvestment in staff. Its "phantom stockout" rate was a staggering 18%—meaning customers couldn't find a book the system said was in stock nearly one-fifth of the time. This operational failure made it impossible for Borders to integrate its physical and online stores, a strategic move that could have helped it compete with Amazon. Unable to execute, it couldn't adapt, and it filed for bankruptcy in 2011.

In contrast, Mercadona demonstrated incredible adaptability during the 2008 financial crisis. To help its price-conscious customers, it committed to a 10% price reduction. This was achieved not by cutting jobs, but by leveraging its empowered workforce to find massive cost savings, such as switching from selling packaged to loose produce—a change that saved €175 million annually. By executing this change flawlessly, Mercadona emerged from the recession stronger, gaining significant market share. This adaptability, born from operational excellence and a committed workforce, is a direct payoff of the good jobs strategy.

Narrator: The single most important takeaway from The Good Jobs Strategy is that investing in employees is not a drain on profits but a powerful engine for growth and resilience. The conventional view of labor as a cost to be minimized is a profound strategic error. By combining significant investment in people with smart operational choices, companies can create a virtuous cycle that delivers superior results for employees, customers, and investors simultaneously.

The book proves that the "bad jobs strategy" is ultimately a failure of imagination and leadership. It leaves managers and executives with a challenging question. The question is not, "Can we afford to invest in our people?" but rather, "In a world of intense competition and constant change, can we afford not to?"