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Online retailer thredUP highlighted by DCED during minimum-wage pitch

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This article was published on June 14, 2016 from the Central Penn Business Journal.

Minimum wage “just is not an option.”

ThredUP distribution center manager Tammy Salas-Miller didn’t mince words this afternoon when a line of reporters asked her about how the Cumberland County distribution center compensates its employees.

ThredUP, an online consignment business, starts workers at $11 per hour. The company has found that higher wages translate into happier, more productive workers with less turnover, she explained.

That success is what attracted Department of Community and Economic Development Secretary Dennis Davin to tour the Upper Allen Township facility today as part of his “Jobs that Pay” tour.

“I just don’t think that ($7.50) an hour is going to attract the greatest talent, but that’s my opinion,” Salas-Miller said. “It is certainly not enough to sustain a family.”

Davin’s tour comes as Gov. Tom Wolf continues to call on the House and Senate to pass legislation that would raise Pennsylvania’s minimum wage from $7.25 to $10.15 per hour, while tying it to inflation to maintain its purchasing power over time.

The secretary acknowledged that some businesspeople have raised concerns about how such an increase would affect them. He believes the move would benefit workers by helping more people earn a living wage and reducing reliance on government-funded social programs. The money they earn would then be channeled back into the economy. And, like Salas-Miller, Davin said better paid workers are more likely to be productive workers, which is beneficial for employers.

“I think it’s necessary,” Davin said of raising the minimum wage, adding: “I’m a guy who represents the business community, too.”

Online business model

ThredUP, a California-based online consignment business, is a marketplace for buying and selling like-new women’s and childrens’ clothing. It accepts mailed-in clothing from more than 25,000 women’s and kids’ brands, and resells the items for up to 90 percent off the original retail price.

“Our customers’ experience is very important,” Salas-Miller said, “and we have high expectations of our team members.”

She described the facility as a retail operation in a climate-controlled warehouse environment, where employees post between 10,000 and 15,000 items to the web each day for sale.

While those employees can expect to be hired at $11 per hour, with a 50-cent shift differential for P.M. work, the average wage among its roughly 300 employees is about $14, she said.

Managers can earn between $60,000 and $100,000, officials told CPBJ last year, and all permanent employees are offered shares of thredUP stock.

Headquartered in San Francisco, thredUP’s backers include investors and executives from Netflix, Virgin, Diane von Furstenberg, GAP, Macy’s and other national brands.

Cumberland Area Economic Development Corp. CEO Jonathan Bowser said thredUP moved into the 5050 Louise Drive industrial building about a year-and-a-half ago. The company received a funding package from the Department of Community and Economic Development, including $900,000 in Job Creation Tax Credits.

Benefiting from its proximity to the Pennsylvania Turnpike and Interstates 81 and 83, thredUP has been a strong addition to the area’s distribution industry, Bowser said.

Salas-Miller, who formerly worked for Netflix at its Dauphin County facility, said she had been approached by thredUP COO John Voris about establishing an eastern U.S. distribution facility in Allentown or Mechanicsburg.

The Cumberland County site, with its highway access and existing broadband, won out. But with thredUP now up to four distribution centers nationwide, it’s likely not the last.

“It’s important that we look at companies like thredUP as an example of the success a business can experience while also paying its employees a competitive wage,” Davin said. “This company has shown a commitment to empowering its employees with fair wages, increasing the purchasing power of the workforce and we are very excited that they are thriving in Central Pennsylvania.”

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