Why Paying a Living Wage Is Smart Business

Low wages and skimpy benefits are no bargain if good employees can't afford to keep working for you.

learn more about Hari Ravichandran

By Hari Ravichandran


Opinions expressed by Entrepreneur contributors are their own.

My first real job paid minimum wage. It was 1993 and I was a research assistant at a National Science Foundation Research Center making $4.25 an hour. I was proud of my paycheck, but every night I went back to my apartment wondering if the phone or electricity would still be on. I was 18 years old, single and didn't have a lot of obligations. I counted myself as lucky. All I had to do was pay my bills, but at $4.25 an hour, it was a challenge. Those bills weighed on my mind every time I clocked in and out of the research lab.

Fast forward 22 years later and I'm fortunate to be the founder and chief executive officer of Endurance International Group, a thriving public technology company that helps small businesses get online. My days in the research lab are long behind me, but my experience earning minimum wage and trying to make ends meet has remained with me throughout my career.

The issue of fair wages has been brought to the fore recently, thanks to decisions by McDonald's, Wal-Mart and others to increase workers' wages, and the nationwide protest staged by tens of thousands of hourly workers decrying the existing minimum wage. Yet changes to the federal minimum wage remain a third rail in politics. Suggest raising it and you risk falling prey to accusations of meddling in private enterprise and expanding the reach of government. Oppose a raise and get branded a greedy capitalist.

Related: Are Minimum-Wage Activists Trying to Kill the Franchise Model in Seattle?

The truth is, politics don't belong in the debate. From Endurance's perspective, paying a living wage was a business calculus.

Several years ago, we evaluated the marketplace and concluded that to remain competitive and attract the best talent, we needed to increase our wages, ensure that every full-time employee had access to healthcare and help our people plan for their future retirements. If we could help them on these three fronts and show them a path for career growth, I knew, from my own personal experience, that they would come to work more focused and engaged. For our business, higher wages meant better employee retention and increased productivity, which translated into happier customers and healthier profit margins.

Quietly, two years ago, we increased hourly wages across the board by 15 percent. We added a 401K retirement plan with matching for employee contributions. I'm proud to say that by the end of this year, every full-time, hourly U.S. employee at Endurance will make $14 per hour, or more, nearly double the current federal minimum wage.

Out of our 2,500-person workforce, nearly 1,500 are hourly employees in the U.S., working in our customer care call centers in Texas, Utah and Arizona. The competition for talent is fierce and it's important that we attract bright, motivated people to come work at Endurance. The battle for talent in the technology industry is notorious and it's critical that we stay competitive. Paying a living wage isn't just a nice thing to do for our employees, it's an absolute requirement for us if we want to stay in business and keep the lights on.

At Endurance, the results of our commitment to a living wage show. Our employees are happier, more productive and staying longer with the company. Last month, I visited our call center in Tempe, Arizona and a young man came up to me after a presentation to say he was grateful that we paid more than his last minimum wage-paying job. With the extra money he earned, he had proposed to his girlfriend and they were moving in together, something he said he would never have considered if he were still at his last job.

Related: Are Small-Business Owners Immoral If They Pay Low Wages?

Paying a living wage means people can get married, start families, buy homes and contribute more to our communities. It's a part of the "virtuous circle," or in our business what I call the "virtuous cycle'' where paying your employees a living wage pays off in a multitude of immeasurable ways that all add up to less customer churn, higher average revenue per customer, wider profit margins and an overall healthier bottom line.

Raising the minimum wage could do the same for our country by strengthening our overall economy and reducing the size of our government. According to the Economic Policy Institute, if the minimum wage were raised to $10.10, an estimated 1.7 million American workers would no longer rely on public assistance programs and we could reduce government spending on income-support programs by more than $7 billion per year. Those are impressive numbers that would pay dividends in communities across our country.

At the end of the day, I run a public company and it's my fiduciary duty to expand our business, increase profits and keep our shareholders happy. What I've learned is the best way to achieve that is with a happy workforce. If we want to remain competitive as a country and continue to grow a strong middle class, all businesses may soon recognize that paying a living wage isn't just goodwill, it's pretty darn good business.

Related: Lower Employee Turnover and Improve the Bottom Line

Hari Ravichandran

Founder and CEO of Endurance International Group

Hari K. Ravichandran founded Endurance International Group Holdings, Inc. in 1997, and for the past 17 years has built Endurance into a trusted partner for the business market. Ravichandran has founded other successful businesses focused on business-process outsourcing and web security, and sits on the boards of a number of growing companies.

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