Dan Price, founder and CEO of credit card payment processing company Gravity Payments, decided to introduce a new minimum wage of $70,000 (£47,000) while reducing his own by 90 per cent.
Admirable, but, he will be going up against market forces beyond his control, if I may be so bold. I don't know anything about running a company. But... What do you think investors are going to do when the profits are not as handsomely commensurate with the rewards exacted from the company?
Any chance this company will succeed?
20 comments:
I have to assume they couldn't find employees worth $70K, so they just made from what they had.
Now if you are a highly qualified employee who worked your ass of to get to $70K, and one day the laziest guy in the company gets the same salary just because, then I'm gonna guess you are gonna be the new disgruntled underpaid employee, and you are right. So he changed the underpaid from those not earning their pay to those who do. Nice work.
We'll find out it is a house of cards that gets all its business from the fed govt maybe processing student loan payments.
wv= aclog = what I'll probably die from
Well, think about it. This kind of industry has a shit ton of turn over, so hiring, rehiring, retraining people costs a lot more than the $48k initial investment, but at $70k, you may see way more retention and that money across a 150 person company may recoup those costs quickly. Not to mention it's a three year phase in for the raise, not overnight. The company gets good press, the industry will see this as an experiment, and the market may or may not respond in kind and this move, might prime him for selling the company for larger profits on the back end. I'm not seeing this as a losing maneuver. No one is forcing him to do it.
I recently had a big problem with an employee.
I hired her because of her expertise in bra fitting offering her a big raise from what she was making before. She worked with us in the planning of our new store and we bought a bunch of stuff on her recommendation and her statement that she could sell them easily. The we went to the Curve lingerie show and she met her old boss and gave us her notice.
So I sent her the W-2 and she just contacted me to complain that she did not get paid overtime. She never mentioned that when I paid her every week when I gave her a pay stub. I have never paid overtime before. I would have sent her home before paying time and a half. I think I could fight this. But she is threatening me that she is going to put in a complaint to the Dept of Labor. If that happens I am going to lose for sure. They always rule for the employee. They even allowed unemployment benefits to someone who I proved was working off the books for someone else. As an employer you can not win.
It is one of the many reasons that so many people close their businesses. The government will do what ever they can to destroy you. Your employees will screw you over.
Word.
I hired a clerk who occasionally ran things to court for filing. He was pulled over on one such trip for driving like a lunatic and the cop smelled drugs and then, surprise!, found drugs in his car and carted his skinny ass off to jail. Of course I fired him. He claimed unemployment bens. Granted. I appealed.
Guess who won? (Hint: Not me.)
I was very young at the time.
How much is the overtime she's claiming? Is it worth fighting over? And by "worth," you should consider the costs of litigating.
In retrospect, I probably should have paid him $70,000.00 since this never would have happened if I had. Oh, wait, yes it would have and he would have been able to claim a lot more benefits.
I'm willing to wait and see how this all works out for Dan Price. Maybe he's got a better class of employee.
Whatever you set your minimum pay at is by definition the lowest pay, and that means whoever is close to that will feel underappreciated and want a raise. It almost does not matter what that salary is. You are making it the bottom, and nobody is satisfied with that, especially good people with skills.
Do they really pay the janitor, the receptionist, or new people learning basic skills $70K?
Admirable, but, he will be going up against market forces beyond his control, if I may be so bold.
Not sure if it's bold but I'm reasonably certain it's not the case. Today's "market forces" shunt as much compensation as possible into equity/stock, and away from salary. Some prominent CEOs have even reduced their salaried compensation to a symbolic $1, especially when the issue was turning the company around, as it is here.
What makes this case different was the willingness to equalize CEO and average employee pay. It made an additional statement beyond what those other examples have done.
Now if you are a highly qualified employee who worked your ass of to get to $70K, and one day the laziest guy in the company gets the same salary just because, then I'm gonna guess you are gonna be the new disgruntled underpaid employee, and you are right. So he changed the underpaid from those not earning their pay to those who do. Nice work.
It's possible you're more familiar with lazy employees than this guy is. Or maybe you're just worse at inspiring them. Do you have a company motto? People who are passionate and believe in it as much as you do, if you do? These things matter in a society with a 3-second attention span, where creativity matters more than ever. Whatever the case is, this guy's company grew really fast and is still not all that big - that sort of growth velocity is bound to create the excitement that generates passionate, loyal employees. But you could always hire a motivational speaker if that sort of thing is new to you. Lol.
I know that if the first few companies I worked for started at $70K, I would never have gotten my start, which means I would never have hired the 1200+ people I have over the years. That from a college dropout in a poor family from a severely depressed town.
If he can pay that to everyone, then his company is not helping people who need help. He is hiring people who already have all the advantages you could hope for short of marrying a future President.
Either it's not really true of all employees, or he is just farming out the dirty low-paying work and keeping his hands clean, which is fine, but a little deceptive in the narrative.
I'm sorry dudes...
He's got freaking HIGHLIGHTS in his hair.
Giving up a whole bunch of money when you were born with more than you need is not a sacrifice. I'd put money on a bet that he's not even going to have to give up his hairdresser or grooming products.
He gave up a million dollar salary and, in return, received millions of dollars worth of publicity. Now everyone has heard of his company, and it's more than possible that there are some customers who will want to buy from such a personable, idealistic young man. My level of cynicism is such that I think this might be a genius marketing move........Henry Ford gave his employees the highest possible wages. During the Depression, his plants had the most bitter and violent strikes.
He's not going to give up the eyebrow waxing either. That fellow was born with a unibrow and you know it.
He might possibly do his own suggestively scruffy shadow beard.
See, I would take more pride in providing two $35K jobs or even three $24K jobs than one $70K job. The people willing to work for those kind of wages are the ones who 1) most need jobs, 2) have the fewest options, 3) will be forced to use social services and tax dollars if not hired.
Giving a fancy job to a gamer with an ivy league degree and a trust fund is just not what inspires me.
Don't you think if he was better at inspiring people, he wouldn't have to buy them off, and could employ more people instead?
Synova is the threadwinner so far.
Great points, Bagoh. As for Dan Price, his new payroll (once the pay raises are implemented) will reportedly be 300% greater than the company's profits (currently $2.2 mil). Publicity stunt?
Why not set up a profit sharing plan for the employees?
See, I would take more pride in providing two $35K jobs or even three $24K jobs than one $70K job.
By that goofy logic, you'd also prefer offering six $12k jobs. Or twelve $6k jobs. Or sixty $1k jobs.
Or an infinite number of slave labor offerings.
There is an edge of reality against which your more-labor-at-any-price philosophy juts up, and massively fails: The fact that we've normalized work compensated far below any decent standard of living.
If you're ok with that, and if you think substandard compensation is no problem - or at least less of a problem than insufficiently "motivated" employment (that's nonetheless able to at least feed, clothe, shelter and care for itself), then you at least have to define a point at which substandard compensation norms are a problem. Because these days, even GOP candidates take that seriously.
Of course, they're insane, desperate and malevolent. But they're not politically retarded.
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