I hope some academics are doing a study on this, as it's an almost prefect real-world example of efficiency wages.[1] I wouldn't be surprised if they see large increases in productivity amongst downmarket employees, as they now have an extremely strong incentive to kick ass at their job (any other job they could get would pay significantly less).<p>That being said, I also sympathize with the workers who were making $70k. If I were making $70k and a junior developer making $30k before (all hypothetical) got a raise to $70k I would absolutely be pissed off that I am now apparently considered equally valuable to them.<p>Probably a better way to handle this with total buy-in from all employees would have been to give an $Xk raise, where $Xk is the amount required to bring the lowest paid employee up to $70k. This would have preserved proportional productivity values while giving everyone an awesome reward (and introducing efficiency wages). Of course, it probably also would have been much more expensive.<p>Tangent: a salary of $50k seems absurdly low for a web developer in Seattle. That guy should be looking for a new job <i>immediately</i>.<p>[1]: <a href="https://en.wikipedia.org/wiki/Efficiency_wage" rel="nofollow">https://en.wikipedia.org/wiki/Efficiency_wage</a>
> Roger Reynolds, a co-owner of a wealth management company, said his discussion of the pay plan with Mr. Price got heated. “My wife and I got so frustrated with him at a cocktail party, we literally left,” said Mr. Reynolds, who complained that Mr. Price unfairly accused him of measuring his self-worth solely in terms of money and trying to hold somebody else down. Everyone may have equal rights, but not equal talent or motivation, Mr. Reynolds said. “I think he’s trying to bring in some political and aspirational beliefs into the compensation structure of the workplace.”<p>Curious. The status quo is inherently political. There is already a heavy political stance built into the structures of the workplace.<p>(edit: see Jeff Schmidt's book Disciplined Minds)
I think this is half the problem for the backlash:
"“What’s their incentive to hustle if you pay them so much?” Ms. Brajcich said they asked."<p>It relies on the assumption that the only motivation people would have to work, is that they will be homeless if they don't. I think the idea that you can work towards something bigger than you is a foreign concept to the majority of people.
Jealousy is quite common. You see plenty of instances of this, people can't wait to measure their self-worth relative to others and would happily affect the lives of others in a negative way simply because it makes them feel better about themselves. After all if you determine your status by the pay you receive and the stuff you can buy then it's better for you if your colleagues earn less than you and your self-worth will suffer if your colleagues earn the same.<p>Human nature is predictable and depressing.
Seems there are some fundamental but overlooked assumptions running through these comment threads, the stance that companies "should" pay higher salaries to workers who create more value for the company being one. The assumption is that the company, or its management, is like a parent that must treat each of its children equally. Why should this be the case? Who says a company should be a full-fledged meritocracy? If you work for me and I wish to pay your colleague more money than you, even though you produce more, why shouldn't I? I may have good reason to. Your colleague, I may think, simply needs the money more. Of course I understand you might choose to leave. I may even feel that would be best for you, that you have more to offer the world than you'll be able to give it in your current role. At any rate, you're free to make your life choices, including where you work. I'm free to make my life choices, including how I run my company. CEOs are not moms or dads.<p>A second assumption is that companies "should" reward people who have invested in educating themselves and cultivating valuable skills. You're in danger if you think like this. Companies pay good money for such knowledge and skills usually because they need to, not because they "should". That is why most will ask you to tell them your salary expectations when you apply, rather than tell you up front what they are willing to pay you. By letting you speak first, they may find you're willing to accept a less-than-market rate.
Interesting. He would have done well to have read The Hard Thing about Hard Things by Ben Horowitz, which conveys nicely that much of being a CEO is realizing that when you think you're talking to person X (about their salary, etc), you're also sending messages to everyone else in the company. You have to keep everyone in mind, all the time.
Am I crazy for thinking it seems naive to not anticipate that current employees may not take kindly to people who earn half as much as them getting bumped up to their salaries?
Something I hadn't seen discussed with much clarity is what happened to the employees who were already making 70k+? If I was working there making that much, would I see a similar percent increase? If not, then I'd be pretty angry about the situation and would probably leave as well.<p>I think part of it is that what you get paid is mostly based on your experience and skill set, as well as what you bring to the company. Let's compare a customer service rep and a web developer. They're both important parts of the company, but one has a highly specialized skill set that takes a while to develop, while the other person answers the phones. The developer has taken the time to invest in themselves professionally so that they could be a higher earner. The customer service rep needs about a week of training. To put them on the same pay grade seems unfair and illogical.
Link to the HN thread when the raise was first announced:<p><a href="https://news.ycombinator.com/item?id=9371854" rel="nofollow">https://news.ycombinator.com/item?id=9371854</a>
This reminds me of a few months ago when gas price was down to a mere $2.00 . It was wonderful for the public, but all I heard on TV is how bad it was for the economy.<p>We shouldn't let this be the norm, these employees complaining or those who quit are angry that their "inferior" coworkers are getting the same wages.
Do you know what happens when Paul McCartney gives to charity and charity leaks his name? He cancels the donation. That's how you do good deeds when you genuinely want to help people and not pull a little PR on a side.<p>If this guy wanted to help his under-40K employees, there were multiple ways to do it (a) quietly (b) without pissing off other people who worked for him. I don't know if it's a poorly throught through PR stunt or if it's just a vanity / mid-life crisis thing, but it sure wasn't executed smartly.
It's interesting to see him being accused of being "socialist" or "communist" when his decision seems to flow from his conservative Christian upbringing.
The departure of most values employees is not surprising. In their place I'd do the same. I want no part of working in a place where salary is based 100% on politics and 0% on merit.<p>curious all the quitters said the same thing (if you read the article)
> <i>Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises.</i><p>Man, that must have been awkward to explain to anyone who stopped by while you were cleaning out your desk. "Yeah, I'm quitting because you don't <i>deserve</i> more money, <i>peasant.</i> It was really nice working with you, though!"
The cool thing about how incentives work: instead of being angry that relative slackers are now making $70K, be happy that when they are fired, they will be replaced from a pool of hopefuls an order of magnitude larger then when the company had to settle on hiring those slackers in the first place.<p>It's funny how libertarian conservatism gets apoplectic when wealthy people make the <i>wrong</i> choice. Then they get all "Virtue of Selfishness" on your ass.
I think incentives like this [0] could help achieve this affect.<p>[0] - Tax Credit for Businesses That Share Profits - <a href="http://www.nytimes.com/politics/first-draft/2015/07/16/profit-sharing-makes-good-business-sense-hillary-clinton-says/" rel="nofollow">http://www.nytimes.com/politics/first-draft/2015/07/16/profi...</a>
I would love to see a more in depth case study of this.<p>I also wonder how much of the issue is because it was in some respects a publicity stunt. If instead it had been quietly phased in over two years, I doubt there'd be as many negative ramifications.
For all the people complaining.<p>Please remember this:<p>1. It is his company; not yours.<p>2. He doesn't have to check with you<p>3. He pays the consequences of any bad decisions; not you.<p>4. He reaps the benefits; not you.<p>5. Your (and my) opinion does not matter.
So a discussion concerning making payments, primarily living expenses and student debt is what triggered this idea to help alleviate financial burdens for entry level staff. Instead of raising starting salaries to $70k, why not keep the starting market rate salaries but offer to pay $1500-$2000 per month towards an employee's student loan debt until it is paid off?
Giving the same raises as secretly as possible would avoid a whole lot of trouble. If it was considered important to announce it, it would work much better if done after a couple of years when at least you could claim that it proved itself and customers wouldnt have to worry about its impact on pricing.
The part that bothered me was the fact that the Web developer made 40K to start, and he worried that getting a boost to 70K might make him too satisfied to better himself. I was under the impression that west coast salaries where a bit higher.
Crab Mentality[0]: Not just for people earning slightly-above minimum wage anymore.<p>[0] <a href="https://en.wikipedia.org/wiki/Crab_mentality" rel="nofollow">https://en.wikipedia.org/wiki/Crab_mentality</a>
His biggest issue was this "Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises."<p>If he was going to double the salary for the new hires, he should also doubled the salary of everyone else too. Whatever pay gaps existed still should be there for the best employees not to get demotivated.<p>If he had done this and told his employees not to tell people on the outside. He would have been in a much stronger position.
Very interesting result from DuckDuckGo for "unbridled socialism" (without the quotes).<p>It asks "do you mean <i>unbridled capitalism</i>?"
and then gives me only results for unbridled capitalism.
One scenario this article doesn't address is a situation where an employee who previously earned a lot less comes to rely on the higher salary and adjusts his/her expenses accordingly, but then for whatever reason ends up having to look for another job, which is unlikely to pay nearly as much.<p>I'm guessing that while the situation would be extremely unfortunate, the overall higher income should still help cushion the blow, provided the money was not completely spent, and leave that person better off.
Better to give everyone the same % raise, out of your pocket, then create a reason for jealousy and other silliness within the company. It seems irrational for someone to care about what other people make. As long as you're OK in absolute terms, what does it matter? But I've seen people get really pissed and quit over the perceived slight of a coworker getting a nominal bonus that was not "deserved".
CEO with a salary package of over a million; 120 employees, 12,000 customers; processing 6.5 billion in transactions...<p>... is a 'small business'!?
And this is why you (USians) cant have nice things like universal and _free_ healthcare/education. You were raised to believe you deserve more than your peers, its kind of sick.
Wouldn't a simple stated policy of having generous compensation have been sufficient without creating all the problems from the blunt, arbitrary minimum?
Talking about "cost of living" in a place like Seattle, as if it were an ordinary economic issue, masks the real problem, which is that liberal US cities have made it very difficult to construct new housing. If a million families want to live in a city, and the city only allows half a million houses to be built, then a lot of people are going to be forced out. It's not a question of economics, it's a simple question of arithmetic. It doesn't matter how much you pay people or what minimum wage you have or what other policies you enact. It's like a giant game of musical chairs - if there are more people than chairs, it doesn't matter what else you do, because someone's going to wind up without a chair. Increase salaries, and rents go up to compensate. Subsidize housing for the poor, and landlords will charge more. Enact rent control, and watch as everyone converts rental buildings into super expensive condos. It's like trying to squeeze Jell-O to death: you can't beat the fundamental law that, if there are houses for X people, only X people can live there.
While I have no idea whether this will work (or if it's a good idea), the most interesting part of all of this, to me, is the backlash from people calling it "unbridled Socialism."<p>I'm still not sure how a CEO of a profitable company electing to pay his employees more becomes a political debate. If it fails, perhaps it's a failed experiment in Capitalism? It's not like anyone is forcing the business owner to do this.<p>Theoretically, economics would dictate that by paying people $70K who would get paid $40K would make them fight like crazy to keep their jobs, wouldn't it? And if that's the case, wouldn't one conclude that their productivity would increase, and the company would be much better off? Unwise investment? Perhaps. Unbridled "Socialism?" Definitely not.<p><a href="http://www.rushlimbaugh.com/daily/2015/04/15/ceo_buys_short_term_love" rel="nofollow">http://www.rushlimbaugh.com/daily/2015/04/15/ceo_buys_short_...</a>
The most repulsive thing to read here is the reaction of some of the customers. “What’s their incentive to hustle if you pay them so much?”<p>Really? Do you ask that same question when a CEO gets millions of dollar in bonus? Nah, the CEOs simply "deserve" it. The employees though, they must hustle. Roughly transposed to the 17th century, that statement reads "What's the incentive for this n<i></i><i></i>* to pick more cotton if he is well-fed?" Repulsive and sickening. How about observing how well they perform before bringing in your Ayn Rand propaganda. This sort of thought must be eradicated from the American mindset.