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

[ksen]

So anything paid above dismal's market rate is charity?

And if paying above dismal's market rate is charity what's it called when a company pays below dismal's market rate?

 

[dismal]

So anything paid above dismal's market rate is charity?

And if paying above dismal's market rate is charity what's it called when a company pays below dismal's market rate?

He has these people working for him now for less than $70,000 so I feel reasonably comfortable concluding that they are willing to work for him for less than $70,000.

 

[Earl IV]

So anything paid above dismal's market rate is charity?

And if paying above dismal's market rate is charity what's it called when a company pays below dismal's market rate?

He has these people working for him now for less than $70,000 so I feel reasonably comfortable concluding that they are willing to work for him for less than $70,000.

But are they happy?

 

[ksen]

So anything paid above dismal's market rate is charity?

And if paying above dismal's market rate is charity what's it called when a company pays below dismal's market rate?

He has these people working for him now for less than $70,000 so I feel reasonably comfortable concluding that they are willing to work for him for less than $70,000.

So?

 

[RavenSky]

It will be interesting to see how this little experiment works out. Let's be sure to check back in a couple of years to see how things are going.

I don't know what the workforce make up is, but if the night janitor with no real skills and speaks no English is going to be making the same salary as a college degreed computer programmer or accountant, then I suspect there could be problems. I would think there would be some resentment there...possibly to the point where the skilled, educated workers are going to leave en masse. I know I worked my ass off at a tough college for 5 years to get a physics degree, and if I was making the same salary as the lady working the copy machine, it would be a bit annoying.

BTW: I do like the fact that he lowered his salary. I wish more CEOs would do stuff like that.

Note, the article stated that the MINIMUM salary would be AT LEAST $70,000 - not that every person was going to make $70,000.

I like that he intends to make no more than the lowest salary he offers (for now)

 

[dismal]

He has these people working for him now for less than $70,000 so I feel reasonably comfortable concluding that they are willing to work for him for less than $70,000.

So?

So what evidence or logic leads you to conclude the market for them is >=$70,000?

The fact they are working for less than that now suggests it is not.

 

[RavenSky]

The part I bolded is what everyone at the company should be focusing on. Accountants ought to recognize that they are making as much or more than their CEO and not worry about what clerks are making.

aa

I'd say everyone at the company should be (and probably will be) focusing on the fact that their CEO actually gives a shit about them. If you're the accountant, then you know he's not just paying you 70k because that's the going rate he's got to match so you won't leave. If you're the clerk, then you know he's paying you 70k because he values you that much. It remains to be seen if he can maintain this pay scale, but I'm willing to bet that every single one of his employees (assuming he treats them well in other areas) will go to the mat for this guy.

Of course the clerk isn't going to find another job that pays that much, but if you're the accountant in question, would you leave a great job with a great boss for an uncertain future at a firm which can beat your salary by a few thousand a year? I wouldn't.

Although the money is grabbing the headlines, this is also about corporate culture. I bet there's people lining up to apply to this company, and they'll be left wanting because nobody's going to want to give up their job. Not because of the salary, but because of the fact that when the quarterly numbers go down a bit jobs won't be on the chopping block so that management can hit budget and make their usual bonus.

^^^ That times 1000

One of the articles I read (possibly the one I linked) also talked about how he brought his company through near bankruptcy during the economic downturn (when they lost two major clients to their own bankruptcies) without laying anyone off or cutting their salaries.

Without a doubt, this is far more about a corporate culture that genuinely cares about its employees (and clients) than about golden parachutes and corporate raiding.

Yes, I look forward to seeing how this goes. My expectation is that it will go well, very very well. Maybe I'm wrong. I look forward to someone finally doing the experiment that I think has been warranted all along.

I haven't seen any fact-checked articles on it yet, but anecdotal evidence says he is picking up new clients already because of this.

 

[KeepTalking]

It will be interesting to see how this little experiment works out. Let's be sure to check back in a couple of years to see how things are going.

I don't know what the workforce make up is, but if the night janitor with no real skills and speaks no English is going to be making the same salary as a college degreed computer programmer or accountant, then I suspect there could be problems. I would think there would be some resentment there...possibly to the point where the skilled, educated workers are going to leave en masse. I know I worked my ass off at a tough college for 5 years to get a physics degree, and if I was making the same salary as the lady working the copy machine, it would be a bit annoying.

BTW: I do like the fact that he lowered his salary. I wish more CEOs would do stuff like that.

Note, the article stated that the MINIMUM salary would be AT LEAST $70,000 - not that every person was going to make $70,000.

I like that he intends to make no more than the lowest salary he offers (for now)

The article notes that he has 120 employees, and that the new minimum pay means that 70 of his employees will be getting a raise, so there are apparently 50 employees making over 70k at his firm. It also mentions that he will be cutting his own salary from a cool Million to 70k, though I would assume that he has investment income that will augment that salary.

 

[ksen]

So?

So what evidence or logic leads you to conclude the market for them is >=$70,000?

The fact they are working for less than that now suggests it is not.

What evidence or logic leads you to call this company's new pay structure "charity"?

The fact that it is not charity suggests it is not.

 

[dismal]

So what evidence or logic leads you to conclude the market for them is >=$70,000?

The fact they are working for less than that now suggests it is not.

What evidence or logic leads you to call this company's new pay structure "charity"?

The fact that it is not charity suggests it is not.

He has demonstrated he can get Person A to come work for him of $X and elects instead to pay $X+30,000 then what do you call that $30,000?

It's voluntarily giving someone money because it makes you happy which we sometimes refer to as "charity".

Beyond that, if you want to have a massive pedantic nitpicky kseny discussion about the definition of the word "charity" I pass.

 

[Ford]

What evidence or logic leads you to call this company's new pay structure "charity"?

The fact that it is not charity suggests it is not.

He has demonstrated he can get Person A to come work for him of $X and elects instead to pay $X+30,000 then what do you call that $30,000?

An investment.

 

[dismal]

He has demonstrated he can get Person A to come work for him of $X and elects instead to pay $X+30,000 then what do you call that $30,000?

An investment.

In what? Clerical people that could be replaced at half the cost?

 

[ksen]

What evidence or logic leads you to call this company's new pay structure "charity"?

The fact that it is not charity suggests it is not.

He has demonstrated he can get Person A to come work for him of $X and elects instead to pay $X+30,000 then what do you call that $30,000?

A raise.

It's voluntarily giving someone money because it makes you happy which we sometimes refer to as "charity".

Mmmm, no.

I've received a few raises since I started working at my current job. It's been demonstrated that I'm willing to do the work at my original salary so I guess those raises I've received were just charity from my company.

Beyond that, if you want to have a massive pedantic nitpicky kseny discussion about the definition of the word "charity" I pass.

I can understand why you don't want to talk about how spectularly obtuse your post sounded by referring to raises as "charity".

 

[Nice Squirrel]

An investment.

In what? Clerical people that could be replaced at half the cost?

He could find illegals to do it for 1/3 that.

 

[dismal]

He has demonstrated he can get Person A to come work for him of $X and elects instead to pay $X+30,000 then what do you call that $30,000?

A raise.

It's voluntarily giving someone money because it makes you happy which we sometimes refer to as "charity".

Mmmm, no.

I've received a few raises since I started working at my current job. It's been demonstrated that I'm willing to do the work at my original salary so I guess those raises I've received were just charity from my company.

Beyond that, if you want to have a massive pedantic nitpicky kseny discussion about the definition of the word "charity" I pass.

I can understand why you don't want to talk about how spectularly obtuse your post sounded by referring to raises as "charity".

As mentioned previously, I pass.

At least we can agree this guy has demonstrated the "if you think it's so great form your own company and do it" approach works.

 

[Ford]

An investment.

In what? Clerical people that could be replaced at half the cost?

And then replaced again. And again. And again.

This shouldn't be such a hard concept to grasp. We do it all the time with consumer goods. Do you buy the cheapest mattress possible and replace it every two years? Or spend twice as much and replace it every five? If you go all out and get the best quality mattress it can last you ten.


This guy is paying more, but getting more in return. Clerical people who won't bail on him the moment they find a job that pays a little more. He won't lose money when the new people he has to hire screw things up while they're learning. Not only that, but because he'll be able to retain the best employees, the quality of his product will be that much better than his competitors, and he'll make more money.


My father did something like this when he ran a small plastics company back in the 80s. He paid his people well above average. Everyone. Even his secretary. He made less than most people in the same position, and used that money to pay his employees more. As I said earlier, it wasn't entirely about the money. It was about culture. Instead of an adversarial relationship between management and labor, it was cooperative. He treated his employees like loyal associates and friends rather than liabilities to his bottom line. As a result, they were happy to work for him. They wanted the company to succeed because they knew they would share in that success. They were also fiercely loyal. So much so that when a union tried to organize the shop the employees kicked them out of the building.

And it was very successful. It wasn't "charity." He invested in his people, and it paid off big time.

 

[TV and credit cards]

http://gravitypayments.com/careers/

You’ll start off supporting our customers by answering their phone calls and emails, troubleshooting away their technical issues, and providing them a great experience. But let’s not focus on what we do, but how we do it.

Were it my company, I'd call this an investment. I sure wouldn't pay say, 32k for the support rep position and hope they don't screw me over.

 

[SimpleDon]

The fallacy is that the labor market pays what the labor is worth. That some magical clockwork mechanism sets wages to the proper level that all of the factors of production are set to, the level that represents the marginal value added by the production factor to the product, especially if the government says out.

By the magic mechanism theory then profits are higher because capital is scarcer and must be rewarded with more than it use to, executive salaries are higher because executives contribute more than they use to and labor is paid less because they contribute less than they use to. But this is a magic and that doesn't exist and never existed.

In the real world,

• Businesses pay the wages that they have to pay, and no more.
• The less that they have to pay in wages the more profit they make.
• The more profit they make the higher the executives' salaries are.
• Executives don't have to work as hard to make profits and higher salaries.
• Marginal businesses are better able to stay in business.
• Wages are lower when the workers feel insecure in their jobs.
• This occurs when unemployment is high and when employment is low.

Conversely,

• When unemployment is low and employment is high then workers can demand and get higher wages.
• When everyone who wants a job has a job profits are low.
• When profits are low executives' salaries are low and executives have to work harder to raise the profits to raise their salaries.
• Marginal businesses are more likely to fail enabling better more productive and more innovative businesses to increase their business.

So the choice is how are we going to run the economy. On what basis, what are we trying to do with the economy?

The current answer is clear. Over the last thirty five years we have run the economy to produce more profits and relatively lower wages. We have done this by maintaining higher unemployment and lower employment, by redistributing less money through the tax system and by increasing workers' insecurity by other means like making it harder for workers to organize, sending increasing amounts of production to low wage countries and by reducing government regulation over wages and work rules, that is regulations like the minimum wage and time and half for overtime. Businesses reduced non-wage compensation such as pensions, health care, sick time, vacation days, etc.

All of these boosted profits, increased executives salaries, etc.

So the question is, what is it that we want from the economy? Is this it?

 

[Trausti]

The fallacy is that the labor market pays what the labor is worth. That some magical clockwork mechanism sets wages to the proper level that all of the factors of production are set to, the level that represents the marginal value added by the production factor to the product, especially if the government says out.

By the magic mechanism theory then profits are higher because capital is scarcer and must be rewarded with more than it use to, executive salaries are higher because executives contribute more than they use to and labor is paid less because they contribute less than they use to. But this is a magic and that doesn't exist and never existed.

In the real world,

• Businesses pay the wages that they have to pay, and no more.
• The less that they have to pay in wages the more profit they make.
• The more profit they make the higher the executives' salaries are.
• Executives don't have to work as hard to make profits and higher salaries.
• Marginal businesses are better able to stay in business.
• Wages are lower when the workers feel insecure in their jobs.
• This occurs when unemployment is high and when employment is low.

Conversely,

• When unemployment is low and employment is high then workers can demand and get higher wages.
• When everyone who wants a job has a job profits are low.
• When profits are low executives' salaries are low and executives have to work harder to raise the profits to raise their salaries.
• Marginal businesses are more likely to fail enabling better more productive and more innovative businesses to increase their business.

So the choice is how are we going to run the economy. On what basis, what are we trying to do with the economy?

The current answer is clear. Over the last thirty five years we have run the economy to produce more profits and relatively lower wages. We have done this by maintaining higher unemployment and lower employment, by redistributing less money through the tax system and by increasing workers' insecurity by other means like making it harder for workers to organize, sending increasing amounts of production to low wage countries and by reducing government regulation over wages and work rules, that is regulations like the minimum wage and time and half for overtime. Businesses reduced non-wage compensation such as pensions, health care, sick time, vacation days, etc.

All of these boosted profits, increased executives salaries, etc.

So the question is, what is it that we want from the economy? Is this it?

You seem to be suggesting that some third party, err government, ought to be in charge of setting wages and earnings. I hope you're not. But if you are, screw that.

 

[dismal]

You seem to be suggesting that some third party, err government, ought to be in charge of setting wages and earnings. I hope you're not. But if you are, screw that.

As I understand it SimpleDon can peer at things and intuit their intrinsic value.

A diamond is worth 436 gallons of water, for example.