One Company’s New Minimum Wage: $70,000 a Year

[tailfins]

One Company’s New Minimum Wage: $70,000 a Year


http://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html

Here's what I predict will happen: The qualifications for their jobs will get tougher. Over time the gap between their salary and the market salary for their jobs will evaporate. If they pressure people into working extra hours, they are down to $30 per hour. Furthermore $30 per hour in Seattle spends like $20 per hour in places like Dallas, Indianapolis, or Omaha.

[Kathianne]

One Company’s New Minimum Wage: $70,000 a Year


http://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html

Here's what I predict will happen: The qualifications for their jobs will get tougher. Over time the gap between their salary and the market salary for their jobs will evaporate. If they pressure people into working extra hours, they are down to $30 per hour. Furthermore $30 per hour in Seattle spends like $20 per hour in places like Dallas, Indianapolis, or Omaha.

My feeling is that the owner has a right to do with his company, his own salary, and those of his employees as he wishes. This may help him or harm him, but it's within his rights.

I like it much better than the nonsense demonstrations with paid actors. I also like that it's wholly voluntary. I doubt the workers would have much problem with working overtime or furthering their base of knowledge. I know that poor workers would easily be replaced.

[fj1200]

Here's what I predict will happen: The qualifications for their jobs will get tougher. Over time the gap between their salary and the market salary for their jobs will evaporate.

That in part depends on what their competitors do; will they have to raise pay to compete? Because at the very least the competition for those jobs will increase and they may just end up with overqualified workers or those overqualified workers will be more productive and make up the difference. Interesting to see either way but I think it only works because it's privately held and he's giving up his own money of salary and future profits.

Of course if it doesn't work we'll never hear about it.

[NightTrain]

This reminds me of what Henry Ford did back in the day.

I hope this works out, I think he'll see an improvement in performance due to stellar loyalty levels from his employees.

[tailfins]

That in part depends on what their competitors do; will they have to raise pay to compete? Because at the very least the competition for those jobs will increase and they may just end up with overqualified workers or those overqualified workers will be more productive and make up the difference. Interesting to see either way but I think it only works because it's privately held and he's giving up his own money of salary and future profits.

Of course if it doesn't work we'll never hear about it.

I don't think it's a pass/fail kind of thing. I also see the job descriptions being changed to bridge the overqualification gap. The move is not as Earth shattering as it appears.

[darin]

Good for him - but $70,000 is not very much around seattle. Figure rent would cost me about twice what it would in my area now; and that's for bare-bones.

Figure $2000/month for rent vs bare bones $1000/month around here and that'd mean somebody from here making 70k and moving there would need $82000 just to break even.

When people remove income from context they lie. But - we love lies. People love lies.

The only group that really makes out when wages are raised is the Gov'ts who can now steal more money from the income of the citizens.

[tailfins]

What if your market value is $100K/yr and you learn a new skill that makes your market value $110K/yr? What do you suppose will happen when the company says no to your $10K raise request because we need the money to subsidize the company minimum wage?

[LongTermGuy]

This reminds me of what Henry Ford did back in the day.

I hope this works out, I think he'll see an improvement in performance due to stellar loyalty levels from his employees.


`Yup...and no one will `eva` take a vacation.....

[fj1200]

Of course if it doesn't work we'll never hear about it.

It might not be working but we're hearing about it. :eek:

A Company Copes With Backlash Against the Raise That Roared (http://www.cnbc.com/2015/07/31/new-york-times-digital-a-company-copes-with-backlash-against-the-raise-that-roared.html)

...
More troubling, a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase—despite repeated assurances to the contrary—also left. While dozens of new clients, inspired by Mr. Price's announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees—now at a significantly higher cost—and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.
Two of Mr. Price's most valued employees quit, spurred in part by their view it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle's close-knit entrepreneurial network were also piqued that Mr. Price's action made them look stingy in front of their own employees.
Then potentially the worst blow of all: Less than two weeks after the announcement, Mr. Price's older brother and Gravity co-founder, Lucas Price, citing longstanding differences, filed a lawsuit that potentially threatened the company's very existence. With legal bills quickly mounting and most of his own paycheck and last year's $2.2 million in profits plowed into the salary increases, Dan Price said, "We don't have a margin of error to pay those legal fees."
...

There have been other ripples. Mario Zahariev, who runs Pop's Pizza & Pasta, switched to Gravity after seeing Mr. Price on the news. When he learned his monthly processing fees would drop to $900 from $1,700, Mr. Zahariev decided, "I was not going to keep the difference for myself." He used the savings to raise the salaries of his eight employees.
Pop's Pizza aside, Mr. Price's plan is not easily replicated, said Nick Hanauer, a Seattle venture capitalist and an early promoter of the city's $15 minimum wage law. Still, he noted, "These individual acts can create a new kind of perception of what's possible and what's righteous." After all, he said, two years ago, no one would ever have guessed higher minimum wage laws would be catching fire in cities around the country. "Who can tell what that last thing is that catalyzes big change?"
In that sense, Mr. Price's foray into the public debate on wages is not unlike his newfound passion of wake surfing. Cruising atop the curl of a wave created by a motorboat isn't easy. Lean too far ahead of the swell or drift behind it and you wipe out. For the moment, he is balancing on the crest, enjoying the ride and doing his best to keep from falling off.
Some Gravity employees quit because they felt the pay increase was unfair.
A lawsuit by the C.E.O.'s brother has the company scrambling for legal fees.

[Kathianne]

I knew there was a thread on this, went to post off it yesterday, couldn't find it. All I can say, 'That was fast!' :laugh:

[NightTrain]

Well, I hope he makes it.

I don't understand why people are demonizing him for simply trying to make his employees more financially rewarded... usually what you see are employers paying the absolute minimum they can while retaining certain employees and they're not concerned with the condition of their general employee pool as long as they get the required performance out of them.

I don't know if it was necessarily responsible for him to do this, his brother certainly doesn't according to that lawsuit (it's going to be a cold Thanksgiving), but it was his decision and pretty damn generous.

He lost a couple of employees that got their noses bent out of shape - even though they also got substantial raises - but I'm pretty sure there are a shitload of talented people beating down his door to replace them.

[gabosaurus]

This is the direct opposite of many current mega-companies (Big Oil comes to mind), who would rather do massive layoffs than risk cutting their profits.

My sister was the legal guardian of a girl who emigrated from Colombia. At 12 years old, she couldn't speak English. Ten years later, she was a college graduate starting a job where the opening salary was $75,000 a year.

[darin]

Well, I hope he makes it.

I don't understand why people are demonizing him for simply trying to make his employees more financially rewarded... usually what you see are employers paying the absolute minimum they can while retaining certain employees and they're not concerned with the condition of their general employee pool as long as they get the required performance out of them.

I don't know if it was necessarily responsible for him to do this, his brother certainly doesn't according to that lawsuit (it's going to be a cold Thanksgiving), but it was his decision and pretty damn generous.

He lost a couple of employees that got their noses bent out of shape - even though they also got substantial raises - but I'm pretty sure there are a shitload of talented people beating down his door to replace them.

I think it's not about demonizing the guy, I think it's about pointing out the fallacy of liberal logic. Liberal Logic is this: Give somebody more free shit without requirements to earn it, and they will suddenly develop the work-ethic to make it a good business decision. What happened here boils down to this: Most things liberals call for 'sound good' on the surface but face secondary and tertiary affects that cause a lot of harm. As an example: The UAW gets their employees a LOT of money. A Shit-ton of money. Every time wages go up prices go up. When my neighbors go from $45/hr to $60/hr for pushing buttons on a machine gas prices rise, milk prices rise, car prices rise, et cetera. The increased prices mean the higher pay becomes lost.

[NightTrain]

I think it's not about demonizing the guy, I think it's about pointing out the fallacy of liberal logic. Liberal Logic is this: Give somebody more free shit without requirements to earn it, and they will suddenly develop the work-ethic to make it a good business decision. What happened here boils down to this: Most things liberals call for 'sound good' on the surface but face secondary and tertiary affects that cause a lot of harm. As an example: The UAW gets their employees a LOT of money. A Shit-ton of money. Every time wages go up prices go up. When my neighbors go from $45/hr to $60/hr for pushing buttons on a machine gas prices rise, milk prices rise, car prices rise, et cetera. The increased prices mean the higher pay becomes lost.


Just because his bill processing company suddenly experienced higher wages load does not mean their prices went up - in fact, that's one of the things he stated over and over, that his prices weren't going to increase because of the higher wages. He made the cuts primarily to his own salary to compensate.

Remember, he's still competing with many other companies who are still paying their employees the same as before.

UAW is a different animal, because they're representing the labor of 3 companies... that's a very limited pool, and we're not talking union vs. non-union groups.

[darin]

Just because his bill processing company suddenly experienced higher wages load does not mean their prices went up - in fact, that's one of the things he stated over and over, that his prices weren't going to increase because of the higher wages. He made the cuts primarily to his own salary to compensate.

Remember, he's still competing with many other companies who are still paying their employees the same as before.

UAW is a different animal, because they're representing the labor of 3 companies... that's a very limited pool, and we're not talking union vs. non-union groups.

I was using 'prices going up' as one example. Not for the business necessarily but for the landlords, coffee stands, and all that - knowing now their customers have more money to spend. And the worse problem - telling the other employees they are just as valuable as the then-low-wage earners.

FWIW, 70k around Seattle is NOT a lot of money

[fj1200]

The increased prices mean the higher pay becomes lost.

Cost-push inflation is not really a thing. The problem with the UAW's demands is that GM, or whomever, will outsource or automate to ameliorate the effects of too high labor costs.

[NightTrain]

And the worse problem - telling the other employees they are just as valuable as the then-low-wage earners.

I understood this to be a minimum wage of 70k, not as a flat-rate. I'd think that your high-performers would be getting more.

I know exactly how it played out regarding the suddenly-disgruntled employees making the same money, because I've seen it before :

Man1 : I now make 70k a year!

Man2 : What? You talentless, lazy hack, so do I! That's bullshit!

Man1 : So what? You still got a 20k raise.

Man2 : Yeah, but I'm a better employee than you are. Not fair.

Man1 : You don't like an extra 20k? wtf?

Man2 : Of course I do, but everyone around here knows that I'm worth more than you are. Fuck it, I'm quitting.


The play of egos around pay scale will make an ordinarily reasonable person to bite their nose to spite their face. I've watched this conversation play out before... the ego is a serious force in the workplace and payscale strokes it.


FWIW, 70k around Seattle is NOT a lot of money

I know. Cost of living is higher still here in AK, and even at 100k you're still having to keep a close eye on things.

[darin]

I understood this to be a minimum wage of 70k, not as a flat-rate.

You understood correctly.



I'd think that your high-performers would be getting more.

Not necessarily. The story tells us some of the employees are bitter for not getting a raise like that - and others can't believe low-performers are now making what they make via hard work. Nobody making $70k got a raise because of this action.

[Voted4Reagan]

You understood correctly.



Not necessarily. The story tells us some of the employees are bitter for not getting a raise like that - and others can't believe low-performers are now making what they make via hard work. Nobody making $70k got a raise because of this action.

From each according to his ability... To each according to his need.

The joys of Socialism in action.....