> he has sold all his stocks, emptied his retirement accounts, and mortgaged his two properties -- including a $1.2 million home with a view of Puget Sound<p>Maybe I'm missing something, but how is a $1.2m mortgage affordable on $70k/year? Did he not remortgage the whole value of the house?
I suspect that the real reason for the raises is the dispute with his brother: by paying profit out to employees, he doesn't have to pay it as dividends to his brother.
Wages are subject to the law of supply and demand, just like every other aspect of economic life. Since the CEO seems to be paying well above the going market rate, I doubt that this is sustainable for the long run. Yes, he's partially compensated for the imbalance by cutting his own pay, but it won't be enough. Also, the rapid growth of the company will also buy him some time, but that can't go on forever.
The article's author seems to know little about capitalist economics beyond the conventional wisdom, most of which is wrong or non-essential.
And if Rush Limbaugh did in fact call the CEO a socialist, then Rush Limbaugh doesn't understand what socialism is.
Having said all this, I would still like to see this company succeed, just like Henry Ford did many years ago with a similar tactic.
This <i>is</i> socialism. Paying wages that are 50k over the market creates enormous incentives for corruption. The CEO seems to be a devout Christian, and I want to hope that all the employees are strongly moral people, but to paraphrase the parable of the camel and the needle, it is extremely difficult to be both rich and righteous at the same time.<p>There is a pressure on the people to outsource much of their work at market price, skimming the profit. People are clever, they will find a way.<p>It also puts an immense value on getting the job (possibly by deception or by getting rid of the incumbent in some way), and then staying at that job at all cost. The risk-aversion will be through the roof. There will be absolutely no back-talking. The managers will never be challenged, no matter what they do, by their underlings. Morale and the working conditions will deteriorate as a consequence, with negative effect on the bottom line.<p>All the above used to be the norm in various forms in the Soviet bloc when I was a kid. Those of you who spent some time in a socialist country will recognize the problem.<p>I hope that this experiment stands the test of time, and we can all learn from it how to make employing people more humane. But I won't be holding my breath.