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Why Doesn't Urban Outfitters Offer Paid Sick Time? Ask Richard Hayne

David Callahan

A few weeks ago I wrote about a part-time employee at Urban Outfitters who went to work with the flu in New York City becase she didn't have paid sick time and couldn't afford to stay home from her job as a cashier. So, for eight contagious hours, she dealt with the public. 

Now, thanks to the new paid sick leave law just passed in New York City, Urban Outfitters will have to offer five days of paid sick time to its New York employees, including part-time ones, starting in spring 2014. 

One question raised by all this is why Urban Outfitters doesn't offer paid sick time to begin with to its part-time employees, like many other companies in America? After all, so many of its employees are part-time and it's simply the right thing to do for those people, since everyone gets sick and needs time off. It's the right thing do for productivity, since sick workers infect healthy workers, and studies also show that offering benefits, even modest ones, increases employee morale and reduces turnover, which in turn reduces costs. Offering paid sick leave is also the right thing to do from a public health standpoint. Who knows how many other people got the flu because of that one sick worker who dragged herself into work?

Finally, Urban Outfitters can clearly afford to offer paid sick time: It had gross profits last year of over $800 million and net income of $237 million. Not to mention the $473 million in cash that Urban Outfitters has lying around. In contrast, providing paid sick leave typically amounts to as little as 1 percent of employee compensation. 

For that matter, Urban Outfitters could afford to raise its wages, which are difficult for anyone to live on, especially in the major cities where its stores are located. 

Unlike other companies, Urban Outfitters would seem to have more freedom from shareholder pressures, given that it's single biggest shareholder is its founder, Richard Hayne. And he's doing okay, owning $763 million worth of stock in the company. 

Hayne is also Chairman, President, and CEO of Urban Outfitters, so if anyone in the retail industry can makes changes in their stores with the wave of a wand, it would be Hayne. 

Interestingly, Hayne started Urban Outfitters back in 1970, at the height of the counterculture. The ethos of that time emphasized doing your own thing, but also making the world a better place. Hayne's co-founder and ex-wife, Judy Wicks, remained true to those values and became a co-founder of BALLE, the Business Alliance for Local Living Economies. 

What happened to Richard Hayne and his values?

Hayne doesn't seem like a bad guy, but clearly his vision of business's purpose in society is quite narrow. Judging by how Urban Outfitters treats its employees, Hayne seems to believe the company's sole purpose is to maximize shareholder return and increase his own personal wealth. 

But why can't Hayne take a more balanced approach? Why not articulate a mission for the company that, yes, seeks strong returns for shareholders, but also delivers better returns to other stakeholders in the company -- such as the employees who actually run the stores and sell the products? This seems especially worth trying since research shows that better paid employees have lower turnover and sell more goods. 

If you look at anonymous employee comments about Urban Outfitters, it's clear that the company has many of the problems of low-road employers who are deeply despised by their workers. That's just not a good business model. Among other things, customers can feel that bad vibe when they walk in the door. 

Richard Hayne: Try something different.