Traditional Wisdom: A penny saved is a penny earned

On The Contrary: Penny-pinching leads to a sub-par, unhappy workforce

If you're a human being and you live in the 21st century, you should understand that workers should be fairly compensated for labor. If you can't afford to be an employer--and that means actually investing in people who work for you by paying them fairly and providing benefits--then you need to revisit your business model, not your interpretation of labor laws. If any glitch in your revenue projections leads you to the preparation of pink slips or the waving of the magic wand that turns employees into contractors (not to mention mice into ride-share drivers), you probably will never be able to run a profitable company.

Good Capitalists Aren't Greedy

Sure, getting more done for less creates the illusion of profit, but business men and women, especially CEOs and owners, should weigh the short term benefits of cutting payroll against the long-term costs of having to deal with a less-educated, less-skilled and less-invested workforce. As the manager, you're supposed to see the whole is larger than the parts. Cutting your payroll today will eat your revenue next year. So stop doing it.

Our company, which straddles the tech, manufacturing and retail industries, doesn't exist in a vacuum. How we care for our employees makes a tremendous difference in their lives, as well as the lives of their immediate and extended families. In turn, this has an impact on our entire community. Even the quality of education children receive and the depth and breadth of community services available are affected by the payroll taxes that wages generate. Moreover, caring for and about our employees impacts their engagement and motivation, which positively affects the atmosphere of the workplace, the quality of our products, our relationships with our customers and vendors, and thus, the success of the organization as a whole.

Practicing What We Preach

I choose to pay competitive wages, offer benefits (including on-site health care at our headquarters) and limit the duration of temporary workers we use in production (the average length is 3 months and 70 percent are hired into permanent, full-time positions). We are proud that during the recent recession, we never considered layoffs as a way to address the impact of the difficult economic climate. Of course, I'd like to say this is all because I'm a great guy, but the real reason is because we're good capitalists. We expect quality work for above-average wages. And, not surprisingly, we get it.

Contractors Aren't Employees. They Just Aren't.

When companies invest in workers, workers invest in companies. When companies commit to their employees, employees become committed to their employers. When companies contract with (versus hiring) the people who make the organization run, luring them with the advantage of work flexibility, they get workers who also are "flexible" with their loyalty and attention. The media and the courts have explained why this situation is unfair to contract workers, but no one has really pointed out that this, quite simply, is bad business.

In all honesty, independent contractors, minimum wage laws and overtime policies shouldn't be an issue for the courts; companies, their customers and their investors need to decide on an employment standard and abide by it. But, for the system to work, employers have to hold up their end of the bargain; they simply can't shore up organizations by jettisoning employees to keep the business afloat.

The logical first step is for employers and investors to get back to basics. Employ and invest--don't gobble profits and run away.