Then as I said above if it's other people, "who cares?"
This is a web forum where we discuss things. If we do not care what other people say why are we here?
Since the claim was about the conjecture that paying people twice as much will instantly double their capacity then if that's not Price's conjecture and this discussion is about his actions and motivations then what other people surmise doesn't really matter. What matters is what Price has claimed his motivations are. Anything else is simple mental masturbation which feels good otherwise we wouldn't do so much of it here. And I'm not against that per se but when discussing the motivations and conjectures of a particular person then what that person says about is what matters.
And if Price believes paying his clerks twice as much will result in more profit it seems to indicate that he believes they will become 2X+ as productive.
No it doesn't.
Huh? How does paying people twice as much to do a job lead to more profit if they are not 2x+ more productive.
First of all not everyone is getting their pay doubled so there's that.
Let's take this scenario (anybody know how to post a table?):
Revenue|20,000,000|20,000,000|20,000,000
Payroll|5,2000,000|8,470,000|9,400,000
Other Costs|10,000,000|10,000,000|10,000,000
Net Income|4,8000,000|1,530,000|600,000
In the above table for column 1 I assumed 120 employees at an avg pay of 35,000 plus Price's 1,000,000 salary.
In column 2 I doubled the avg pay for the 120 employees to 70,000 and reduced Price's salary by 930,000.
in column 3 I kept the avg pay for the 120 employees at 70,000 and restored 930,000 to Price's salary making it 1,000,000 again.
In column 2 revenue would only need to go up 16% to get back to 4,800,000 in profit.
In column 3 revenue would need to go up 21% to get back to 4,8000,000 in profit.
That is nowhere near a doubling of productivity needed to get back to the original amount of dollar profit.
Of course the arguments against my scenarios above would be that there are some variable costs in the "Other Costs" group and you'd be right but it wouldn't be enough to drastically change the equation and bring it so that 2x productivity would be needed in order to restore profitability.
Another argument against my scenario would be that getting back to the original amount of profit in dollars is not the same as getting to the same level of profit percentage. That is also true but I haven't read anything that says Price is concerned about maintaining the same profit percentage and that he's happy with a lower return in exchange for better compensated employees.
If I have a business processing records and I currently pay someone $10 per hour to process 10 records per hour if I start paying them $20 per hour how many records per hour do they have to process for me to increase my profits?
Unless their cost to you is your only cost for processsing records then it would be less than 2x in order to start increasing your profits. It's simple arithmetic.
I'm particularly curious how not paying them more for the next 3 years helps things along.
I can see, perhaps a silly person attempting to argue from ideologically necessity that if he doubles their pay now this will motivate them to learn to be more productive and at some point in the future they will learn to be 2X+ productive but that argues for paying them more now to start the process not waiting three years to pay them more. What magic is unleashed by waiting 3 years?
Where did you get the idea that the Gravity employees aren't getting more for the next 3 years? What I've read said the raise to $70k is being done over 3 years which implies some form of more money is starting to go to employees now.
Sure he may be giving them little bits of a raise now and nobly enduring the pain that paying his employees less than 70k causes within his soul. But why not the whole thing now?
I do not detect an answer to that question.
Maybe he's relying on the confidence fairy. They know it's coming and so will start working harder/smarter now in anticipation.
So for the next three years he gets the benefit of them working harder while not paying them? How will that go over in the depths of his soul?
You've slipped back to him not paying them any more until three years has gone by so I don't think I need to address that again since that's not what is happening.
And, if these people are slacking so much now that they'll instantly be twice as productive if he dangles the promise of a raise in the future in front of them maybe he needs better workers.
Or you need better assumptions since no one has claimed, other than you and certainly not Price, that his employees are currently slacking.
What is the benefit you allege from waiting the three years to raise their salaries to 70K versus doing it now?
I'm not alleging anything. I'm too busy asking you how you come to your conclusions that aren't based on anything Dan Price has actually said or claimed.
You seem to be alleging Dan Price's employees are currently a bunch of slackers who could be more than twice as productive if they really decided to work hard. I'm not sure why you hate workers so much.
I'm not sure why you are going to such lengths to trash workers so as to defend Dan Price's capacity to earn even more profits.
If your faith leads you to argue that doubling a workers salary leads to more profits what about tripling it?
Would tripling it lead to even more? How about quadrupling it?
Where would you say the magic power of increasing expenses to gain more profits stops?
lol
