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

[Canard DuJour]

Some seem to think Price is suspect for pretending to be charitable when he's really doing this as a way to drum up more revenue; others seem to think he's really being charitable, but that he's being too charitable (wrong word, really) by virtue of paying the same salary to entry-level employees as certain higher ups, and that this is not a good thing—which it clearly isn't: Paying an unskilled employee the same as a skilled employee is going to curtail (or outright destroy) the skilled employee's incentive for sticking with that company, unless they have a wicked egalitarian bent. DBT and I think he's awesome for being bold enough to do this well-intended thing, and that exploitation of wage-earners is morally wrong and that someone at the forefront of modern business needs the nads to own up to it and be willing to work towards changing it.

After thinking on it, I think if it were my money, I would bump my lesser-skilled employees up to whatever income bracket I considered necessary to ensure their ability to sustain themselves without financial distress, while bearing in mind that there are many people who simply cannot manage money, no matter how much they have; but I would pay my more highly-skilled or professional employees considerably more, since that seems not only fair but just common sense.

What's most certainly true is that people with very large incomes—say in the many millions per year—have far more money than they need and might want to consider how they can put their money to productive, even beneficial use. Note I say "consider", since if a billionaire who's earned her money lawfully, and through her own effort and intelligence, refuses to part with a single nickel, that ought to remain her right in any civilized nation, since to force her to part with that nickel against her will would make that parting something other than charity. Charity should be wholly voluntary and genuine. That being said, no-one in a civilized nation should be prevented from (nor feel ashamed for) calling the billionaire who refuses to part with a nickel a money-grubbing Smaug, and to hold her in private or public contempt.

That being said, if Steve Weiss, from the old board, were here, he'd tear me a new ass for saying that. And Ayn Rand, whom I revered when I was in my thirties, and still admire, though to a lesser degree, would call me all sorts of names, using many exclamation points (far more than the Chicago Manual of Style recommends).

What rot.

Nobody is going to quit a $100,000 a year job as a manager just because his subordinates also get $100,000 a year - not if the alternative is to do the same job for $90,000, with subordinates who get paid $40,000. You would need to have a very sick mind to fuck yourself over just for the pleasure of lording it over people who are being fucked over even more than you.

Most people aren't going to do that, no. There are always a few prats who would, and they tend to give themselves away with their political opinions.

 

[maxparrish]

What rot.

Nobody is going to quit a $100,000 a year job as a manager just because his subordinates also get $100,000 a year - not if the alternative is to do the same job for $90,000, with subordinates who get paid $40,000. You would need to have a very sick mind to fuck yourself over just for the pleasure of lording it over people who are being fucked over even more than you.

What could go wrong? After all, everyone knows that the road to heaven is paved with good intentions, yes? And look at all those good 'intentions':

He felt intensely guilty over making so much money. He hung with a group of friends that were "normal" - “I was just experiencing the difference, and seeing both sides of that every day,” he said. The stark divide irked him, and "he felt that the pay-gap between himself and his employees was just too much."

He felt his material wants/needs are now taken care of and he was overcome by a wave of shame for an employee he socialized with, an employee who was stressed out about her rent (which, in Seattle, has to be pretty stiff). It was "The straw that broke the camels back".

So he jumped on his own bandwagon for 70K, based on a study of mental health.

Don't worry, he assures himself, "its an investiment"; its just a temporary cut of CEO pay, and that "his team is going to do a great job to make that up"...a dubious hope that softens any lingering 'owner's regret'. (Actually what might 'make it up' is his PR that gins new business).

So what could go wrong? Imagine...

- After the glow wears off, high performing skilled workers and supervisors currently earning 70K (or within 10-20K) will resent the extra responsibility for 'supervising' or excelling the formerly 35K a year employees who now make as much (or nearly as much) as they do. So wage compression will (regardless of the market wage) cause increasing work friction, politics, and demands for raising wages who those who feel they DO "earn" it. "Teamwork" will suffer, at least until those folks also get some increases.

- Workforce turnover (especially that of marginal employees) will largely freeze. Attempts to replace lower performing or lazy employees will meet a fierce legal (or more) resistance as they know they are overpaid and won't find a job like this elsewhere (see USPS and many government agency employees).

- Should the owner realize he was too generous, and wants part of (or all of) his CEO pay back, and has to cut wage increases after giving them it will be a morale disaster. It is nearly impossible to "take back" raises. (Good time to unionize though).

- In any adversity, the owner could develop an attitude of bitter resentment that employees don't work harder or take cuts in their raises for his prior "gifts" of salary increases. He may lecture them on their greed, and demand to know 'what have they done for others'.

Most likely it will be another 'utopian' experiment gone sour.

 

[KeepTalking]

What rot.

Nobody is going to quit a $100,000 a year job as a manager just because his subordinates also get $100,000 a year - not if the alternative is to do the same job for $90,000, with subordinates who get paid $40,000. You would need to have a very sick mind to fuck yourself over just for the pleasure of lording it over people who are being fucked over even more than you.

What could go wrong? After all, everyone knows that the road to heaven is paved with good intentions, yes?

Heaven, hell, they are both imaginary, so who cares? But good intentions are better than bed intentions, are they not?

As for the rest of the crap you typed, thank you Mr. Kreskin.

And look at all those good 'intentions':

He felt intensely guilty over making so much money. He hung with a group of friends that were "normal" - “I was just experiencing the difference, and seeing both sides of that every day,” he said. The stark divide irked him, and "he felt that the pay-gap between himself and his employees was just too much."

He felt his material wants/needs are now taken care of and he was overcome by a wave of shame for an employee he socialized with, an employee who was stressed out about her rent (which, in Seattle, has to be pretty stiff). It was "The straw that broke the camels back".

So he jumped on his own bandwagon for 70K, based on a study of mental health.

Don't worry, he assures himself, "its an investiment"; its just a temporary cut of CEO pay, and that "his team is going to do a great job to make that up"...a dubious hope that softens any lingering 'owner's regret'. (Actually what might 'make it up' is his PR that gins new business).

So what could go wrong? Imagine...

- After the glow wears off, high performing skilled workers and supervisors currently earning 70K (or within 10-20K) will resent the extra responsibility for 'supervising' or excelling the formerly 35K a year employees who now make as much (or nearly as much) as they do. So wage compression will (regardless of the market wage) cause increasing work friction, politics, and demands for raising wages who those who feel they DO "earn" it. "Teamwork" will suffer, at least until those folks also get some increases.

- Workforce turnover (especially that of marginal employees) will largely freeze. Attempts to replace lower performing or lazy employees will meet a fierce legal (or more) resistance as they know they are overpaid and won't find a job like this elsewhere (see USPS and many government agency employees).

- Should the owner realize he was too generous, and wants part of (or all of) his CEO pay back, and has to cut wage increases after giving them it will be a morale disaster. It is nearly impossible to "take back" raises. (Good time to unionize though).

- In any adversity, the owner could develop an attitude of bitter resentment that employees don't work harder or take cuts in their raises for his prior "gifts" of salary increases. He may lecture them on their greed, and demand to know 'what have they done for others'.

Most likely it will be another 'utopian' experiment gone sour.

 

[ksen]

What rot.

Nobody is going to quit a $100,000 a year job as a manager just because his subordinates also get $100,000 a year - not if the alternative is to do the same job for $90,000, with subordinates who get paid $40,000. You would need to have a very sick mind to fuck yourself over just for the pleasure of lording it over people who are being fucked over even more than you.

What could go wrong? After all, everyone knows that the road to heaven is paved with good intentions, yes? And look at all those good 'intentions':

He felt intensely guilty over making so much money. He hung with a group of friends that were "normal" - “I was just experiencing the difference, and seeing both sides of that every day,” he said. The stark divide irked him, and "he felt that the pay-gap between himself and his employees was just too much."

He felt his material wants/needs are now taken care of and he was overcome by a wave of shame for an employee he socialized with, an employee who was stressed out about her rent (which, in Seattle, has to be pretty stiff). It was "The straw that broke the camels back".

So he jumped on his own bandwagon for 70K, based on a study of mental health.

Don't worry, he assures himself, "its an investiment"; its just a temporary cut of CEO pay, and that "his team is going to do a great job to make that up"...a dubious hope that softens any lingering 'owner's regret'. (Actually what might 'make it up' is his PR that gins new business).

So what could go wrong? Imagine...

- After the glow wears off, high performing skilled workers and supervisors currently earning 70K (or within 10-20K) will resent the extra responsibility for 'supervising' or excelling the formerly 35K a year employees who now make as much (or nearly as much) as they do. So wage compression will (regardless of the market wage) cause increasing work friction, politics, and demands for raising wages who those who feel they DO "earn" it. "Teamwork" will suffer, at least until those folks also get some increases.

- Workforce turnover (especially that of marginal employees) will largely freeze. Attempts to replace lower performing or lazy employees will meet a fierce legal (or more) resistance as they know they are overpaid and won't find a job like this elsewhere (see USPS and many government agency employees).

- Should the owner realize he was too generous, and wants part of (or all of) his CEO pay back, and has to cut wage increases after giving them it will be a morale disaster. It is nearly impossible to "take back" raises. (Good time to unionize though).

- In any adversity, the owner could develop an attitude of bitter resentment that employees don't work harder or take cuts in their raises for his prior "gifts" of salary increases. He may lecture them on their greed, and demand to know 'what have they done for others'.

Most likely it will be another 'utopian' experiment gone sour.

..............................................

 

[ZiprHead]

You're assuming Price's desire is to get back to even on a cost per record basis. There's no evidence that's the case while there is evidence that he feels he has enough room to allow his costs per record to grow while still being profitable.

Actually I'm assuming he's being charitable with his money. It's your co-religionists who keep trying to justify this as good business that will pay off in more profits. This should have been clear from reading the thread, but always happy to help.

It seems to me you're the religionist and your god is the all-mighty profit.

 

[Ford]

So what could go wrong? Imagine... Fantasize...

There. Fixed that for ya.

 

[dismal]

Actually I'm assuming he's being charitable with his money. It's your co-religionists who keep trying to justify this as good business that will pay off in more profits. This should have been clear from reading the thread, but always happy to help.

It seems to me you're the religionist and your god is the all-mighty profit.

I'm more of a religionist that he can do what he wants with his money. But again this thread is not actually about me. Though I understand the confusion given the large number of comments directed at me personally.

I'm not sure why some people object so much to charity. Was a time when it was considered a good thing to be charitable with one's money.

 

[Axulus]

It seems to me you're the religionist and your god is the all-mighty profit.

I'm more of a religionist that he can do what he wants with his money. But again this thread is not actually about me. Though I understand the confusion given the large number of comments directed at me personally.

I'm not sure why some people object so much to charity. Was a time when it was considered a good thing to be charitable with one's money.

Charity and welfare to them are dirty words - government should grant everyone "benefits" and employers should pay their workers "what they are worth", and charity and welfare should be eliminated.

 

[ksen]

Not really. Charity and welfare, to me anyways, are well known concepts in which "wages" would never normally be lumped into.

But it is pretty telling that some people would like to classify the wages an owner pays above what those people think is the market wage, whatever that is, as charity or welfare.

 

[Axulus]

My predictions:

The positives:

The company will get a temporary boost in business due to all the free press he is receiving.

The company will be able to obtain better employees for these positions that are getting substantial raises. The question will then become, do we let go some of the current employees and replace them with these new applicants? If the answer is yes, then a much larger benefit of the raise will be realized with these better employees, but there will be some resentment within the company at the changes being made (a damper on morale). If the answer is no, then the employee quality boost of the raises will be small. Only new hires will be of better average quality All that will be obtained with the current employees is an employee morale boost, which tends to fade over time from a one time event like this.

The negatives:

The additional wages will constrain growth - profits are the lifeblood of a growing business and they need to be reinvested to meet growth potential. As a result, the company will have to turn away some of these customers as it does not have the ability to meet all the additional demand out there, due to inability to expand capacity as rapidly to meet this demand.

They will have to rely on more bank loans to fund growth, which will increase their vulnerability should the industry suffer a downturn. The bank will be less generous in its terms and the credit limits will be smaller as cash flow and ability to service debt is substantially diminished. It is possible the CEO could be sowing the seeds for an eventual bankruptcy. It is easy to be generous during the good times. The real test of whether a business is disciplined and able to survive in the long term is during a recession or an industry downturn.

The company, constrained in its growth, will not be able to hire as many employees as it otherwise could due to less cash flow. The jobs will be great for those who are able to obtain them, but all the people who would've otherwise been hired by the company will now be SOL.

The company, constrained in its growth, will not be able to purchase as much capital equipment as it otherwise would be able to due to constrained cash flow. As a result, employee productivity will actually suffer a little bit from this factor, further diminishing the gains from increase in average employee quality and morale.

The wages are really more-so well above market for those who are currently below $70,000/year at the company. I didn't hear of any raises offered for management earning well above $70,000. If anything, raises will be substantially diminished for the top executive team lest their salaries pull away too far from the lowest paid employees at the company. As a result, management will suffer just as high of turnover as it currently does, as other companies poach this company's management with better offers.

Current employees will have far less reason to try to move on up into management, with the additional hours, stress, and responsibility it requires, with very little additional pay to compensate.

These two factors together will make it more difficult to obtain top management talent within the company. This increases the chances that the company's innovation is diminished and it will struggle when new competition arises.

 

[Bomb#20]

Unfortunately for you and dismal, Dan Price himself has explicitly stated that, in his own analysis of his own business, this is NOT NOT NOT charity. I've even quoted, with links, multiple sources of Dan Price explaining his reasoning and confirming that he is NOT NOT NOT doing this as charity.

For dismal to continue to claim this is charity is, at best, simply his own opinion with no basis in reality, or at worst, intellectual dishonesty since Dan Price has made his own motives crystal clear.

For you to finger wag at everyone else while trying to defend dismal's untenable position in the face of Dan Price's own words - quoted in this thread extensively - is simply pathetic.

We don't have to read his mind because we can read his words!!!! ... I've repeatedly quoted the man stating his reasons and stating that he did not do this as charity. Are you and dismal and Aluxus accusing Dan Price of being a liar about his own motives?

So when a man says "Here's my position and here are my reasons", in your view that settles the matter. Got it. Glad we have that "crystal clear".

Post #2:

Sounds like he's running a charitable effort. His money, his choice.

Post #5:

Again: his money, his choice. Read carefully and you will see this contains no objection.

Post #9:

Dismal's objection is the typical nonsense we always hear when discussing wages in the U.S.: ordinary working people aren't worth the salaries they are paid - no matter what those salaries are. No one is worth minimum wage, no one is worth $70,000 a year. The only people who are ever worth their salaries in the minds of some are the CEO's making 300 times the average worker. t is a sick twisted POV in my opinion.

Got it. So let's be crystal clear about this too. When you wrote post #9 right after reading posts #2 and #5 from dismal, you were accusing dismal of being a liar about his own motives? For you to claim dismal objected was simply pathetic, was just your opinion with no basis in reality, and was at worst intellectual dishonesty on your part, since dismal had made his own motives crystal clear?

 

[ksen]

http://www.huffingtonpost.com/steven-conn/the-threat-of-gravity-payments_b_7106524.html

So what, exactly, is so bad about Price's salary strategy that it has made some people so upset? Paying $70,000 across the board may or may not be good for Gravity Payment's business; that's beside the point. By implementing an egalitarian salary structure at his company Mr. Price has committed an economic heresy, and like all heretics he is being denounced by the keepers of the true faith.

The orthodoxy about what workers earn is simple: it must be rigorously hierarchical; those at the top must earn more than those at the bottom; and most importantly those hierarchical wages reflect what workers genuinely deserve because they are set by the magical, impersonal and infallible forces of the labor market.

So the fact that American CEOs now make 475 times what the average workers in those companies earn simply represents the market at work -- unavoidable, nothing you can do about it, like any other natural law at work. And if you don't like them apples, I suggest you become a CEO too.

The heresy that Dan Price has committed, therefore, is to suggest that salary structures might actually be matters of choice, that they reflect a company's priorities and not just a set of immovable economic imperatives. And once you start pulling the curtain back from the way corporations work, who knows what Oz-like things you might discover.

Man, you don't see this kind of bad reaction from the Right when companies slash payroll and/or lay lots of people off. The shrillness of those opposed to what Price is doing just seems very out of proportion.

Also lol at Rush Limbaugh calling this "socialist".

 

[Ford]

Also lol at Rush Limbaugh calling this "socialist".

Why are you trying to make this about Rush Limbaugh?!

 

[RavenSky]

It's funny that you think we should all just take Dan Price at his word as if he reveals the gospel truth.

He is the only one that knows what his own motivations are Who's word ARE we supposed to take for what Dan Price's own thoughts on his own motivations are?

This does not miraculously increase profit. Regardless of what he says.

Since nothing I have quoted from him indicates that he thinks his company will have "a miraculously increase profit" I have no idea what you are babbling about.

There really is a very long continuum between the modest profit his company is STILL enjoying even with this restructuring of salaries and this "miraculously increase profit" your fevered imagination attributes to Dan Price.

 

[RavenSky]

http://www.huffingtonpost.com/steven-conn/the-threat-of-gravity-payments_b_7106524.html

So what, exactly, is so bad about Price's salary strategy that it has made some people so upset? Paying $70,000 across the board may or may not be good for Gravity Payment's business; that's beside the point. By implementing an egalitarian salary structure at his company Mr. Price has committed an economic heresy, and like all heretics he is being denounced by the keepers of the true faith.

The orthodoxy about what workers earn is simple: it must be rigorously hierarchical; those at the top must earn more than those at the bottom; and most importantly those hierarchical wages reflect what workers genuinely deserve because they are set by the magical, impersonal and infallible forces of the labor market.

So the fact that American CEOs now make 475 times what the average workers in those companies earn simply represents the market at work -- unavoidable, nothing you can do about it, like any other natural law at work. And if you don't like them apples, I suggest you become a CEO too.

The heresy that Dan Price has committed, therefore, is to suggest that salary structures might actually be matters of choice, that they reflect a company's priorities and not just a set of immovable economic imperatives. And once you start pulling the curtain back from the way corporations work, who knows what Oz-like things you might discover.

Man, you don't see this kind of bad reaction from the Right when companies slash payroll and/or lay lots of people off. The shrillness of those opposed to what Price is doing just seems very out of proportion.

Also lol at Rush Limbaugh calling this "socialist".

GREAT article! LOL. Minor quibble - Dan Price did not set $70,000 across the board. He set $70,000 as the lowest salary. Nearly half of his employees make more than that.

And the more some people whine about what this guy did, the more I love that he did it

 

[RavenSky]

Also lol at Rush Limbaugh calling this "socialist".

Why are you trying to make this about Rush Limbaugh?!

You clearly did not read the article.

 

[RavenSky]

Actually I'm assuming he's being charitable with his money. It's your co-religionists who keep trying to justify this as good business that will pay off in more profits. This should have been clear from reading the thread, but always happy to help.

It seems to me you're the religionist and your god is the all-mighty profit.

Ironically, this is the very same conclusion drawn by the author of the article Ksen posted about those having hissy fits over what Dan Price did.

I particular enjoyed this comment:

Viewing workers in this way is not economic reasoning, of course; it amounts to Calvinist moralizing.

 

[barbos]

I think this thing will fail spectacularly

 

[Ford]

Why are you trying to make this about Rush Limbaugh?!

You clearly did not read the article.

I don't need to read any stinking articles! This is charity! Why? Because I say so!

Now, let me tell you what's going to happen as a result of this obvious act of charity and/or communism:

The Mighty Invisible Hand of the Free Market will reach down from on high and smite Dan Price. Perhaps not literally in the Monty Python sense, but at the very least his company will suffer greatly, since we know that anyone who dares pay higher salaries at the expense of profit is an apostate and not really a Capitalist.

His employees - at least the ones with college educations, will secretly hate him for paying people clearly beneath their education and social status a near-equivalent wage, and will secretly plot to bring down Gravity Payments (that's a sort of pun, isn't it?). Anyway, at some point those who don't leave (in order to earn the same salary at another company that pays the secretary less) will no doubt hatch a plan to sabotage their CEO who is clearly unhinged and has been driven mad by some sort of liberal indoctrination which told him he's wrong to make a million dollars while his employees make the going rate.


They'll perhaps engage in some sort of work slowdown, and when 'ole Dan asks them why they're not producing, they'll say "hey Danny, why don't you have the clerks do our jobs? You're paying them enough!" Because after all, we should measure our worth by how much more we're making than the folks on a lower rung, right?


Eventually, after a weekend of reading the requisite Ayn Rand texts (might take longer) a group of Gravity employees (the smart ones, not the overpaid dolts at the bottom) will try to emulate Dagny Taggart by...and my memory isn't quite clear on this...breaking into some building and shooting a hapless security guard because he wasn't sufficiently Objectivist.


This will all happen because I predict it will happen. Oh, and it is a charity because I said so.





(edited to add) This isn't about me! Why are you trying to make this about me?!

 

[RavenSky]

You clearly did not read the article.

I don't need to read any stinking articles! This is charity! Why? Because I say so!

Now, let me tell you what's going to happen as a result of this obvious act of charity and/or communism:

The Mighty Invisible Hand of the Free Market will reach down from on high and smite Dan Price. Perhaps not literally in the Monty Python sense, but at the very least his company will suffer greatly, since we know that anyone who dares pay higher salaries at the expense of profit is an apostate and not really a Capitalist.

His employees - at least the ones with college educations, will secretly hate him for paying people clearly beneath their education and social status a near-equivalent wage, and will secretly plot to bring down Gravity Payments (that's a sort of pun, isn't it?). Anyway, at some point those who don't leave (in order to earn the same salary at another company that pays the secretary less) will no doubt hatch a plan to sabotage their CEO who is clearly unhinged and has been driven mad by some sort of liberal indoctrination which told him he's wrong to make a million dollars while his employees make the going rate.


They'll perhaps engage in some sort of work slowdown, and when 'ole Dan asks them why they're not producing, they'll say "hey Danny, why don't you have the clerks do our jobs? You're paying them enough!" Because after all, we should measure our worth by how much more we're making than the folks on a lower rung, right?


Eventually, after a weekend of reading the requisite Ayn Rand texts (might take longer) a group of Gravity employees (the smart ones, not the overpaid dolts at the bottom) will try to emulate Dagny Taggart by...and my memory isn't quite clear on this...breaking into some building and shooting a hapless security guard because he wasn't sufficiently Objectivist.


This will all happen because I predict it will happen. Oh, and it is a charity because I said so.