$70,000 Minimum Wage In One Us Company

[interestrateripoff]

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?ref=business&_r=0

The idea began percolating, said Dan Price, the founder of Gravity Payments, after he read an article on happiness. It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.

His idea bubbled into reality on Monday afternoon, when Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000.

“Is anyone else freaking out right now?” Mr. Price asked after the clapping and whooping died down into a few moments of stunned silence. “I’m kind of freaking out.”

If it’s a publicity stunt, it’s a costly one. Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 year.

Mr. Price’s small, privately owned company is by no means a bellwether, but his unusual proposal does speak to an economic issue that has captured national attention: The disparity between the soaring pay of chief executives and that of their employees.

I hope this works out for the guy. Certainly a very bold move, although one can't see too many highly paid CEO's following his lead.

[longgone]

i wonder if tesco`s will follow suit

[tyres]

video here:

http://www.nbcnews.com/nightly-news/seattle-business-owner-raises-minimum-pay-70-000-n341546

[19 year mortgage 8itch]

Update

http://www.nytimes.com/2015/08/02/business/a-company-copes-with-backlash-against-the-raise-that-roared.html?_r=0

[Guest_northshore_*]

Update

http://www.nytimes.com/2015/08/02/business/a-company-copes-with-backlash-against-the-raise-that-roared.html?_r=0

Interesting cheers. Raise employee returns and it's debate or politics or backlash. Raise shareholder or management returns and it's a sign of success and just the way. Decisions have consequences, but reads like society needs deprogramming from top down business and self-worth brainwashing.

[interestrateripoff]

I suspected that other business leaders would react in horror at this and that indeed is the case. I wonder what Adam Smith would have made of this.

[nome]

I've actually noticed a few other examples of this kind of ethical/equitable business practice lately... and what's the one thing that all the CEO's and business owners doing this have in common? They're all relatively young and would be classed as being post boomer generation.

Are we witnessing the first slight glimmer of what could be a more fair and just society?

A society that isn't ran by a generation of entitled, greedy, self indulgent, I'm alright Jack, boomers?

[MarkG]

I've actually noticed a few other examples of this kind of ethical/equitable business practice lately... and what's the one thing that all the CEO's and business owners doing this have in common? They're all relatively young and would be classed as being post boomer generation.

Yes. In other words, they're clueless.

I mean, surely no-one could have predicted that, when they raised the salaries of the least productive employees to $70,000 a year, those who had previously been on higher salaries than that would get pissed off and quit?

Well, only if they had a clue about the real world, anyway.

Edited August 4, 2015 by MarkG

[19 year mortgage 8itch]

Yes. In other words, they're clueless.

I mean, surely no-one could have predicted that, when they raised the salaries of the least productive employees to $70,000 a year, those who had previously been on higher salaries than that would get pissed off and quit?

Well, only if they had a clue about the real world, anyway.

See, even MarkG is a statist at heart.

[erat_forte]

Every day he and his four brothers and one sister rose as early as 5 a.m. to recite a proverb, a psalm, a Gospel chapter and an excerpt from the Old and New Testaments. Home-schooled until he was 12 and taught to accept the Bible as the literal truth

So no psychological issues from childhood, a balanced upbringing... the explanation must lie elsewhere.

[Killer Bunny]

Hasn't this company gone bust?

[cool_hand]

Does this make sense? It is a serious question.

Hypothetically:

I studied for seven years. I have a degree in "whatever". My contribution to the business generates $XXX,XXX and yet the receptionist straight out of high-school earns the same as me. Where's the incentive?

I do think we have extremes in this country, that should be addressed.

[eztiger]

From what I've read he's screwed himself and his company.

From what I remember:

1. Two of his most valuable staff members left after working their backsides off just to see the post boy end up on an equivilent salary in the future.

2. He fell out with local technology CEO's as they felt they were being shown up by him.

3. Existing contracts were lost due to not believing that fees would not increase / business not being run properly.

I think theres more but I cant remember, If you trawl through Zero Hedge posts for last month you should find it.

Edited August 5, 2015 by eztiger

[19 year mortgage 8itch]

The politics of envy, now coming at you from the right!

[Venger]

See, even MarkG is a statist at heart.

The politics of envy, now coming at you from the right!

I don't understand. (?)

[ccc]

If he is just raising the lower salaries and doing nothing with the upper - then that sounds a bit nuts. If however he is raising the lower - and also the higher - but at a lesser % - then that sounds a bit more logical (Well in theory anyway)

[19 year mortgage 8itch]

I don't understand. (?)

This man is making a free choice to pay his employees at least an amount of money that is statistically shown to increase those people happiness. And in response, the posters here are telling him what to do and complaining they are worth more.

If you have kids (and god forbid some of these people ever pro-create) do you favour the smart successful ones? Are they "worth more"? Do you ignore the slightly dim and less successful ones?

[Venger]

This man is making a free choice to pay his employees at least an amount of money that is statistically shown to increase those people happiness. And in response, the posters here are telling him what to do and complaining they are worth more.

If you have kids (and god forbid some of these people ever pro-create) do you favour the smart successful ones? Are they "worth more"? Do you ignore the slightly dim and less successful ones?

It cause a whole lot of chaos in just one company though.

At the mid-level, would you want the 9-5 warehouse man to be paid nearly as much as someone who had put in the hard slog to get business up and running, lots of qualifications they've studied hard for, doing unpaid overtime to advance the company... work ethic and whatever other value enhancing qualities they bring to the firm - the good salesman who brings in loads of new accounts.

You might end up with that warehouse man outbidding you on rent/house. Also it's never enough (imo). Pushed out so that most companies feel obligated to do it, the $70K is the new low that's statistically not possible to increase people's happiness. It goes on to push up other prices, I suspect. It's just a temporary fix imo.

[...] Do we propose a workplace where all workers are paid equally, in defiance of their mastery of ability and value to the company?

[19 year mortgage 8itch]

It cause a whole lot of chaos in just one company though.

At the mid-level, would you want the 9-5 warehouse man to be paid nearly as much as someone who had put in the hard slog to get business up and running, lots of qualifications they've studied hard for, doing unpaid overtime to advance the company... work ethic and whatever other value enhancing qualities they bring to the firm - the good salesman who brings in loads of new accounts.

You might end up with that warehouse man outbidding you on rent/house. Also it's never enough (imo). Pushed out so that most companies feel obligated to do it, the $70K is the new low that's statistically not possible to increase people's happiness. It goes on to push up other prices, I suspect. It's just a temporary fix imo.

Even I understand the land aspect as noted by other posters. If everyone did it, it would fail but clearly there's no chance of any significant numbers following Dan's lead.

and in the mean time it draws attention to the fac tthat employees are people and people being happy is not a bad thing.

[...] Do we propose a workplace where all workers are paid equally, in defiance of their mastery of ability and value to the company?

Is that what he has proposed? Is that what he is doing?

Edited August 5, 2015 by 25 year mortgage 8itch

[StainlessSteelCat]

It seems a perfectly reasonable initiative to me. It's a minimum salary of $70K - not presumably a maximum. He's determined that number from studies which that show that it's necessary to lead a fulfilled life without worrying about money all of the time.

It's quite similar to Henry Ford's approach. He'll now have the pick of the best frontline staff as he's likely paying much better than other employers in the area as well as reducing turnover. And even for better paid staff, he's more likely going to recruit people who are more aligned with his ethics/vision. Providing he can make it work from a business perspective it strikes me as win win.

It has always struck me as odd that to make bosses work harder you apparently pay them more, but they then advocate the reverse philosophy with regards to frontline workers.

Edited August 5, 2015 by StainlessSteelCat

[ccc]

I can see a version of his plan working very well. Your 'lower' level staff get a big wage increase and a nice basic salary that most will be very happy with. The 'higher' level management staff - salespeople etc.. get perhaps a small increase or nothing at all - but a much improved incentive scheme that rewards their performance/sales etc..

The good and ambitious 'higher' level staff will see that as a challenge and go for it. They wont give a shit what the back door fork lift driver is getting. The pish 'higher' level ones - will get annoyed by it and probably leave.

Win win.

(Of course you will always get your bullshitters who will sneak their way along without doing much at all - but thats always going to happen)

[interestrateripoff]

The "Robin Hood" CEO Who Famously Raised His Employees' Minimum Wage To $70,000 Has A Dirty Secret

It appears that the "Robin Hood" CEO who famously raised the minimum wage of his employees to $70,000 while cutting his own $1.1 salary, lauded by progressives, praised by the media, and adored by "wealth egalitarians" everywhere, may have been nothing but a con man.

[billybong]

Does this make sense? It is a serious question.

Hypothetically:

I studied for seven years. I have a degree in "whatever". My contribution to the business generates $XXX,XXX and yet the receptionist straight out of high-school earns the same as me. Where's the incentive?

I do think we have extremes in this country, that should be addressed.

If it's a technical job then that exact situation isn't something new. It's been like that since records began in the UK. Where's the incentive - there isn't any.

Edited December 2, 2015 by billybong

[billybong]

Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19,..

Financial sector.

When it happens in UK technical, science and engineering companies (nail bars aside) then it'll be worth a headline. Don't hold your breath.

Well done to him of course for doing well. He's benefiting from the White Heat of Banking. Everyone should be in the financial sector.

Edited December 2, 2015 by billybong

[wonderpup]

Does this make sense? It is a serious question.

Hypothetically:

I studied for seven years. I have a degree in "whatever". My contribution to the business generates $XXX,XXX and yet the receptionist straight out of high-school earns the same as me. Where's the incentive?

Well- assuming that the receptionist performs a vital function to the company- otherwise her job would not exist- it must be true to say that without her the company would fail and your contribution to that company would be zero since it would not exist.

So on a purely functional level it's not really possible to argue that your contribution is worth more than hers since both are required to make the company succeed. In that sense your value is the same as her value.

Using a mechanical analogy is it really possible to argue that the smallest cogs in a gearbox add less value than the larger ones to the operation of the gears?

Of course it's not really that simple because assuming you have a skillset that is harder to replace than that receptionist it makes sense to pay you more in order to retain those skills. So it's not your contribution that matters, it's how hard you might be to replace.

If for some reason your skillset became easily available or even replaceable via technology then your market value would fall, even though your contribution would not have altered.