Customers dine outside at a Chipotle Mexican Grill in San Francisco, Calif., Feb. 2, 2015.
Photo by David Paul Morris/Bloomberg via Getty

Chipotle’s expanded employee benefits matter

Updated
For a brief period in April, for reasons I never fully understood, the political world seemed fascinated with the Chipotle chain because Hillary Clinton got lunch there. Making matters even stranger, Jeb Bush weighed in at the time, telling a Republican gathering, “I actually cook it at home. I don’t need to go to Chipotle.”
 
It was all quite odd. Fortunately, there’s a new, more substantive reason for the political world to take note of the popular restaurant chain. USA Today reported overnight:
Chipotle Mexican Grill is set to give all employees, including part-time workers, paid vacation time, sick leave pay and tuition reimbursement starting July 1, media outlets have confirmed.
 
The benefits were given before only to salaried workers but now will be open to every employee.
There are some caveats – cashiers, for example, will have to work for a year before they’re eligible for the tuition benefits – but it’s still a huge step forward. It also comes on the heels of Starbucks’ announcement that it’s “doubling its free tuition plan for employees to cover a full four years of college instead of two.”
 
In a political context, these expanded benefits come against a backdrop of Democrats eagerly pushing proposals such as paid-sick leave – a policy legally mandated by nearly every industrialized country on the planet except the United States.
 
But there’s also the economic picture to consider. Chipotle and Starbucks are moving forward with ambitious new benefits packages, while at the same time, major retailers like Walmart, Target, the Gap, TJX, and Ikea are raising their minimum wages.
 
Some of this may relate to public-relations, but it’s economic factors that are driving these changes.
 
As Danielle Kurtzleben explained at Vox after the Wal-Mart news, announcements like these from major retailers offer fresh evidence of an improved labor market.
After all, one of the closest-watched indicators in recent monthly job reports has been hourly wages. If those tick up, it’s a sign that the labor market is tightening, and that employers have to raise wages to hold onto or attract the talent they want. Last month, the jobs report showed that pay is already increasing, with average hourly wages jumping by 12 cents, the biggest jump in nearly eight years.
 
Walmart’s announcement signals that the company wants to keep attracting good talent and doesn’t want to lose its workers to competitors – which in turn signals that there’s increased competition to get good workers.
As we discussed at the time, there’s little doubt of the ripple effect in the competitive marketplace. The more major retailers look for an advantage, the more they want to recruit the best available employees to their enterprise.

Wal-Mart made its move, which prompted TJX to act, which led Target to act. Starbucks improved its benefits, which led Chipotle to announce a change, which will very likely encourage rivals to do the same.

I have a strong hunch some of my more conservative readers are shouting at the screen right about now. “See?” They’re saying. “The free market is working just fine. Legal mandates on wages and benefits are clearly unnecessary since the private sector is acting all on its own. Congress need not interfere.”
 
It’s a nice argument and I wish I were persuaded by it. But the fact remains that (a) the progress with these major retailers covers a lot of people, and (b) when the recovery eventually fades, there’s nothing stopping these employers from dropping the more generous benefits and leaving workers without much of a net. Federal policymaking offers guarantees that the whims of the market do not.
 

Labor

Chipotle's expanded employee benefits matter

Updated