Examining attitudes on pay for low level workers : do consumers care?

Purpose: This paper examines whether decisions to improve pay for low-level employees lead to more positive attitudes toward firms, depending on firm’s service reputation. Design/methodology: Four experiments examine whether information on compensation decisions for employees affects consumer attitudes toward firms. Findings: Results show attitudes toward firms providing raises are more positive when firms are known for high quality (vs average) service. This occurs because individuals use information about firm reputation as a cue to make inferences about employees, and fairness of firm pay procedures. Moderators are introduced to show how these effects can be altered. Research limitations/implications: Drawing from research on the representativeness bias, this work extends theories on justice and equity and contributes to the literature on corporate social responsibility. Practical implications: This research provides firms with insight on how to promote their efforts to improve employees’ financial welfare. Social implications: Findings provide guidance on how to increase public support of initiatives to improve financial well-being for low-wage workers. Originality/value: This research is the first to examine how specific firm factors affect reception of initiatives to improve employee financial welfare and to delineate the process.