Monday, June 22, 2020

Royals Take Advantage of Market Inefficiency: Not Treatring Low-Paid Workers Like Garbage

RoyalsMajor League Baseball implemented a temporary rule limiting signing bonuses for new players as a cost-saving measure when teams are bringing in no revenue. One result: teams with a history of treating their workers well are attracting talent they otherwise would have had little chance of luring. Here's the take-away:

The Royals jumped to the top of many players’ lists because of their demonstrated commitment to their minor leaguers. While most of Kansas City’s competitors wavered on paying minor leaguers at all this summer—and then released scores of them—only the Royals and Minnesota Twins said they would keep every prospect. Royals general manager Dayton Moore justified that action by telling reporters, “The minor-league players, the players you’ll never know about, the players that never get out of rookie ball or High-A, those players have as much impact on the growth of our game as 10-year or 15-year veteran players.”

In saying that, the Royals positioned themselves to take advantage of a very simple market inefficiency: not treating your lowest-paid employees like garbage.

Jared Diamond, The Royals Are Taking Advantage of a New Market Inefficiency Wall St. J. (June 19, 2020).

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https://lawprofessors.typepad.com/laborprof_blog/2020/06/royals-take-advantage-of-market-inefficiency-not-treatring-low-paid-workers-like-garbage.html

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