What's the lesson from this story?

[ivwshane]

My takeaway from this story is that internal HR and payroll decisions shouldn't be advertised to the world for publicity.

The change in policy would have been disseminated organically and soon enough. The manner in which it was announced probably wasn't the best in hindsight.

Too early to tell how wise a move this was business wise and financially speaking. $70,000 really isn't that much if you want to attract talent and experience in the Seattle and Eastside area anyway.

Being a cynical jerk I can't help but suspect he realized $70,000 was the minimum he needed to pay for the talent required and chose to go after some feel good PR at the same time.

Good points as well but just a small correction. He came up with the $70k figure based on studies that showed that was the pay that most people say they could live comfortably on. He also went public with this stunt specifically for the PR. It's hard to say for sure but based on the reporting it appears to have worked.

 

[ivwshane]

Well said.

I think we have a lot of current issues that face the same dilemma where it is very easy to hold up the "this is what is wrong" flag but it stops there, no constructive realistic offerings to replace it or to improve it. As Dank just did with the post above.

I do wonder.. in this world of equal pay for everyone what percentage of people say I want to be a doctor/plumber/lawyer/etc and then how many say, aw screw it for the same pay I'll just be a paperboy since it gets me home to the Xbox faster?

Are we counting 100% on passions for people to occupy these careers under this perceived utopia? Or does it eventually get assigned by the people in control?

If we are going to dive into fantasy scenarios (I have no problem with that) then I think that is a very valid question.

What would the future hold if people were paid equally? At that point would there even be a need for monetary compensation? I'd imagine that if money didn't matter and people focused on what they enjoyed, would there be people to do the jobs we currently think are undesirable or would those jobs simply be done by robots?

It's fun to think about but I'm unable to come up with answers or solutions to the problems that might arise.

 

[ivwshane]

I think you are confused on what the issue is about. It's not about wealth inequality, it's about the wealth gap.

This particular story isn't about either. It's about a business owner wanting to take care of his employees and the blowback he's received for doing that and doing it in public.

He wasn’t thinking about the current political clamor over low wages or the growing gap between rich and poor, he said. He was just thinking of the 120 people who worked for him and, let’s be honest, a bit of free publicity.

Versus what? Please specifically define "inequality", define "equality". How much time various workers spend dedicated to the job, how many hours they devote, how much studying they do on their off time, how committed they are to seeing the business succeed, how capable they are of helping the business succeed, helping the business grow larger, how much liability they take on if a problem arises, these all are a part of the equality equation.

It's very simple to decry "inequality" without actually discussing what it specifically is.

Have you ever gone through the process of starting up a business? Developed a product? Taken it to the marketplace? Taken on the responsibility of servicing the product?



And, there are some great examples of well run countries around the world. Germany has a high standard of living. Except they provide extra wealth for their citizens by sucking the wealth away from the rest of the Eurozone, the more countries like Greece, Spain, & Italy struggle to provide basic standards of living for their citizens, the Euro gets devalued, and because of that Germany's export market benefits greatly.

It also is the culture of Germany that has made them unique to stand out. They are a very obedient society, and they are very dedicated to knowledge and skill. They take far more pride in their work and their quality than almost any other nation in the world. They are generational - if your parents work the same line of work their whole lives, and you learn from them their knowledge, and carry on in the same line your entire life, you have such a better foundation for outperforming others in the same field. It's not coincidence that these traits have helped propel Germany.

Or take the Scandinavian countries who have bountiful oil resources spread across a small population. Same with Canada.



Many point to the worker conditions of Europe, the other side of the equation is their citizens learned not by choice to live frugal lives. WWII devastated the continent, all over citizens were poor, infrastructure was destroyed, resources were very limited. A lot of the success nations have experienced recently, has been a direct result of the population learning through force to live a cheap life, live an efficient life, that has carried over through today.

Bottom line, the issue of worker equality is far more complex than simply believing hard enough for good things and electing smart Democrats everywhere.

 

[ivwshane]

Bullshit. The left thinks income inequality is a good idea also, they just want the right to fine tune the levels of it to their exact preference.

When one of them pulls down a $150k salary in their 40s after grad school, that's a sign of their merit and completely justified. When someone else makes $150MM from the sale of their business for which they sacrificed their time and lifestyle for decades, that's a sign of someone who screwed the poor and completely unjustified. Doesn't matter that the same guy might have been the one who paid the leftist the $150k while they drew a $15k salary for themselves.

I don't know if could say the left thinks it's a good thing. The left, like most Americans see income inequality as a given, their issue, as you have stated, is the size of the gap.

With regards to the rest of your post, I have no idea what your point is or where or how you came up with that crap. I suspect you sleep with a light on, afraid of left leaning boogeymen.

 

[ivwshane]

1)When has pay ever been linked to harder work? (see farm hands) It's about responsibility and accountability. Mail room guy puts the wrong letter in the wrong mailbox it still finds its intended receiver. IT guy doesn't do a backup and the company loses millions in lost time guess which one isn't making $70K anymore.

2) Some people feel this way no matter what their pay, some people try to find every way out of work they possibly can.

3) If the prices do go up they can find another company, hopefully they are more driven by a better product than just cost.

4) Welcome to capitalist competition, what about companies that don't offshore to slave labor compared to companies that build quality products with US labor. Everyone gets to pick and choose what is fair and what isn't.

5) Deserves got nothin' to do with it

6) IMHO it'll just be a trend that comes and goes. I don't think it's sustainable for every company to do anyway.

I appreciate the response but I was merely summerizing the main contentions people in the story brought up. Your response mirrors my own feelings which really boils down to people just being illogical.

 

[ivwshane]

It is really a tortured argument. He believes we shouldnt care what others make. But then turns around and will scream income inequality. lol what?

Further, what he believes is a race to the top is actually a race to the bottom. Instead of people being paid for their talents. They now get paid the talentless rate. How many will venture into becoming talented if there is no payoff compared to the talentless? So while 70k sounds nice today. In 30 years we are all making 70k with little to no reason to increase our skill sets. That is a race to the bottom.

Lol! Your posts are normally more rational and based on arguements actually made, this one seems rather lazy by comparison.

 

[ivwshane]

You post this and yet will turn around and complain about "income inequality" in your next post and will advocate for aggressive government measures to address it. Including increased taxes on those who you say should feel self-validation from just a job well done.

Whatever you have to tell yourself to maintain your bubble

 

[ivwshane]

And who are you to tell me how I should or shouldn't feel validated?

And what are you 8 years old to believe we should feel validated by meeting our bosses expectations? lol! I am sure management would love to get the working public to buy into that.

Anyways, if you feel this strongly why dont you offer to take a pay cut to match people below you with a lesser skillset. After all, what you get paid shouldnt have anything to do with how your feel validated within your position. Am I right?

Woosh!! I guess because I used the word "your" you felt attacked an were therefore incapable of understanding the point being made.

You Genx87 can feel and do whatever the fuck you want but know that just because you do that doesn't make what you do logical

 

[realibrad]

Did I say that? No I didn't.

So let's ignore that straw man and you'll see that your post says the exact same thing I said.

Its not a straw man. Your statement was that a company should both. The post you responded two is one where I said that there is a trade-off between wages and investment. If you have X amount of revenue, you can either spend it on wages, investment, or any mixture of the two. If you put all of your revenue toward wages, you capital investment has to be zero, or vice versa. Your response was that with the recent profits companies have been making, they should do both.

You did not explicitly say that the firms should do both at max, but that is the implication you made by responding the way you did. Its not a straw man by me. If you made a mistake in what you said fine, we are not perfect.

If I say there are trade-offs between wages and investment, and you respond with "I don't see why they couldn't do both, pay well and hire more people or equipment if needed." it seems to imply you are disagreeing with me. If you thought your statement was agreeing with me, then you did it in a way that is not clear to me.

 

[soulcougher73]

That the business owner has zero competition - if he did the price premium would put him out of business and all those employees out of work.

Individual choice is separate from government mandate, as someone will always cut costs without a floor set by mandate.
This is not equivalent to setting a minimum wage.

That's not a given though. If he cut his salary enough to offset everything he could keep prices just as they have been.

 

[Darwin333]

How are you not in a production environment?

Employee A refinances 100 homes for his mortgage bank a month

Employee B refinances 50 homes for his mortgage bank a month

= same pay?

The employer made twice the money off of Employee A's efforts. Should that not dictate compensation that reflects your contribution to the overall business? If not, wouldn't the natural inclination of the employee then be of less performance since its apparently acceptable at that wage?

If I'm employee A and I was making $50K a year, as was my market rate, and I got a $20K a year raise I would definitely try my hardest to increase my productivity.

What's the motivation? For one my boss just gave me a huge raise. Secondly, there are thousands of people who would love my job making $20K a year over their market value as well. Lastly I don't base my own performance on other peoples pay nor does their pay motivate me or demotivate me, mine does. Up until I became a business owner I've never known what most of my coworkers made. Do you think I was less motivated to make more money because I didn't know how much the guy next to me made?

 

[TheSlamma]

If we are going to dive into fantasy scenarios (I have no problem with that) then I think that is a very valid question.

What would the future hold if people were paid equally? At that point would there even be a need for monetary compensation? I'd imagine that if money didn't matter and people focused on what they enjoyed, would there be people to do the jobs we currently think are undesirable or would those jobs simply be done by robots?

It's fun to think about but I'm unable to come up with answers or solutions to the problems that might arise.

I agree with the monetary part, and I think the passionate fields would take care of themselves, even the 9-5 clock in and clock out and don't think about it when you go home jobs would probably get taken care of.

What I think we would see is no one wanting to work for Wastewater management for example. Ever been in one of those plants? My god Jim, it's dookie times 1 zillion, I wasn't even able to be in there with a respirator and my gag reflex simply could not stop, I don't know how much the guys that work there being paid but they were underpaid no matter what it was.

 

[sm625]

It is a horrible decision and its going to cost him the entire business.

 

[Darwin333]

That's not a given though. If he cut his salary enough to offset everything he could keep prices just as they have been.

He cut his salary from $1M a year to $70K a year like everyone else who works for him.

He has also stated publicly, in quite a few articles that he was not raising prices on his customers. OTOH he also stated that he had "no margin of error" and he obviously isn't as liquid as he was before to pump money into the company due to his severe decrease in pay. That's a really nervous position for a company to be in.

 

[jackstar7]

My takeaway is that people whose primary concern is about "income inequality" make for shitty business owners in real life.

Is business prosperity a measure of societal success?

Is citizen prosperity also such a measure?

It seems based on all recorded history that the two cannot co-exist without a very careful balance.

 

[Atreus21]

Some of you may have heard about this but this is the first update I've heard.

A quick recap of the original story is this: Business owner cuts his own pay and makes the minimum wage of all his employees. $70k.

http://mobile.nytimes.com/2015/08/0...nst-the-raise-that-roared.html?_r=0&referrer=

From an economics perspective there isn't much to be learned yet so my question is more to do with human nature rather than political or economic policy.

My personal take away is that people are stupidly selfish, that is, there selfishness causes them to do stupid shit.

The complaints about the minimum pay are;

1) Some people feel those that don't work as hard shouldn't be paid as well.
2) People feel pressured to work harder.
3) Clients are worried about price increases despite being told there wouldn't be any.
4) Other business owners are concerned about how it's going to impact their business (as in employer/employee relationship).
5) They don't deserve it.
6) It's inspired other business owners to do something similar.

I'll let others respond before I give my feelings on the six points.

If a business owner wants to pay people $70 grand a year from his own pocket, that's rightly his call. If he values everyone's pay that highly, then great. The man puts his money where his mouth is, and that's courageous.

Arguments against a national minimum wage have much more merit than criticizing a business owners decision about employee compensation.

 

[realibrad]

Is business prosperity a measure of societal success?

Is citizen prosperity also such a measure?

It seems based on all recorded history that the two cannot co-exist without a very careful balance.

Why would a business being prosperous take away from citizen prosperity?

 

[jackstar7]

Why would a business being prosperous take away from citizen prosperity?

Why would it? Or why does it?

 

[realibrad]

Why would it? Or why does it?

I used the word" why" to establish it was a question based on a hypothetical. Do you need another English lesson before you answer the question?

 

[cubby1223]

Is business prosperity a measure of societal success?

Is citizen prosperity also such a measure?

It seems based on all recorded history that the two cannot co-exist without a very careful balance.

Define "prosperity".

If by "prosperous" you mean citizens are content living off the land growing their own crops, building their own tools, building their own shacks, sewing their own clothes, etc., then yes, citizens can be prosperous without business prosperity.

You may be stuck in a shit job, but at least you also get to benefit from everyone else who also has a shit job. You have a nearby grocery store that supplies you with food. You have indoor plumbing providing drinkable water straight to your faucet. You have cell phones that provide you communication to anyone you want. You have television programming that provide you with entertainment beamed directly to you. You have cars and airplanes that allow you to meet with anyone you want relatively easily.

That has all been made possible by flourishing businesses. The only issue is your own perspective. You can either choose to feel prosperous by what you have, or choose to not feel prosperous because of what someone else has. It all comes down to what you define as being "prosperous".

 

[jackstar7]

I used the word" why" to establish it was a question based on a hypothetical. Do you need another English lesson before you answer the question?

I'll take all the English lessons you have. Better to know how you approach things, than state my thoughts and opinions and have nothing productive come of it.

Your shit attitude speaks volumes though, so that's a good place to start.

 

[ivwshane]

If a business owner wants to pay people $70 grand a year from his own pocket, that's rightly his call. If he values everyone's pay that highly, then great. The man puts his money where his mouth is, and that's courageous.

Arguments against a national minimum wage have much more merit than criticizing a business owners decision about employee compensation.

I agree!

 

[jackstar7]

Define "prosperity".

If by "prosperous" you mean citizens are content living off the land growing their own crops, building their own tools, building their own shacks, sewing their own clothes, etc., then yes, citizens can be prosperous without business prosperity.

You may be stuck in a shit job, but at least you also get to benefit from everyone else who also has a shit job. You have a nearby grocery store that supplies you with food. You have indoor plumbing providing drinkable water straight to your faucet. You have cell phones that provide you communication to anyone you want. You have television programming that provide you with entertainment beamed directly to you. You have cars and airplanes that allow you to meet with anyone you want relatively easily.

That has all been made possible by flourishing businesses. The only issue is your own perspective. You can either choose to feel prosperous by what you have, or choose to not feel prosperous because of what someone else has. It all comes down to what you define as being "prosperous".

Clearly I stated things awkwardly in relation to my point.

If the aim of a business is to extract the maximum profit from the minimum of resources, then there must be a balance between those goals and the goal of a prosperous citizenry (with their own level of comfort). One source of conflict is that a primary motivator of people is fear, and this is exploited to achieve greater profit.

 

[realibrad]

I'll take all the English lessons you have. Better to know how you approach things, than state my thoughts and opinions and have nothing productive come of it.

Your shit attitude speaks volumes though, so that's a good place to start.

And yet still no explanation.

 

[realibrad]

Clearly I stated things awkwardly in relation to my point.

If the aim of a business is to extract the maximum profit from the minimum of resources,...

So you are saying that efficient allocation of resources can be a bad thing? That would throw economics into a tailspin.

...then there must be a balance between those goals and the goal of a prosperous citizenry (with their own level of comfort). One source of conflict is that a primary motivator of people is fear, and this is exploited to achieve greater profit.

All you have done is say that different things can lead to profit. Not every cause of profit is negative, and thus profit is not the problem. What you have done is put the blame on outcome (profit) when in reality its the cause (fear). I still do not see an answer to my question.