The Case for Good Jobs

What if the best way to cut costs was actually to pay people more? In The Case for Good Jobs, MIT Sloan professor Zeynep Ton makes a bold argument: companies that invest deeply in their frontline employees—providing higher wages, more stable schedules, and meaningful work—outperform those that treat labor as a cost to minimize. Her core claim challenges decades of conventional wisdom in business: good jobs aren’t just morally right—they’re strategically smart.

Drawing on years of research with companies like Costco, Trader Joe’s, and Mercadona, along with hands-on experience through the Good Jobs Institute, Ton illuminates a hidden truth of modern capitalism: most companies are stuck in what she calls a “vicious cycle” of low pay, high turnover, poor performance, and disengaged workers. But a small set operate in a “virtuous cycle,” where investing in people drives higher productivity, better service, and sustainable profits. Those choices, Ton insists, are not inevitable—they’re management decisions.

The Two Worlds of Work

Ton contrasts two competing mindsets. In the first, common among low-cost retailers, employees are treated as replaceable cogs. Leaders pay as little as the market allows, push for lean staffing, and rely on rigid rules and control. Predictably, turnover soars and operations crumble. In the second mindset—the Good Jobs System—employees are seen as value creators. Companies deliberately design operations to amplify workers’ contribution. This means simplifying decisions, giving people autonomy, cross-training them to be flexible, and staffing with sufficient “slack” so they can serve customers well instead of constantly firefighting.

As Ton puts it, bad jobs and good jobs are both business strategies—each made up of interlocking choices. What determines your company’s destiny isn’t industry economics, she argues, but management imagination and courage.

Why the Case Is Urgent

The timing couldn’t be more critical. Nearly half of American workers earn less than $18,000 a year; many hold multiple part-time jobs just to keep food on the table. Pandemic-era resignations, employee burnout, and rising unionization reflect a moral reckoning: work itself is broken. But Ton warns that leaders make a grave mistake by assuming these conditions are unavoidable. Companies can transform low-wage sectors into engines of dignity and prosperity—without sacrificing competitiveness. The evidence is in: Costco thrives with industry-leading pay; QuikTrip’s convenience stores operate profitably with turnover a fraction of its rivals; and Spanish grocer Mercadona dominates its market with a well-trained, loyal workforce.

She frames this movement not just as corporate reform but as an antidote to capitalism’s trust crisis. When employees see their employers act ethically and customers experience genuine care, markets regain legitimacy and society heals some of its divisions. “We need more good jobs now,” Ton insists, because a strong economy—and democracy—depends on them.

From Awareness to Action

To help companies make this shift, the book is structured in three phases: Awareness, Courage, and Implementation. First comes understanding the full cost of mediocrity: high turnover isn’t just an irritant—it sabotages quality, innovation, and morale. Second comes confronting the fears that prevent leaders from change: doubts about ROI, short-term investor expectations, or distrust of frontline workers. Finally comes learning how to rewrite the system itself—adjusting pay, simplifying operations, and building momentum toward a self-reinforcing virtuous cycle.

Behind Ton’s academic rigor is deep empathy. She humanizes capitalism through the eyes of a PayPal employee struggling to afford healthcare, an Aetna call-center worker on food stamps, and a Walmart executive realizing profitability isn’t worth moral compromise. Yet her tone remains pragmatic: you don’t need altruism to create good jobs; you need operational excellence and moral discipline.

Why It Matters to You

Whether you lead a team of five or fifty thousand, Ton’s lesson applies: your competitive advantage lives or dies with your people. If you treat jobs as costs, you’ll harvest mediocrity; if you design systems that enable dignity and contribution, you’ll unleash potential. This book bridges strategy, leadership, and ethics—offering a playbook for those who want to run companies that are both profitable and principled. It’s a manifesto for anyone tired of being trapped in a “vicious cycle” of reactive management—and ready to build an organization their employees, customers, and shareholders can all be proud of.

Ton begins by dismantling one of the most dangerous myths in business: that the market fairly determines wages. Companies say they pay “market rates” as if that absolves them of responsibility. But as she shows through stark examples—from PayPal to Aetna—market wages often don’t cover basic living expenses, let alone create stability or loyalty. The result is a quiet crisis of financial insecurity eating away at performance and decency alike.

Poverty Inside High-Tech Walls

At PayPal, CEO Dan Schulman discovered employees seeking help at local soup kitchens. A wellness survey found that two-thirds ran out of money between paychecks—even though the company paid “above market.” Schulman realized that markets were failing those who worked hardest and launched a Financial Wellness Initiative to increase pay, reduce health costs, and add stock grants. His goal was to raise workers’ net disposable income to 20%. The insight was simple but profound: financial stress had been draining attention, productivity, and dignity from his workforce.

Mark Bertolini at Aetna faced a similar discovery. Many of his own employees’ kids were on Medicaid, and some relied on food stamps. Realizing how unhealthy it was for both people and business, he raised the company’s minimum wage from $12 to $16 and cut health premiums for low-income workers. Against HR’s predictions, the investment paid off quickly—turnover costs fell, productivity rose, and morale improved dramatically.

Why Market Wages Fail

Ton argues that “market rates” are lazy benchmarks, especially in industries where mediocrity is the norm. Benchmarking against peers with high turnover and underpaid staff only calcifies bad practices. Labor isn’t a commodity; it’s a human relationship. When you pay below a living wage, employees can’t perform consistently because they’re living in constant crisis—juggling bills, losing sleep, and working multiple jobs. The cost shows up not only in absenteeism and errors but in the culture of low expectations that follows.

Research Ton cites is staggering: small increases in pay correlate with better health, fewer missed shifts, improved focus, and even reduced child neglect. Chronic financial stress literally taxes people’s cognitive bandwidth—what psychologists call a “bandwidth tax.” It’s not just unethical; it’s economically dumb.

The Vicious Cycle of Low Pay

Low pay begets high turnover, which worsens customer experience, which drags down profits, prompting still more cost cutting. It’s a loop Ton visualizes as a downward spiral. She shows how a single mother working 13 hours weekly at a specialty retailer earns only $8,000 a year—while her employer spends heavily recruiting replacements for the workers constantly leaving. Surveys may tell executives their employees are “engaged,” but 100% turnover tells the real story. “A doctor doesn’t just ask if you have a fever—they take your temperature,” she reminds readers.

Breaking that cycle, Ton argues, requires a philosophical shift: stop asking whether employees are “worth” higher pay and start asking how to design their jobs to create that value. When Toyota reopened GM’s notorious Fremont plant under the joint NUMMI venture, 95% of the same “problem” employees became high performers in two years. The difference wasn’t the people—it was the system. When you give people a chance to succeed, they usually do.

If low pay is a moral wound, high turnover is the hemorrhage that follows. Ton calls it “ruinous” because it invisibly drains money, performance, and competitiveness. Most companies never measure its true cost, treating churn as an inevitable part of business. But her data—and vivid case studies—show otherwise: turnover devastates operations, while stability fuels profitability.

The Quest Diagnostics Example

Few stories illustrate this more powerfully than Quest Diagnostics. After consolidating call centers to cut costs, the company found itself flooded with chaos. Rep turnover reached 34% annually, supervisors handled endless escalations, and customers—patients waiting for test results—were furious. Hiring and training expenses soared to over $10 million a year. When a senior executive finally connected these dots, Quest restructured its operations around the Good Jobs framework: raised pay, streamlined workflows, cross-trained teams, and empowered supervisors. Within two years, turnover was cut in half, absenteeism dropped by two-thirds, and customer satisfaction soared—all while reducing overall costs by $2 million.

The Real Math of Mediocrity

Ton encourages leaders to literally count the dollars lost to churn: the recruiting, onboarding, training, and lost productivity that follow each resignation. Direct turnover costs often reach 20% of payroll. But the indirect costs—mistakes, overtime, lost sales, and customer attrition—are far higher. Aetna discovered that turnover was bleeding $120 million from its bottom line each year; raising pay by $10.5 million looked cheap in comparison. She warns that while mediocrity may appear profitable in the short term, it’s built on fragile foundations: “Profit can hide many sins.”

Why Companies Stay Stuck

Why don’t firms change when the economics are obvious? Because mediocrity pays—at least for a while. Retailers can mask operational dysfunction by expanding stores or adding flashy new services. Executives chase short-term metrics that reward “cost saving” rather than capability building. Ton’s model with MIT colleague Hazhir Rahmandad shows why: it’s easier to run a low-skill, low-pay system because it demands less managerial competence. But it’s a strategic dead end. The companies that escape, like QuikTrip or Sam’s Club under John Furner, invest in people and operations together—creating a self-reinforcing cycle of excellence.

Ton’s takeaway is simple: if you’re bleeding turnover, you’re not just losing people—you’re losing profit, loyalty, and adaptability. Loyalty compounds just like interest; neglect does too.

Mediocrity, Ton warns, is a trap many leaders can’t even see. Their organizations are profitable on paper but hollow inside—overworked managers, checked-out employees, and customers enduring sloppy service. Chapter 4 of the book, “Your Company Is Vulnerable,” exposes five “corporate disabilities” that plague these firms. Recognizing them is the first step to recovery.

Five Corporate Disabilities

• Hiring the wrong people: High-turnover systems force managers into constant firefighting, leaving no time for proper recruitment or training. A manager Ton shadowed admitted hiring “whoever walks in the door” just to fill shifts—a cycle of desperation, not strategy.
• No empowerment: When leaders don’t trust employees, they impose rigid controls. Ton cites the cashier who must call a manager to process a coupon or void a transaction—rules that humiliate workers and frustrate customers.
• Mismatched staffing: Firms cut hours during slow weeks and overwork staff during peaks, never matching labor to reality. The result is burnout, errors, and endless attrition.
• Weak managers: Constant churn leaves no time to develop strong leaders. Units that have stable, experienced managers outperform chaotic ones by huge margins, but bad systems drive good managers away.
• Low expectations: With high turnover, companies stop expecting excellence. “Show up and don’t steal” replaces accountability and pride.

The Moral and Strategic Toll

These disabilities don’t just cripple competitiveness; they corrode integrity. Ton recounts a retail employee forced to sell rat-contaminated shirts because corporate refused to fix a warehouse. Others watch leadership chase superficial growth—acquisitions, bonuses, share buybacks—while ignoring operational rot. When this system collapses, as happened to Sears, Borders, and Toys “R” Us, leaders blame technology or unions. But the real culprit is disconnection: executives who no longer see or value the work that creates customer trust.

The antidote, Ton argues, is relentlessly focusing on fundamentals—hiring right, training thoroughly, empowering intelligently, smoothing workload, and expecting excellence from everyone. Operational excellence and human dignity aren’t opposites—they’re prerequisites for each other.

If mediocrity is widespread and profit can hide it, why would any leader risk change? Ton’s second major section, “Courage,” explores what distinguishes those who act—from Sam’s Club’s John Furner to Aetna’s Mark Bertolini—from those who freeze. Courage, she writes, isn’t fearlessness but conviction grounded in competence, values, and trust in people.

Facing Fear and Doubt

Many executives, Ton observes, simply lack imagination. They’ve spent careers equating “lean and mean” with efficiency. Even as evidence mounts that good jobs pay off, they can’t picture it working in their industry. She recounts conversations with CEOs who insisted “markets have no conscience,” or that paying living wages would make them uncompetitive. What they really lacked wasn’t money—it was faith in their workforce.

Ton connects this to Douglas McGregor’s classic Theory X and Theory Y. Theory X managers assume employees are lazy and must be controlled; Theory Y managers believe people thrive when trusted and challenged. Companies rooted in distrust create systems that prove themselves right. Courageous leaders invert that logic: they design systems assuming people want to perform—and they usually do.

Convictions and Values

Chapter 6 profiles “excellence archetypes” who live their convictions. Costco founder Jim Sinegal, humble and fiercely principled, paid workers far above industry norms not out of charity but strategy. “It’s a fool’s errand,” he told students, “to think you can hire someone for $10 an hour and expect loyalty.” Four Seasons’ Isadore Sharp applied the same logic to luxury service: “Our frontline staff are the product.” Progressive Insurance’s Tricia Griffith declared that “claims are our product,” investing heavily in adjusters’ skills. These leaders share a mental model: putting the customer first demands putting employees first.

Courageous leaders also practice discipline—refusing to chase every whim of Wall Street. Sinegal banned markups over 15%, refused flashy promotions, and said no to loss-leader pricing even when analysts demanded short-term gains. This moral clarity became Costco’s secret weapon: customers trusted them completely. (As Simon Sinek would say, they “started with why.”)

The Payoff of Integrity

These leaders prove that courage and profitability can coexist. Costco, Four Seasons, and Progressive all outperform peers on financial returns and customer loyalty. They also demonstrate that ethics and excellence are habits, not slogans. Sinegal’s code—“Obey the law. Take care of members. Take care of employees. Respect suppliers. Reward shareholders”—summarized the moral logic of capitalism done right. The courage to uphold those priorities, under pressure, is what transforms a good-jobs idea into a lasting culture.

Implementation, Ton’s final act, is a manual for leaders ready to move from conviction to construction. Her message: system change isn’t a leap off a cliff—it’s a sequence of deliberate, manageable steps. But you can’t “optimize” your way to good jobs; you must redesign your system for stability, simplification, and trust.

Make the Case Inside Your Company

Ton recommends starting with radical honesty: hold up a mirror. Measure turnover, pay, schedule variability, internal promotion, and customer satisfaction. Compare not to average peers but to best-in-class competitors. When leaders face the data—as Cincinnati Children’s Hospital did discovering low patient outcomes—they can turn outrage into urgency. Then, tie the need for a Good Jobs System to a critical business threat: lost customers, rising costs, or inability to adapt. As Quest Diagnostics learned, mediocrity becomes intolerable once you measure its waste in millions.

Start the Virtuous Cycle

The most successful transitions follow a simple recipe: invest and subtract. Raise pay and improve schedules to stabilize the workforce; simultaneously reduce workload by eliminating low-value tasks or excess variety. Sam’s Club, for instance, cut SKUs by 25%, ending the “clutter crisis” in stores. Productivity rose 16% and sales grew by billions. Quest reduced call volume 16% by deleting unnecessary outbound calls. Simplifying work creates room for training, empowerment, and innovation—the flywheel of excellence.

Maintain Momentum and Culture

Once the cycle starts, leaders must protect it. Ton urges managers to institute “commitment devices” to guard against backsliding—policies that make ethical shortcuts impossible. Costco’s markup cap, Toyota’s discipline of “kaizen” improvement, and Four Seasons’ refusal to cut service quality are examples. She calls on leaders to resist “present bias”—the temptation to chase quarterly numbers—and instead design organizations that learn daily. As she showed with Quest’s daily huddles and Aetna’s “service without borders,” continuous improvement becomes sustainable only once workers are trusted and trained.

Ton ends on a human note. In organizations that embrace the good jobs system, employees regain pride—“Costco takes care of me, and I take care of Costco,” one worker said. Customers feel the difference. Investors, surprisingly, win too. The result is not utopia but competence infused with conscience. As Ton reminds us in her epilogue, the principles aren’t new—just forgotten: take care of customers, take care of employees, do the right thing. In an age of burnout and distrust, that’s revolutionary enough.