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

#1
volmanbill

volmanbill

The future is bright
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#1
Kudos to the owner.

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.
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http://www.nytimes.com/2015/04/14/b...ing-a-new-minimum-wage-70000-a-year.html?_r=0
 
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#2
#2
The big issue that I see for him is that he will have to increase everyone else's salary proportionately. Otherwise his office manager (that's totally a generic title btw, as I have no clue what that business does), who has an MBA and makes $120k, won't be too happy seeing the lady that answers the phones go from $33k to $70k overnight while he gets no raise.
 
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#3
#3
I mean don't get me wrong… I totally respect the unselfishness by the owner. I just simply don't think it's a smart business move to let the higher paid 40% of your staff (generally harder to replace) watch the lower paid 60% get a 200% increase in pay while they all get no raise because they make over the arbitrary limit that he read in some magazine.
 
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#4
#4
Cdywolfe said:
I mean don't get me wrong… I totally respect the unselfishness by the owner. I just simply don't think it's a smart business move to let the higher paid 40% of your staff (generally harder to replace) watch the lower paid 60% get a 200% increase in pay while they all get no raise because they make over the arbitrary limit that he read in some magazine.
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The real unemployment rate is probably around 25-30%. I think there will be enough candidates that would fill those spots from off the streets.
 
#6
#6
Cdywolfe said:
The big issue that I see for him is that he will have to increase everyone else's salary proportionately. Otherwise his office manager (that's totally a generic title btw, as I have no clue what that business does), who has an MBA and makes $120k, won't be too happy seeing the lady that answers the phones go from $33k to $70k overnight while he gets no raise.
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Not if the $120,000 is what they are worth in the open market. If you are paid fairly why would you care if someone who makes less then you got a big raise.
 
#7
#7
Cdywolfe said:
The big issue that I see for him is that he will have to increase everyone else's salary proportionately. Otherwise his office manager (that's totally a generic title btw, as I have no clue what that business does), who has an MBA and makes $120k, won't be too happy seeing the lady that answers the phones go from $33k to $70k overnight while he gets no raise.
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Not if the $120,000 is what they are worth in the open market. If you are paid fairly why would you care if someone who makes less then you got a big raise?
 
#8
#8
It can work on this scale. Problem comes when people think it should become the standard (Like all the $15 min wage nonsense) and we end up in the exact same place
 
#9
#9
The CEO is a wunderkind who started the business at 19 and has made it into a multi-million dollar company. He dropped his own compensation as well and I'm sure if he thinks his company can afford it, then it will okay for him.
 
#10
#10
Cdywolfe said:
The big issue that I see for him is that he will have to increase everyone else's salary proportionately. Otherwise his office manager (that's totally a generic title btw, as I have no clue what that business does), who has an MBA and makes $120k, won't be too happy seeing the lady that answers the phones go from $33k to $70k overnight while he gets no raise.
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Not going to be overnight. Plan is to get everyone in the company at 70k by 2017 I believe is what the article said. 5k a year in raises.

Extreme kudos for this guy. Now the pay off for him is getting good employees coming in. When a position opens up there will be tons of candidates applying for the position. He gets a larger pool to choose from. This also means his employees are way less likely to churn on him. Another win.
 
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#11
#11
YorkVol said:
The CEO is a wunderkind who started the business at 19 and has made it into a multi-million dollar company. He dropped his own compensation as well and I'm sure if he thinks his company can afford it, then it will okay for him.
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Is he really dropping his compensation down to 70k? Warren Buffet claims that his "salary" is 100 grand, but we all know he's worth billions and can buy a planet if the mood strikes him.
 
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#13
#13
MG1968 said:
Is he really dropping his compensation down to 70k? Warren Buffet claims that his "salary" is 100 grand, but we all know he's worth billions and can buy a planet if the mood strikes him.
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True, he owns the company so his net worth is a lot more than his employees, so the gesture is symbolic at best. Certainly not like Gwynth Paltrow living on $29 a week.
 
#14
#14
utvolpj said:
It can work on this scale. Problem comes when people think it should become the standard (Like all the $15 min wage nonsense) and we end up in the exact same place
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It can also work better for private companies since they can shift resources where they want. A publicly traded company would get a lot of heat from share holders if they lost dividends due to a wholesale pay increase.
 
#15
#15
volfanhill said:
Not if the $120,000 is what they are worth in the open market. If you are paid fairly why would you care if someone who makes less then you got a big raise?
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You're paying $70k to people that aren't worth it though. If a person is already making $75k what is their raise gonna be? Nothing? 3% vs 200%? It's just a publicity stunt and the company will fold or he'll start slashing jobs in 3 years.
 
#16
#16
This guy is obviously a smart businessman. Maybe he's figured out a way to make it work. I don't know.

With that said… I feel like it's really naïve to think the people that are making in the $70k to $120k range aren't rolling their eyes at this. The article said that there is 120 employees, 70 of which got a raise. That means that 50 employees didn't. Keep in mind that these 50, with a few possible exceptions, are certainly his most important and qualified employees.

If you're one of those 50 are you not a little (or even a lot) irritated that as the boss was handing out insane and undeserved raises, you got overlooked?

Now let's say next week when an opportunity presents itself at another company. Let's say it's a lateral move or even one that's a little better but you probably would've passed on due to loyalty before. Maybe you give a better look now.
 
#17
#17
Bigurnge said:
You're paying $70k to people that aren't worth it though. If a person is already making $75k what is their raise gonna be? Nothing? 3% vs 200%? It's just a publicity stunt and the company will fold or he'll start slashing jobs in 3 years.
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Hm making that decision tells me he believes his employees are worth it.
 
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#18
#18
Bigurnge said:
You're paying $70k to people that aren't worth it though. If a person is already making $75k what is their raise gonna be? Nothing? 3% vs 200%? It's just a publicity stunt and the company will fold or he'll start slashing jobs in 3 years.
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I don't know know if the company will fold but he, no doubt, made a move that slighted 40% of his employees. 40% that, most likely, keep the wheels turning.
 
#20
#20
hog88 said:
Or wanted to make some sort of social statement. Either way it's his company to do as he pleases.
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He flat out said this was him taking a stand against CEO pay and income inequality. Then went on to say that he has friends struggling at lower incomes and didn't want this for his employees. So I'd say it's a good combinsaiton of both.
 
#21
#21
TNsnyper20 said:
He flat out said this was him taking a stand against CEO pay and income inequality. Then went on to say that he has friends struggling at lower incomes and didn't want this for his employees. So I'd say it's a good combinsaiton of both.
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Good for him. Refreshing to see someone put their money where their mouth is.
 
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#23
#23
"Planned" is a pretty noncommittal expression. I once sat in an all hands meeting where the office manager told us that he "planned" on doubling our number of employees over the upcoming year. Two weeks later 80% of the office was laid off. The great Oracle seemed to have made an error somewhere in his calculations.
 
#24
#24
Cdywolfe said:
I don't know know if the company will fold but he, no doubt, made a move that slighted 40% of his employees. 40% that, most likely, keep the wheels turning.
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It's a privately owned company. There's no way any publicly traded company would do this. They won't take any hit on profits and if the CEO of a publicly traded company did this he would be unemployed.
 
#25
#25
Cdywolfe said:
This guy is obviously a smart businessman. Maybe he's figured out a way to make it work. I don't know.

With that said… I feel like it's really naïve to think the people that are making in the $70k to $120k range aren't rolling their eyes at this. The article said that there is 120 employees, 70 of which got a raise. That means that 50 employees didn't. Keep in mind that these 50, with a few possible exceptions, are certainly his most important and qualified employees.

If you're one of those 50 are you not a little (or even a lot) irritated that as the boss was handing out insane and undeserved raises, you got overlooked?

Now let's say next week when an opportunity presents itself at another company. Let's say it's a lateral move or even one that's a little better but you probably would've passed on due to loyalty before. Maybe you give a better look now.
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They're small. Maybe they're a tight-knit group. This doesn't seem like the average "oh no it's Monday"-type team. Maybe those 50 are happy for the other 70. Maybe those 50 were in on the whole thing. If I'm making $120K/year, and my secretary gets a raise to $70K...good for her. It's none of my business.

Maybe it IS a publicity stunt. I'd guess, based on the fact is moving slow as molasses right now, that it's working.

But I'll give them the benefit-of-the-doubt and say kudos to this owner, kudos to the associates who LOVE this, and aren't going to squabble and ruin it for everyone. I hope it all works out.
 
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