Dan Price raises minimum wage at his company to $70,000 a year

[DBT]

Minimum pay rate in America is a disgrace...

And how:

MW for Arizona, Rome.

I think that Unemployment Benefits are higher than that in Australia.

 

[Axulus]

I think this thing will fail spectacularly

Not because of anything Dan Price has done. If it fails, which I doubt, it'll fail because of there are external vested interests in seeing it fail. It's probably seen by hard core capitalists as setting a bad precedent, raising expectations for better pay amongst the 'lower classes.'

This is very conspiratorial thinking. There are lots of legitimate business reasons why it would fail, the most predominant being that the business will lack capital to fuel growth (it will be capital constrained - the growth phase requires a large influx of capital each year) and thus put it in a worse competitive position going forward, as well as having a much smaller buffer to survive the inevitable industry crashes. If this policy is also paired with limiting top executive pay (which it sounds like it very well could, given the philosophy of the CEO), then there could also be problems obtaining and retaining executive talent. Beyond that, it will also limit the company's ability to cut prices for customers should the need arise for competitive reasons.

 

[DBT]

Not because of anything Dan Price has done. If it fails, which I doubt, it'll fail because of there are external vested interests in seeing it fail. It's probably seen by hard core capitalists as setting a bad precedent, raising expectations for better pay amongst the 'lower classes.'

This is very conspiratorial thinking. There are lots of legitimate business reasons why it would fail, the most predominant being that the business will lack capital to fuel growth (it will be capital constrained - the growth phase requires a large influx of capital each year) and thus put it in a worse competitive position going forward, as well as having a much smaller buffer to survive the inevitable industry crashes. If this policy is also paired with limiting top executive pay (which it sounds like it very well could, given the philosophy of the CEO), then there could also be problems obtaining and retaining executive talent.

Not conspiratorial thinking at all. It's just the human nature, business and self interest works. Businesses do not like to fork out any more in terms of expenditure than they need to. It is in the interest of firms to keep wages down to what they deem to be acceptable levels, while it is in the interest of workers to increase their income to whatever they can demand. An inherit conflict between the needs and interests of both parties.

 

[Axulus]

This is very conspiratorial thinking. There are lots of legitimate business reasons why it would fail, the most predominant being that the business will lack capital to fuel growth (it will be capital constrained - the growth phase requires a large influx of capital each year) and thus put it in a worse competitive position going forward, as well as having a much smaller buffer to survive the inevitable industry crashes. If this policy is also paired with limiting top executive pay (which it sounds like it very well could, given the philosophy of the CEO), then there could also be problems obtaining and retaining executive talent.

Not conspiratorial thinking at all. It's just the human nature, business and self interest works. Businesses do not like to fork out any more in terms of expenditure than they need to. It is in the interest of firms to keep wages down to what they deem to be acceptable levels, while it is in the interest of workers to increase their income to whatever they can demand. An inherit conflict between the needs and interests of both parties.

You said it will fail because of "external vested interests" seeing it fail. Can you elaborate what you have in mind with this statement? Your reply does not in any way address that.

Firms pay what they have to to obtain acceptable quality employees and acceptable amount of turnover. There are diminishing benefits to increasing pay. At a certain point, it no longer pays off for the company. The point at which it no longer pays off for the company but done anyway can be considered akin to charity (those who make the decision are taking money out of their own pockets to give to someone else). I don't understand why everyone objects to calling a spade a spade.

What I also find interesting is the left's obsession with money, as if it is the only thing in life that has value. Maybe the employees would've been better off had they been given 4 additional weeks of vacation. Maybe they would've enjoyed a better working environment with more perks at work such as a free for employees cafeteria, or maybe a more flexible schedule (to allow them to go to their kid's baseball games or something like that). Why is the amount of money paid the only criteria worthy of praise?

 

[barbos]

I find it highly amusing that Barbos thinks he is better educated than Dan Price. I guess Barbos has access to Dan Price's education transcripts and will post them here along-side his own for all of us to see for ourselves.

What transcripts? the guy left universty when he was 19. The guy has no transcripts.
And even if he had that wold still be utterly laughable to compare undergrad degree with PhD.
You are being ridiculous.

 

[barbos]

I know many people with physics backgrounds who have taken economics. Typically, they are excellent with the mathematics and utterly lousy with the economic reasoning.

I am certainly more educated than Price and vast majority of the businessmen.

Using your rationale, that is irrelevant unless you run a business.

My rationale? in what fucking universe it is my rationale?
Was it me who asked about what business I run?

Everything Price detractors have said so far is true. By paying unnecessary more than competitors he made himself less competitive.

That is only true if his pay is "unnecessary". However, if it spurs productivity and/or reduce staff turnover sufficiently, it may increase profits.

All competitors need to do now, wait a little and reduce prices and Price and his little experiment are history, or do nothing and let him die slow death. 70K minimum wage is absolutely not sustainable unless you are law firm or you have nice monopoly/cartel.

That is your opinion.

Yes it's my well educated and explained opinion

It may turn out correct or it may not. Let's wait and see.

Now, go and find me single economist who would sign on Price experiment.

I am a professional economist, and I think the experiment is interesting.

Someone who is somebody. Surely this experiment have got enough publicity to get warrant attention from big shot economists from universities.
And If I read you correctly you are not signing it up.

 

[DBT]

Not conspiratorial thinking at all. It's just the human nature, business and self interest works. Businesses do not like to fork out any more in terms of expenditure than they need to. It is in the interest of firms to keep wages down to what they deem to be acceptable levels, while it is in the interest of workers to increase their income to whatever they can demand. An inherit conflict between the needs and interests of both parties.

You said it will fail because of "external vested interests" seeing it fail. Can you elaborate what you have in mind with this statement? Your reply does not in any way address that.

What I said was - ''If it fails, which I doubt, it'll fail because of there are external vested interests in seeing it fail'' - the most likely form that this self interest in keeping a cap on wages would be a scare campaign, the 'economy' would suffer, high unemployment, etc, etc...just like we have on this very forum only in the form of a media blitz.

 

[Axulus]

You said it will fail because of "external vested interests" seeing it fail. Can you elaborate what you have in mind with this statement? Your reply does not in any way address that.

What I said was - ''If it fails, which I doubt, it'll fail because of there are external vested interests in seeing it fail'' - the most likely form that this self interest in keeping a cap on wages would be a scare campaign, the 'economy' would suffer, high unemployment, etc, etc...just like we have on this very forum only in the form of a media blitz.

Ah, got it. I thought you meant "fail" in the sense that the company will either go belly up or have to reverse this policy to survive, not "fail" as some sort of chain reaction where other businesses copy it.

From a business perspective, it is possible to survive with wages well above market rate for the positions in question. It just increases the failure rate of businesses who do adopt such policy do to the reasons I've explained. Such a policy will fail for that reason more than anything else.

 

[DBT]

What I said was - ''If it fails, which I doubt, it'll fail because of there are external vested interests in seeing it fail'' - the most likely form that this self interest in keeping a cap on wages would be a scare campaign, the 'economy' would suffer, high unemployment, etc, etc...just like we have on this very forum only in the form of a media blitz.

Ah, got it. I thought you meant "fail" in the sense that the company will either go belly up or have to reverse this policy to survive, not "fail" as some sort of chain reaction where other businesses copy it.

Whether the company fails in terms of its business practices is not so much the issue as the example of what the owner has done for his staff. The idea of a dramatic increase in wages and salaries is the thing that is not in the interest of 'external observers' in the business world, who I'm sure would not be happy to see the OP example become an established practice.

 

[Axulus]

Ah, got it. I thought you meant "fail" in the sense that the company will either go belly up or have to reverse this policy to survive, not "fail" as some sort of chain reaction where other businesses copy it.

Whether the company fails in terms of its business practices is not so much the issue as the example of what the owner has done for his staff. The idea of a dramatic increase in wages and salaries is the thing that is not in the interest of 'external observers' in the business world, who I'm sure would not be happy to see the OP example become an established practice.

If, as some have argued, such practice will lead to increased profits, then why would anyone be unhappy? If, as I believe to be the case, it will result in lowered profits, on what grounds do you believe it could become an established practice and not some isolated move by someone who has more charitable than business motives?

From my perspective, I would give far more praise to a CEO who donates 90% of his salary to the Against Malaria foundation than I would to a CEO who gives 90% of his salary to employee raises to privileged first world employed individuals who already earn more than double the federal minimum wage.

 

[DBT]

Whether the company fails in terms of its business practices is not so much the issue as the example of what the owner has done for his staff. The idea of a dramatic increase in wages and salaries is the thing that is not in the interest of 'external observers' in the business world, who I'm sure would not be happy to see the OP example become an established practice.

If, as some have argued, such practice will lead to increased profits, then why would anyone be unhappy?

Obviously not everyone agrees, as demonstrated on this thread. Nor is the idea of a dramatic wage rise appealing, for the given reasons, to many of those who happen to own or run a business.

If, as I believe to be the case, it will result in lowered profits, on what grounds do you believe it could become an established practice and not some isolated move by someone who has more charitable than business motives?

The higher pay rates are not coming directly out of company profits, Dan Price willingly lowered his own personal income in order to increase the pay rates of his staff, hence it should have no effect on how the business performs in terms of company income and running costs.

From my perspective, I would give far more praise to a CEO who donates 90% of his salary to the Against Malaria foundation than I would to a CEO who gives 90% of his salary to employee raises to privileged first world employed individuals who already earn more than double the federal minimum wage.

Well, as it is the employees who make the running of the business possible through their skill, time and effort, why should they not have a fair share of pie....? As it currently stands, money is flowing upward at an unsustainable rate.

 

[barbos]

If, as some have argued, such practice will lead to increased profits, then why would anyone be unhappy?

Obviously not everyone agrees, as demonstrated on this thread. Nor is the idea of a dramatic wage rise appealing, for the given reasons, to many of those who happen to own or run a business.

If, as I believe to be the case, it will result in lowered profits, on what grounds do you believe it could become an established practice and not some isolated move by someone who has more charitable than business motives?

The higher pay rates are not coming directly out of company profits,

Actually, it comes from profits too.

Dan Price willingly lowered his own personal income in order to increase the pay rates of his staff, hence it should have no effect on how the business performs in terms of company income and running costs.

From my perspective, I would give far more praise to a CEO who donates 90% of his salary to the Against Malaria foundation than I would to a CEO who gives 90% of his salary to employee raises to privileged first world employed individuals who already earn more than double the federal minimum wage.

Well, as it is the employees who make the running of the business possible through their skill, time and effort, why should they not have a fair share of pie....? As it currently stands, money is flowing upward at an unsustainable rate.

Because they are not owners of the company. If they want fair share of profits then they should become owners of the company.

 

[RavenSky]

From my perspective, I would give far more praise to a CEO who donates 90% of his salary to the Against Malaria foundation than I would to a CEO who gives 90% of his salary to employee raises to privileged first world employed individuals who already earn more than double the federal minimum wage.

Well, as it is the employees who make the running of the business possible through their skill, time and effort, why should they not have a fair share of pie....? As it currently stands, money is flowing upward at an unsustainable rate.

Silly you. And...

Silly Dan Price! Doesn't he get it?? Economic necessity demands that we make CEO's happy while simultaneously making cubicle workers miserable, because that's the only way to improve their productivity...

Viewing workers in this way is not economic reasoning, of course; it amounts to Calvinist moralizing. In fact, most economic policies are shaped by a set of moral values more than by a set of natural facts. For at least a generation we have celebrated the rich while vilifying the poor, and we have shaped our economic policies to reflect and reinforce those attitudes.

This is what Dan Price has risked exposing and why so many of the orthodox are rooting for Gravity Payments to fail. After all, if the company does well, it will be a bit harder to ignore that charlatan behind the curtain everywhere else.

 

[laughing dog]

My rationale? in what fucking universe it is my rationale?
Was it me who asked about what business I run?

In this thread you asked "I presume you run a company? What is the name of the company?". If I misunderstood your response to have some actual purpose, I apologize.

Yes it's my well educated and explained opinion

Opinions are not well-educated, people are. Your opinion ignores some real possible effects and seems a bit premature.

Someone who is somebody. Surely this experiment have got enough publicity to get warrant attention from big shot economists from universities.
And If I read you correctly you are not signing it up.

If by "signing it up" you mean endorsing it, I am.

 

[barbos]

In this thread you asked "I presume you run a company? What is the name of the company?".

No, it was not me.

If I misunderstood your response to have some actual purpose, I apologize.

apology accepted

 

[dismal]

The higher pay rates are not coming directly out of company profits, Dan Price willingly lowered his own personal income in order to increase the pay rates of his staff, hence it should have no effect on how the business performs in terms of company income and running costs.

He's the proprietor of the business. His salary is equivalent to company profits.

One question I would ask is why -- if this move is designed to increase profits -- he didn't do it before? Did he suddenly gain some insight that the way to have more profit was to slash his profits?

Why isn't he doing this immediately instead of phasing it in over three years? He doesn't want the additional profit yet? He wants the employees to suffer a little longer?

Why is he waxing to the media about fairness and equality and stories about people with less money eating him up inside and social issues he can do something about if the motive is "more profits"?

 

[laughing dog]

No, it was not me.

In post #206 you wrote

I presume you run a company?
What is the name of the company?

. Are you disavowing what you actually posted?

 

[barbos]

In post #206 you wrote

I presume you run a company?
What is the name of the company?

. Are you disavowing what you actually posted?

No, you need to follow the the whole exchange.

 

[laughing dog]

The higher pay rates are not coming directly out of company profits, Dan Price willingly lowered his own personal income in order to increase the pay rates of his staff, hence it should have no effect on how the business performs in terms of company income and running costs.

He's the proprietor of the business. His salary is equivalent to company profits.

One question I would ask is why -- if this move is designed to increase profits -- he didn't do it before? Did he suddenly gain some insight that the way to have more profit was to slash his profits?

Maybe. One could look at as a form of reinvesting retained earnings to improve future profitability. Are you under the impression that no one can come up with a new idea to improve profitability?

Why isn't he doing this immediately instead of phasing it in over three years? He doesn't want the additional profit yet? He wants the employees to suffer a little longer?

Are you under the impression that any changes yields immediate results? Really?

Why is he waxing to the media about fairness and equality and stories about people with less money eating him up inside and social issues he can do something about if the motive is "more profits"?

Unlike your comments, there is no logical inconsistency with his views and actions.

- - - Updated - - -

In post #206 you wrote
. Are you disavowing what you actually posted?

No, you need to follow the whole the whole conversation.

I agree someone is missing the context. But we disagree on who that is.

 

[barbos]

I agree someone is missing the context. But we disagree on who that is.

It's you