70K Minimum Wage?

[jon.a]

I wonder how this will turn out?

http://www.nbcnews.com/nightly-news/seattle-business-owner-raises-minimum-pay-70-000-n341546

 

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[D11FYY]

God only help who deals with their emails and letters.
Lots and lots of CV's will be coming

 

[jazb]

Whats the big deal? its his money, he can do what he likes.

oh i know what the big deal is, left wing people hailing this guy because they want all CEOs to do the same.

 

[MJ DeMarco]

I suppose shareholders will be happy. NOT.

Honestly, just seems like a BS publicity stunt.

 

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[Lex DeVille]

I suppose shareholders will be happy. NOT.

Honestly, just seems like a BS publicity stunt.

This was my first thought.

 

[randomnumber314]

Over the next three years...Sounds like there will be some minimum requirements for the employees to meet. A little extra motivation for them to land new clients, then pay based on bonuses to get them all to $70k maybe?

 

[Flyleaf]

Came on here specifically to see what people's thoughts were on this.

 

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[Trivium iz rC]

I was thinking the same thing as MJ. Marketing to get people to use his services.

Pretty smart dude productivity will end up increasing & most of the employee's salaries will stay flat till the day they retire because they know that the value they produce isn't over 70k.

Guy made a smart tax move either way.

----------------------------------------------------------------------------------------------------

Income Tax:

1M taxed @ 39.6% plus 7.65% for SS&Medicare. Roughly 400k in +/- income taxes.

70k taxed @ 25% plus 7.65% for SS&Medicare. Roughly 23k in +/- income taxes.

-----------------------------------------------------------------------------------------------------

Long Term Dividends/

1m Salary= 20% LTD tax rate + 4% Obamacare tax

70k Salary= 15% LTD tax rate + 4% Obamacare tax

-------------------------------------------------------------------------------------------------------

Guy will make that money back in a couple years from the INCREASED business from the marketing and by lowering his overall taxes. It's a win win. Employees will be happy which means, happier customers & happier CEO because of lower tax rates.

 

[redsfaithful]

What shareholders? It's a private company, no?

I bet he'll have nothing but "A" employees shortly - interesting experiment. My guess is he's made a few million (at least) already and feels like he's set whether it works out or not, so why not try?

 

[Even Steven]

I don't know, something smells funny. It gives me the same feeling as the guy who "earned" $72M cutting expenses and investing in stocks. It just fits the media's narrative a little too well, you know?

"Oh, see? Business owners CAN afford to double everyone's salary. They just don't do it because they're selfish and want to keep it all for themselves."

Also, I'm guessing the owner has PLENTY of investments and sources of income besides his salary, so it's not like he's going to be living on $70k a year.

But then again, maybe I'm just a cynical a**hole.

 

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[RHL]

Dude did this during campaign season, probably with a fair mind to becoming the Hillary messiah, right down to kindly voice and long hair. He'll be the left's "Joe the Plumber," except while Joe just got some fame and a few short talk-show stints, this guy's company will be a google away for the entire country, and he's going to be gagging on money it will pour in so fast. He turned his unheard of tiny company into international news in a week. If he plays his hand right, he'll make it back and then some. If you quadrouple your company's profits, doubling everyone's salary is NBD. Also, as many owners in here know, taking a small salary yourself can be a way to boost the value of the asset at liquidation time.

 

[Lex DeVille]

Maybe it's legit, maybe it's not.

It's definitely a strategic play.

Love the image with a chess board at the bottom of the article... That's just good copy.

The change will chew into a majority of the company's projected profits this year. But to help out, Price said he will lower his salary from about $1 million to $70,000.

Note the words here.

Nothing says he's keeping a $70,000 salary.

It says he's lowering from $1 million to help out with the hit in projected profits.

To me this suggests a temporary decrease.

Probably to make others feel good & generate publicity at the same time.

 

[PaulRobert]

Honestly, just seems like a BS publicity stunt.

My thoughts exactly...

 

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[theag]

We got a minimum wage in Germany since january 1st this year. It applies to interns too. Now I cant afford interns, although I could provide a very valuable experience with what Im building. It just sucks. F*cking socialist pigs.

Interesting video though.

 

[Durete]

We got a minimum wage in Germany since january 1st this year. It applies to interns too. Now I cant afford interns, although I could provide a very valuable experience with what Im building. It just sucks. F*cking socialist pigs.

Interesting video though.

Let's be honest, interns are the modern slaves.

I had to do 3 internships in my time at uni.
1st internship: 6 months work, 8 hours a day, 6 days a week: no pay.
2nd internship: 8 months work, 16 hours a day, 7 days a week: €225 per month pay.
3th internship: 7 months work, 8 hours a day, 6 days a week: €255 per month pay.

Most business in the netherlands run on only internships, as they're the cheap workforce, and can do anything that a normal employee does as well, only difference is they HAVE to do it, since if they fail internship, they fail their study.

Internships are good, but it should provide value for the student as well, not just for the schools and business owners. and a business should not have 60 internees and 5 real employee's ^^.

 

[biggeemac]

Let's be honest, interns are the modern slaves.

I had to do 3 internships in my time at uni.
1st internship: 6 months work, 8 hours a day, 6 days a week: no pay.
2nd internship: 8 months work, 16 hours a day, 7 days a week: €225 per month pay.
3th internship: 7 months work, 8 hours a day, 6 days a week: €255 per month pay.

Most business in the netherlands run on only internships, as they're the cheap workforce, and can do anything that a normal employee does as well, only difference is they HAVE to do it, since if they fail internship, they fail their study.

Internships are good, but it should provide value for the student as well, not just for the schools and business owners. and a business should not have 60 internees and 5 real employee's ^^.

Hmmm, disagree. Interning is trading a good wage for real world experience and a good line item on your resume, which will help increase your marketability. I am a highly experienced tech and I am doing a small job in my town for free. What do I get? I get trust, word of mouth marketing, and probably more customers. The payback for providing a service to someone isn't always immediate cold hard cash.

 

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[ChrisJTurner]

Great article but I wonder if this is going to spawn a new wave of employees that feel they "need" 70k because they are "entitled" to it.

Similar thing happened with 4HWW, spawned a lot of people that thought they could get rich by working less and employees wanting their employer to pay them full rate for less hours a week.
I would imagine his employees will still only do the 40k work for 70k pay.
Give people an inch and they'll take a mile.

Thanks for uploading

 

[redsfaithful]

Funny all the people here criticizing the guy who has built a multi-million dollar company and just got incredible amounts of publicity. Because politics.

 

[Chaseb731]

What shareholders? It's a private company, no?

I bet he'll have nothing but "A" employees shortly - interesting experiment. My guess is he's made a few million (at least) already and feels like he's set whether it works out or not, so why not try?

Everyone that owns a piece of a company is a shareholder. It doesn't have to be public.

In this case it would be the investment groups looking to make a return on their investment. Unfortunately, probably won't happen for a while now.

 

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[redsfaithful]

Everyone that owns a piece of a company is a shareholder. It doesn't have to be public.

In this case it would be the investment groups looking to make a return on their investment. Unfortunately, probably won't happen for a while now.

Gravity Payments, according to Wiki, is wholly owned by Dan and Lucas Price.

Barry Ritholtz talks frequently about not letting personal politics blind you in business and investing, and boy there's a lot of people on this forum who would be well served to take that advice to heart.

 

[Even Steven]

Barry Ritholtz talks frequently about not letting personal politics blind you in business and investing, and boy there's a lot of people on this forum who would be well served to take that advice to heart.

Well, there's at least one.

What seems more likely to me is that people around here:
1) Generally understand how market forces work
2) Are very skeptical of "success" stories that seem to contradict those market forces, especially when the story is heralded by those who regularly beat the slowlane and/or populist drum

But it may be that he really is just a great guy and that there's nothing else to the story.

It's just that most times stories like these end up having hidden details that come out later.

 

[redsfaithful]

You don't know my personal politics = )

The takeaway here, for me, and why I opened the thread is because employee motivation is a confusing thing - some people seem to be motivated by money, others by security, others by non-stressful atmosphere. Here we have a potential case study in giving people in a white collar environment more money.

We also have a case study of brilliant marketing. This guy could have done this quietly, but obviously he wanted the marketing boost. Companies that pay their employees a living wage get a bump in how people think about them (Costco comes to mind.)

I have four employees. Deciding how to structure their pay, what to pay them, what benefits to offer has been confusing, especially when factored through the filter that I want to structure it all in a way to enhance motivation and productivity. And happiness.

I was hoping to see some discussion on these issues, and instead we have right wingers angry at someone paying their employees well, as well as talk of shareholder revolt with regards to a privately held company with no investors.

I think the issue is that most posters on this message board aren't close to the level of having employees, and many who do are working with razor thin margins. So this sort of thread is probably to be expected, and that's on me expecting to read something different.

 

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[randomnumber314]

Great for publicuty. He was on Fox news and they asked him if he's a socialist. His answer was brilliantly about making his customers happy. That's thousands of potential customers hearing his sales pitch.

 

[Durete]

Hmmm, disagree. Interning is trading a good wage for real world experience and a good line item on your resume, which will help increase your marketability. I am a highly experienced tech and I am doing a small job in my town for free. What do I get? I get trust, word of mouth marketing, and probably more customers. The payback for providing a service to someone isn't always immediate cold hard cash.

What I found is that the internship model does several things.

1) It destroys actual workspaces, as why hire an actual employee when you can get the same for almost free.
2) It gets people in the "Poverty" /"low paid wages" mentality.
3) The market changes as it's depending on the internee's.
4) Since of the free workforce nobody actually reads a resume anymore, as no matter what you got on there, it's not worth the difference in paygrade between an internee and you.

Sure, free work works if you already OWN a business, just like content marketing works.

The same that content marketing is useless if you just give content and don't take anything back.

I see the internship model as the following:
Imagine a company, that gives out free products. Sure they'll have word of mouth, heck they'll have a lot of people that come to use their service.
BUT they are not selling anything, they just give things for free, or everything for $1, like televisions, cars, houses whatever they're selling.
But hey, it's a good thing! THey learned how it is to have a lot of customers, even while they're broke and in big debts now. it was a good lesson.

 

[Chaseb731]

Gravity Payments, according to Wiki, is wholly owned by Dan and Lucas Price.

Barry Ritholtz talks frequently about not letting personal politics blind you in business and investing, and boy there's a lot of people on this forum who would be well served to take that advice to heart.

I don't really see how personal politics make a play here. It's just math. He lowers his pay from 1M to 70,000 which saves 930,000. It states 70 employees will receive a pay increase, which I'm assuming is up from an average 40,000 a year. So that basically costs the company at least 3x what the company saves from that salary cut.

Not personal, just mathematical.

 

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[csalvato]

Not personal, just mathematical.

You have to factor in the mathematics of increased customers, too, though.

And really, you're not looking at actual balance sheets, so this is all speculative.

People on here are obviously more conservative/libertarian. So the response here, in a sentence, is "STUPID HIPPY SOCIALISTS ARGLJKHGKJH"

@redsfaithful is trying to point out that you need to put your biases aside and look at this objectively. If you do, you will see this guy is someone to learn from...and I think I learned quite a few lessons here myself.

EDIT: To be clear, I agree that raising minimum wage is stupid in general. This isn't a lesson in minimum wage to me, though. It's a lesson in capitalizing on a hot-button issue to get press.

 

[The Grind]

 

[Chaseb731]

I don't think this a minimum wage discussion though. It's the minimum wage within his own company, which is completely different. It isn't political at all, and I don't view it that way. @csalvato are you referring to me when you reference "your biases", or everyone's biases in general?

Where will the increased customers come from? The articles talking about how he pays his employees more? I really don't think employee pay will effect someone's decision to pick a credit card processor. They will pick based on rates and the chances of getting screwed over by said company.

Imo, it is a simple marketing ploy, or there is something else behind it. He wouldn't simply do it for no reason at all.

I guess you could learn something about PR, but that's about it at this point.

 

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[redsfaithful]

People on here are obviously more conservative/libertarian. So the response here, in a sentence, is "STUPID HIPPY SOCIALISTS ARGLJKHGKJH"

@redsfaithful is trying to point out that you need to put your biases aside and look at this objectively. If you do, you will see this guy is someone to learn from...and I think I learned quite a few lessons here myself.

Yep, exactly. I have no problem with the forum being right leaning/libertarian (I would expect any forum of small business owners to be.)

 

[csalvato]

@csalvato are you referring to me when you reference "your biases", or everyone's biases in general?

I meant one's general biases. I don't know your biases, so I can't really comment on them.

I guess you could learn something about PR, but that's about it at this point.

I agree. But even 1 lesson that makes me 1% better is worth it. That's why I come here, after all.