Dan Price Is A Hero! CEOs take notice...

Discussion in 'Politics, Religion, Social Issues' started by Huntn, Apr 15, 2015.

  1. Huntn macrumors G5

    Huntn

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    #1
    CEO raising workers' minimum pay to $70K: 'It's about making a difference

    This story just blew me away. Awesome, unbelievable... Generous. Bravo! :)

    New York Times
     
  2. rdowns macrumors Penryn

    rdowns

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    #3
    Awesome gesture on his part but I don't see this working out well for him.
     
  3. ucfgrad93 macrumors P6

    ucfgrad93

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    #4
    Key words, he planned over the next three years. I'm not sure he will be able to pull it off. But time will tell.
     
  4. aaronvan Suspended

    aaronvan

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    #5
    This should take some of the heat off. Payday Loans will be next.
     
  5. gkarris macrumors 604

    gkarris

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    #6
    Nice!

    What about the millions of other Americans (me included)? :eek:

    :rolleyes:
     
  6. Huntn thread starter macrumors G5

    Huntn

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    #7
    I have no idea what his net worth is, but a CEO who wants to spread the wealth? Bring it on. :) This is what humanity is supposed to be about, not feeling deprived if you don't have 3 mansions, 2 vacation homes, a couple of yachts, a Gulfstream and saving more money than you could ever spend. Maybe he has that too! :p
     
  7. vrDrew macrumors 65816

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    #8
    I admire and respect his intentions and the sentiment.

    But I worry about the longer-term effects on the company. Obviously this move may effect the firm's ability to be competitive with other companies.

    It also may prove detrimental to top managers and salespeople. If they see a "soft cap" on their earnings thanks to an overly flattened pay scale, the good ones will tend to seek greener pastures elsewhere - while the mediocre performers at every level will stick around.

    Don't get me wrong: Any full time job ought to pay a decent living wage in whatever city or market its located in. And if a company is doing really well, it behooves them to share the economic fruits of that success with everyone who participated.

    But artificially setting a base-wage far above the prevailing market is a recipe for, if not necessarily disaster, then at least more problems than you might think. I hope I'm proven wrong on this point.
     
  8. TexanMan05 macrumors regular

    TexanMan05

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    #9
    I agree 100% with everything you said. What's the motivation for people to advance? Also, as an investor, I would be concerned with the CEOs decisions on financials. The company is there to make money and how it spends its dividends are an indication of how it's run.

    I think some sort of generous bonus structure motivating his workers to work hard and following through with paying them for it may of worked out better long term. Time will tell.
     
  9. Sun Baked macrumors G5

    Sun Baked

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    #10
    Long term, sort of sucks, since people will look and say -- I deserve more than this lazy ass over here.

    As a boss, I can see limiting my pay to a multiple of the lowest paid employee.

    As for raises, I'd rather give them to somebody that hits "most" of their targets -- and goes quietly about their job. Versus someone that complains constantly, and annoys the crap out of me, think for yourself and earn the company money.

    As investors, yep they have been hitting companies hard, gone are a lot of the customer incentives that made me want to do business with you -- like returns on my money that you are using.
     
  10. Praxis91 macrumors regular

    Praxis91

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    #11
    Sounds good in theory, but if the people already in the $70k range do not get a nice raise as well (to compensate for the lower-skilled people getting huge bumps in pay), you will have a much less incentive to innovate and you will also have attrition.
     
  11. Huntn thread starter macrumors G5

    Huntn

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    #12
    It was reported that the CEO took a substantial pay cut to make this work. He probably all ready has more money than he can spend. Being worried about competiveness sounds like a Conservative's concern, how big my bonus will be. ;) The same argument of an excessive nature was used by the South regarding slavery. Not $70k for this case, but look at Costco vs Walmart. The problem is that typical boardrooms of large wealthy corporations have a sense of power and entitlement. As long as the top of the food chain can live large, then we'll worry about a few extra pennies for our rank and file workers.

    It really boils down to a mindset of how much money does a successful individual need to live a good life? What constitutes and is required for a good life, fabulous riches? You have people like Dan Price who wants to share, because he believes its moral. And then you have Sam Walmart's kids who can see nothing but $$ signs and want it all for themselves.
     
  12. MacNut macrumors Core

    MacNut

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    #13
    How will they not be competitive, everyone will want to work there. I see this as a win for the company. Keep your employees happy, and get more people to want to work for you.
     
  13. FX120 macrumors 65816

    FX120

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    #14
    Maybe the people who were making 80k a year with more education, experience, and demanding positions will be less than pleased that the receptionist will be making nearly the same salary as them.

    Hell, if I worked for this guy and he didn't double my salary at the same time doubled the clerk's, I'd look for another job just on principle.
     
  14. MacNut macrumors Core

    MacNut

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    #15
    Won't those people just make more? 70k is the base salary, not that everyone is making that.
     
  15. Praxis91 macrumors regular

    Praxis91

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    #16
    If those 80k get bumped to 120k (for example) while the people in the 30k-40k get bumped to 70k, then :).

    If those 80k get minimal bumps (or none) while the 30-40k go to 70k then :( goes morale for the higher-skilled 80kers.
     
  16. VulchR macrumors 68020

    VulchR

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    #17
    It will be interesting to see how this plays out. Personally, I'd love to see the winner-take-all old school of management slapped down hard as counter-productive. I guess we'll see.
     
  17. vrDrew macrumors 65816

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    #18
    There is plenty of precedent for a CEO to take very low salaries ("Dollar A Year") - since their personal stake in the company makes a couple of hundred thousand all but irrelevant. Plenty of entrepeneurs take zero salary - sometimes for years - until their company reaches profitability.

    My understanding is that the CEO in this case "paid for" the increases by reducing his own salary and spreading the savings among the hundred or so existing employees.

    Very noble. But what happens, for instance, if the company grows to have five hundred or a thousand employees? He can't reduce his salary any more. Do the new employees not get the high base wage?

    And if the (significantly above market rate) base salaries can't be paid for that way, it means they will result in lowered - perhaps zero - profit. Or the company will have to charge higher prices than its competitors, which will stunt growth. Long term that is unsustainable for a closely held corporation.

    Paying good wages certainly can help to attract and retain people. But motivating and retaining the right people is sometimes not just a matter of dollars and cents. And overly high wages can sometimes attract the wrong sort of people. If you can make $70,000 a year as a customer-service rep., what incentive is there for a young person to get a college degree (which probably is not required for that sort of job.)

    Without knowing all the details of this business, its hard to know for certain. But if simply paying high wages was a guarantee of success - a lot more businesses would be doing it.

    As I said: I'm all in favor of paying decent wages, and quietly disgusted by the greed shown by many top managers of US companies. But flattening out the pay scale is the sort of task to be accomplished with great consideration to all of the possible results.
     
  18. chown33 macrumors 604

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    #19
    One could calculate the revenue-per-employee figure, and use that to decide if the pay rate is sustainable or not. I wouldn't necessarily dismiss it as unsustainable without knowing that figure.

    As a rule, businesses that plan to expand the number of employees expect a roughly commensurate increase to revenue. That is, they expect the revenue-per-employee figure to remain roughly the same. Often, the business will expect an increase in revenue-per-employee, but that might take some time, so there may be a short-term decrease. It depends on a lot of factors.

    One can also calculate a net-profit-per-employee figure, but I've usually seen the revenue-per-employee used for planning purposes, not the profit one.
     
  19. Eric-PTEK macrumors 6502

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    #20
    Wait and see where this is in a year.

    Sound bites are nice but economics are a constant. You get paid based on your value.

    If you feel you are worth more than your making then surely someone out there will pay you more.

    It's that simple. If he had a million dollar a year salary, which I highly doubt, no CEO wants to take a salary period, you want the lowest possibly salary the IRS will let you take as a CEO/owner because if you get income elsewhere you skirt payroll taxes along with self employment tax.

    But assuming that this is entirely true 930k would raise about 25 employee's from 35k to 70k.

    There is a lot of truth to the idea that paying people more to alleviate financial concerns at home helps productivity. It is my philosophy and I take it into consideration with our employee's.

    But I'm also good with a calculator and those numbers with 120 employee's assuming he is raising everyones pay ins step with the lower paid workers does not make financial sense.

    Good free advertising.
     
  20. aaronvan Suspended

    aaronvan

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    #21
    Three years, since that is the roll-out schedule.
     
  21. thekev macrumors 604

    thekev

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    #22
    That specific detail is also affected by external factors. If the work environment is good and they're doing well compared to similar roles at competing firms, it may not result in a lot of turnover.
     
  22. samiwas Suspended

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    #23
    Who cares if someone wants to advance or not? If someone is happy in their job as a receptionist or whatever, who are you to say they need to advance?

    I also find that "we need to keep wages low to motivate people to work harder" is a completely bass-ackwards way of thinking.

    As far as investors go, I would think that the guy talked to his investors before making such a decision.

    They're a credit card payment processing company. Probably not a hell of a lot of innovation going on around there.

    Here's what I find odd in this discussion. When people at the low end are complaining that they didn't get raises while those at the top did, they are told "it doesn't matter what that person makes, it doesn't affect you!" In fact, we've had that discussion plenty of times around here. But when someone at the bottom gets a raise, that person at the top better damn well get a raise or else it's an insult to him.

    We see how it is.
     
  23. thekev macrumors 604

    thekev

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    #24
    Can you explain the problem? The big difference with self employment tax is that you pay both the employer and employee portion of social security, yet that is only on the first $115k~ or so. Half of the social security portion is also taken as a deduction, but if your salary is that high($1m / yr), you'll max out on the social security portion before your first quarterly payment. Anything after that is much lower, and you don't pay it on the same income. Assuming the CEO isn't also the owner and receives stock as compensation, it's still taxable. Neither of those methods really helps with AMT, which is more annoying than self employment tax.

    Anyway I'm not sure how you arrived at this conclusion. It's possible that they benefit from a low salary and greater equity based compensation for other reasons. I can't see how this would be the case due to self employment tax.
     
  24. Eric-PTEK macrumors 6502

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    #25

    My error, payroll taxes.
     

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