
A Company Copes With Backlash Against the Raise That Roared - mattee
http://www.nytimes.com/2015/08/02/business/a-company-copes-with-backlash-against-the-raise-that-roared.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news
======
morgante
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).

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.

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.

Tangent: a salary of $50k seems absurdly low for a web developer in Seattle.
That guy should be looking for a new job _immediately_.

[1]:
[https://en.wikipedia.org/wiki/Efficiency_wage](https://en.wikipedia.org/wiki/Efficiency_wage)

~~~
jkestner
I've always wondered how pro athletes in their weird economy deal with this
issue. With salary caps, max contracts and scarcity there are all sorts of
constraints that change from year to year, and a superstar on a max contract
signed a few years ago can be making less than a merely good player who just
signed a contract. (One of the rare cases where one's actually voiced
displeasure: [http://www.sportingnews.com/nba/story/2015-07-14/john-
wall-m...](http://www.sportingnews.com/nba/story/2015-07-14/john-wall-
mystified-hes-now-getting-paid-the-same-as-reggie-jackson) )

~~~
plonh
They make a lifetime supply of money each year, and plenty from non-league
sources (endorsements, etc). Their energy is better spent learning how to
manage the money they have, than fighting over who gets paid more of it.

~~~
jkestner
I agree with you. But these are serious competitors and they have egos, so I'm
surprised it doesn't come up more. You do see some of the guys at the low-
medium end of the pay scale really happy to get to a level where they can
provide security for their family, taking into account how short their careers
are.

------
shoo
> 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.”

Curious. The status quo is inherently political. There is already a heavy
political stance built into the structures of the workplace.

(edit: see Jeff Schmidt's book Disciplined Minds)

~~~
Spooky23
Ironic that a wealth management advisor, who essentially peddles mutual funds
and pats clients on the head in exchange for 2% of their wealth is concerned
about paying for talent.

My grandfather owned a bar years ago. He paid the bartenders a good wage, way
more than what he was required to by law. He did it because it kept good
people around and reduced pilferage.

~~~
sopooneo
So compared to his contemporaries, was your grandfather a better man, a more
prudent man, or both?

~~~
Spooky23
A bit of both. He was a great guy who loved people, selling stuff to them was
just a thing you did to keep the conversation going. But, he wasn't unique in
doing this... plenty of business owners, especially smaller businesses, pay
for better employees. Ever go to a hardware store where the clerk has worked
there for 20 years? She doesn't make minimum wage.

I think the discussion here is a demonstration of how bean counters have
conquered the world.

------
goldenchrome
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."

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.

~~~
guan
If you are being overpaid (in some sense), you might work harder than before
because you have more to lose if you get fired. Any alternative job would most
likely come with lower pay.

~~~
jkestner
Right. From the article:

    
    
      Several employees who stayed, while exhilarated by the
      raises, say they now feel a lot of pressure. “Am I doing 
      my job well enough to deserve this?” said Stephanie Brooks,
      23, who joined Gravity as an administrative assistant two
      months before the wage increase. “I didn’t earn it.”
    

(edit) I understand the gut feeling of unfairness from the people who were
already earning more than $70K, but some of the quoted assume their fellow
employees who got raises "for nothing" will just slack off, and that shitty
attitude seems to underscore a class division.

~~~
mistermann
I think they assume correctly. I know all sorts of people who are extremely
well paid who spend at least 30% of their time just waltzing around the office
and chatting with people. Some people are just entitled &/or clueless.

~~~
juliangregorian
Seems like you have plenty of time to observe the habits of your fellows.

~~~
mistermann
I'm not sure what you mean?

------
jacquesm
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.

Human nature is predictable and depressing.

~~~
noir_lord
I had this at one job, I was a developer and earnt considerably more (though
market rate) than the office manager.

She had a vendetta against me from day one with constant jibes about pay and
such as prior to me starting she'd earnt the most out of the staff there.

It progressed into her making a landgrab (decided that I had to clear all days
off and holidays through her etc) which I countered by speaking to my boss
(and the company owner) who then told her that I was nothing to do with her
and she should get back to managing the job of an office manager.

If I were not so thick skinned it would have been a deeply unpleasant
experience.

~~~
noir_lord
Since I can't edit and forgot to say, should my company ever grow to the size
where an office manager role is needed it will not be called Office _Manager_
since you give some people the word Manager anywhere in their job title and
they start planning to invade Poland.

Not sure what I would call it, Office Support Specialist or something suitably
ambiguous I guess, the role is largely one of keeping the lights on, making
sure the ISP is paid etc it's not a management role in the sense of dealing
with staff etc.

Title inflation is a pernicious problem.

~~~
kelukelugames
Power trips scare me. I wonder I'd be just as bad.

------
tangerine_beet
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.

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.

~~~
stdbrouw
I think you might be misinterpreting the meaning of "should" in these
discussions. Nobody's claiming that a CEO is ethically obligated to adhere to
a certain remuneration strategy or that employees with certain skills legally
should be paid a certain wage... people are just giving their opinion on what
they believe is sensible or stupid. Sort of like "you probably shouldn't eat
that entire box of cookies."

------
ekanes
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.

~~~
jbigelow76
It _seems_ (based on the Horowitz reference, pardon me if I am wrong) you're
implying that Mr Price was wrong to make the change based on losing two key
employees (and probably more that didn't up and quit). Maybe at the time he
didn't anticipate that some would feel slighted but he also didn't know really
what the change mean to the lives of other of his employees.

An interesting question would be "if you could go back in time would you do it
all over again?" (PR and ego would probably indicate "yes" but we would never
know the real truth).

~~~
ekanes
It's not so much that the change was wrong or right, but that Mr Price didn't
anticipate how big a deal it would be, both internally and externally. While a
couple employees might have left, it sounds like the company may now be in a
financial crisis which is a bigger deal.

I'm mostly saying he should have thought it through more, even if he did go
through with it.

------
dopamean
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?

~~~
jameshush
I know what you're saying, but I've never understood this logic personally.
How does someone else earning more money hurt you? It's not like a person
doing better than you is taking your money.

~~~
run4yourlives2
>How does someone else earning more money hurt you?

It's not that simple. The employees were already working under conditions that
job/person a was worth 2x and job/person b was worth 3x. That was established
and everyone was content (or reasonably so).

All of a sudden, someone declared that job/person a is worth 3x too, with no
corresponding change to the output or expectations of either job.

Job/Person b, having been previously told that their value was, at 3x, MORE
than job/person a, is now told that their value is now equal.

That's a redefining of the previously established contract of understanding.
To expect Job/person b to completely agree to that redefinition is rather
naive, to say the least.

I'm more valuable to my company as their key software developer than the
receptionist. I've got more knowledge of how the company works, contribute
more to the bottom line and am harder to properly replace. I expect my
compensation to reflect that.

If you suggest all of a sudden that I'm not any more valuable than the
receptionist hired last month, you should rightly expect that I'd be a little
pissed.

~~~
pm24601
> If you suggest all of a sudden that I'm not any more valuable than the
> receptionist hired last month, you should rightly expect that I'd be a
> little pissed.

Then leave.

Seriously. If you are so upset then leave.

But when interviewing, you might want to come up with a different reason for
leaving the job. The interviewer might not be so understanding.

Update: wow, a downvote. :-) I welcome the downvotes.

~~~
ssalazar
Just up and leave? Y'know, its possible to work these things out without
something so extreme.

~~~
pm24601
Sure there is... Don't be grumpy over someone else's good fortune.

Be happy for them.

Be happy that they can now afford to get married.

Be happy that they can now save money to buy a house.

Be happy that they can now save for their kid's college education.

Be happy that you work for someone who cares so deeply about his employees and
will be there for you when you need help.

------
kdamken
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.

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.

~~~
hanspeter
So you would leave for another job paying you the same? You would actually
leave just to find another job, where your colleagues were payed less?

~~~
kdamken
I probably would leave, but mainly because I feel that by paying most of the
employees the same amount, the company is showing they don't value the
employees who are actually worth more to the business. This shows poor
management in my opinion. If they had increased everyone's wages accordingly
by the same percentage I would feel differently.

------
jonas21
Link to the HN thread when the raise was first announced:

[https://news.ycombinator.com/item?id=9371854](https://news.ycombinator.com/item?id=9371854)

------
jetskindo
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.

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.

~~~
mcphage
> 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.

That really pissed me off. When the gas prices were high, then the damage to
the economy was clear—everyone was paying more, prices for everything across
the board were going up, because the cost of doing everything went up.

And then when prices dropped? Suddenly it was "bad for the economy". I'm sure
there were companies it was bad for—specifically, the companies that were
riding high when prices were gigantic. But for the rest of the economy, it was
a breath of fresh air.

------
eps
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.

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.

~~~
Daishiman
This is ridiculous. _Any_ change in pay structure is going to cause someone to
get the short end. Who doesn't want more money? Who doesn't have getting less?

One thing's for certain: there's a whole bunch of people who are butthurt
about lower class people getting more money. Wonder what that reflects about
them...

~~~
pm24601
> Who doesn't want more money? Who doesn't have getting less?

The answer to both questions in this case was:

    
    
       the CEO
    

The money came from his paycheck.

------
jefurii
It's interesting to see him being accused of being "socialist" or "communist"
when his decision seems to flow from his conservative Christian upbringing.

~~~
wmboy
Interesting and even nonsensical. He's an entrepreneur, owns a for-profit
business and is choosing to compensate how he wants to. It's actually the
definition of how capitalism can improve quality of life for everyone, is it
not?

~~~
mistermann
Not really, because he's pushing towards a completely arbitrary minimum $70k
salary for everyone. That's certainly his right as the business owner, and
that sentiment shared more widely might be better for society, but there's
nothing particularly "capitalistic" about it.

~~~
Frondo
It's his money, he's the capital-holder, he can do what he wants with it. If
he thinks it's better for his business to do this, that's entirely up to him.

Capitalism doesn't mean "pay your employees out according to some made-up
scheme of who's-worth-what," though the weird calvinist pseudo-capitalism we
love in the U.S. sure likes that kind of ranking.

~~~
sneak
I thought the article was about how he fucked his business with this nonsense,
was it not?

------
dmitrygr
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.

curious all the quitters said the same thing (if you read the article)

~~~
Daishiman
Merit-based salaries is bullshit.

Salaries are based on what the market will bear. Employee performance is
extremely hard to quantify, and there's not reason to believe that this
changes that aspect of the equation too much.

Seems like people in the US have completely forgotten that collective
bargaining was a key piece to advancing workers' rights.

------
PhasmaFelis
> _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._

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 _deserve_
more money, _peasant._ It was really nice working with you, though!"

~~~
alexqgb
"I mean, Jesus Christ! If there are a bunch of really happy and super loyal
people working here and that does great things for the company then maybe
it'll turn out that I'm not as important as I think I am and _then what?!_ "

"Uh, you'll try not to let the door hit you on the way out?"

~~~
indymike
Actually, about that Jesus Christ guy, there is a parable about this exact
situation. Short version: laborers hired in the afternoon were paid the same
as those hired in the morning. Morning hired complained. Farm owner: it's my
money, you were paid as agreed. Nice day, have one.

Interesting that people have struggled with this concept for at least 2000
years...

------
pessimizer
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.

It's funny how libertarian conservatism gets apoplectic when wealthy people
make the _wrong_ choice. Then they get all "Virtue of Selfishness" on your
ass.

------
mentos
I think incentives like this [0] could help achieve this affect.

[0] - Tax Credit for Businesses That Share Profits -
[http://www.nytimes.com/politics/first-
draft/2015/07/16/profi...](http://www.nytimes.com/politics/first-
draft/2015/07/16/profit-sharing-makes-good-business-sense-hillary-clinton-
says/)

------
scarmig
I would love to see a more in depth case study of this.

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.

~~~
JamesBarney
The article mentions that the change was phased in over 3 years but it was
easy to miss.

------
serve_yay
The reaction to what seems like an unalloyed good are dismaying.

------
pm24601
For all the people complaining.

Please remember this:

1\. It is his company; not yours.

2\. He doesn't have to check with you

3\. He pays the consequences of any bad decisions; not you.

4\. He reaps the benefits; not you.

5\. Your (and my) opinion does not matter.

~~~
cheald
Don't confuse criticism with complaint.

~~~
pm24601
I am not. Criticism is constructive. The people _complaining_ are not being
constructive.

------
jrs235
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?

------
_yosefk
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.

------
zafka
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.

~~~
hueving
In tech companies they tend to be.

It sounds like the dev was inexperienced which is why he was talking about
improving skills to work at a tech company.

------
ForHackernews
Crab Mentality[0]: Not just for people earning slightly-above minimum wage
anymore.

[0]
[https://en.wikipedia.org/wiki/Crab_mentality](https://en.wikipedia.org/wiki/Crab_mentality)

~~~
jsprogrammer
Anthropomorphize much?

Are the crabs aware of their situation? Are they actually consciously
preventing the other crabs from escaping? Or are they just trying to grab on
to anything they can get get out of the crab-pile?

Seems like a deeply flawed metaphor that will likely lead you astray.

~~~
thuuuomas
The crab's "intentions" are immaterial!

Like, if a human meerely intends "to grab on anything they can to get out of
the [human]-pile", & they're quite rude/destructive while doing so, they're
still rude/destructive regardless of how sympathetic we may judge their
intentions to be.

~~~
jsprogrammer
Certainly. The linked reference argues otherwise though:

>is a phrase that describes a way of thinking best described by the phrase "if
I can't have it, neither can you."

>Individually, the crabs could easily escape from the pot, but instead, they
grab at each other in a useless "king of the hill" competition which prevents
any from escaping and ensures their collective demise.

------
paragpatelone
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."

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.

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.

------
MaysonL
Very interesting result from DuckDuckGo for "unbridled socialism" (without the
quotes).

It asks "do you mean _unbridled capitalism_?" and then gives me only results
for unbridled capitalism.

------
sologoub
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.

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.

~~~
andrewvc
I'm not sure if you realize that the poor hold on to a ton of debt in this
country, and a large part of it is their inability to dig themselves out of
the holes they're in.

Now, it is true that financial literacy is tends to be low among those who
make little, but it is also the case that many people who are financially
literate, but poor, just can't dig themselves out of debt. Medical expenses,
for instance, are one of the leading costs of bankruptcy in this country.

~~~
sologoub
I do realize that and am fairly familiar with how the cycle works, largely
fueled by pay-day loans.

Is your hypothesis that the higher income, even if temporary, may afford
significant relief from this?

------
zekevermillion
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".

------
vacri
CEO with a salary package of over a million; 120 employees, 12,000 customers;
processing 6.5 billion in transactions...

... is a 'small business'!?

------
rasz_pl
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.

~~~
sneak
If they weren't being paid the same before this stunt, they weren't peers.

~~~
rasz_pl
How is the mud on your pig farm Napoleon?

~~~
rasz_pl
yay the downvotes. Its a book reference. I wonder if people that left his
company didnt read Animal Farm as well.

------
pbreit
Wouldn't a simple stated policy of having generous compensation have been
sufficient without creating all the problems from the blunt, arbitrary
minimum?

------
lumberjack
Probably the same kind of people who say that relative wealthy/income
inequality does not matter, when discussing other topics.

------
petersontimr
That there is a video is interesting for the NYT. That it's using Flash player
is doubly interesting.

------
apsec112
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.

~~~
gohrt
There's no need to toss "liberal" in there. Dense cities tend to have rent-
control, and Dense cities tend to have people with policies generally referred
to as "liberal" (to the extent that "liberal" means anything.

But NIMBYism and status-quoism is not just a liberal issue, and "not changing
the neighborhood" is right in line with the definition of "conservative",
which means a preference for how things already are and against risky changes.

Trying to squeeze any question into a "liberal-conservative" split just
muddies the issue.

~~~
Kalium
Liberal here.

Yeah, there really is a need to toss "liberal" in there. More liberal dense
cities seem to have this problem much worse than dense less-liberal cities.
Qualifier: American cities.

Some of it tends to be due to liberal reflexes (participatory democracy at all
levels, favoring small local groups of activists over people who stand to
profit, etc.) that backfire writ large. Add in a distrust of markets, and you
have a recipe for disaster. San Francisco is a great example.

~~~
zorpner
You have a serious confounding factor in that urban density correlates highly
with liberal political views, at least in America.

~~~
Kalium
This is true. We can separate out which cities have liberal views from which
cities have put liberal urban planning policies in place.

------
austenallred
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."

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.

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.

[http://www.rushlimbaugh.com/daily/2015/04/15/ceo_buys_short_...](http://www.rushlimbaugh.com/daily/2015/04/15/ceo_buys_short_term_love)

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omonra
I'll try to explain.

People call it socialism because a starting salary of 70k is likely to be
uneconomic. Ie the cost of the employee is set above their value to the
company. This is done at the expense of other stakeholders (ie management and
investors, possibly other employees who would be paid less).

That's kinda the basic premise of socialism - whereby an employee's salary is
dissociated from the economic benefit they bring.

Ie the backlash is because he chose to set _everybody 's_ salaries fairly
high, regardless of seniority, etc.

~~~
justinpombrio
Since when is an employee's salary based on their value to the company?
Occasionally that value can be measured, and an employee will be payed by
commission, but that seems like a bit of an exception. How do you judge the
value of a business's single, extremely necessary, janitor?

I thought employees were generally paid by their _market_ rate, i.e. how much
it would cost to _replace_ them, which is not necessarily related to their
value to the company.

~~~
icebraining
Based, not tied. Specifically, the salary is _capped_ to their value to the
company.

~~~
jakebaker
Conceptually, though in reality/over shorter time frames, it's potentially
just as tied to political/human considerations vis a vis the person setting
the compensation decision. Maybe easier to avoid this in start-ups, but I saw
it happen with some frequency in the context of working for a large global
bank. At a certain scale, feudalism or liege-lord-vassal models becomes as
good of a mechanism for interpreting outcomes at a human level as anything
else.

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jwise0
The title from the article is somewhat less clickbait: "A Company Copes With
Backlash Against the Raise That Roared"

~~~
sctb
Thanks, we updated the submission title.

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littletimmy
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?”

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 __ __* 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.

~~~
api_or_ipa
> How about observing how well they perform before bringing in your Ayn Rand
> propaganda.

While I agree with the rest of your post, your portrayal of Ms. Rand's work is
woefully inaccurate. No where do I recall she wrote of demeaning blacks,
suppressing wages and preventing the equal participation of all capable people
in a common market.

Rand was very clear that racism and discrimination hindered the free market by
preventing, under threat of violence, the equality of all in participating in
market transactions and deals.

It's a shame Atlas Shrugged is so long, because I think most people would be
far more humbled by what she wrote compared to what people think she wrote
about.

~~~
DannoHung
Hahahahah fuck off

"They (Native Americans) didn't have any rights to the land, and there was no
reason for anyone to grant them rights which they had not conceived and were
not using. What was it that they were fighting for, when they opposed white
men on this continent? For their wish to continue a primitive existence, their
'right' to keep part of the earth untouched, unused and not even as property,
but just keep everybody out so that you will live practically like an animal,
or a few caves above it. Any white person who brings the element of
civilization has the right to take over this continent."

~~~
logingone
I think you, and those below, have misunderstood this quote, in the usual
knee-jerk liberal ("fuck off") fascist manner. She is complaining about the
lack of productive use of the land. She is saying that the native Americans
didn't have rights to keep the land from being used productively. She is
saying that they are maintaining a way life that is not progressing - she is
not saying they should be excluded from progressing.

------
paulhauggis
That's why you shouldn't make foolish and quick decisions like this and at
least give it some forethought.

~~~
buerkle
Whether it was foolish is a bit too soon to declare; he already is getting
more business. And that's harsh to say "give it some forethought". I didn't
read anywhere in the article about how much time he spent thinking over the
decision.

~~~
paulhauggis
Paying everyone this amount of money just isnt practical and wont really help
the employee in the long run.

~~~
Daishiman
You don't really know that. You're essentially talking out of your ass while
this guy is walking the walk.

------
a3voices
I don't see why the CEO feels the need to fix problems with capitalism instead
of just doing what's best for the company.

~~~
swyman
Some people care about things other than what's immediately in front of their
faces on a day-to-day basis

~~~
a3voices
True but paying people more than necessary in a lot of ways contradicts his
role as CEO.

~~~
hanspeter
You can't say so without looking at the bottom line. Henry Ford did the same
and it worked out quite well for the company.

