Seattle Business offering $70K min wage is failing

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  • SEIndSAM

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    Bigtanker

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    Learn the hard way. He lost a few of his hardest working employees because they were making the same as the people who just ducked up oxygen.
     

    pudly

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    He slashed his own salary to pay for employees increased pay because he didn't want to be one of those evil 1 percenters. Most business owners do that when business slumps so that they can minimize layoffs. He didn't have enough business savvy to allow for bad times.
     

    BehindBlueI's

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    Learn the hard way. He lost a few of his hardest working employees because they were making the same as the people who just ducked up oxygen.

    If he's paying 70g, it shouldn't be tough to replace the oxygen suckers with motivated employees. It's funny people quit not because of their own pay but because of other people's pay. "I was happy with my slice of the pie until that guy's slice got almost as big. Now my pie slice looks smaller in comparison!" Or apparently "I'm making too much money and if I don't leave now I won't be able to follow my dreams!"

    The new pay scale also helped push Grant Moran, 29, Gravity’s web developer, to leave. “I had a lot of mixed emotions,” he said. His own salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but the policy was nevertheless disconcerting. “Now the people who were just clocking in and out were making the same as me,” he complained. “It shackles high performers to less motivated team members.”
    Mr. Moran also fretted that the extra money could over time become too enticing to give up, keeping him from his primary goal of further developing his web skills and moving to a digital company.


    Or perhaps employees will be more loyal and motivated:

    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.”

    For now, at least, Mr. Price has undoubtedly made an immediate difference in the lives of many of his employees. José Garcia, 30, who supervises an equipment team, was able to afford to move into the city and replace the worn tires on his car. Ms. Ortiz, who was briefly homeless as a child, can now visit her family in Burlington, Vt. Cody Boorman, 22, who handles operations out of his eastern Washington home, said he and his wife finally felt financially secure enough to start a family.

    There have been other ripples. Mario Zahariev, who runs Pop’s Pizza & Pasta, switched to Gravity after seeing Mr. Price on the news. When he learned his monthly processing fees would drop to $900 from $1,700, Mr. Zahariev decided, “I was not going to keep the difference for myself.” He used the savings to raise the salaries of his eight employees.

    I wonder how loyal those employees and clients are going to be...


    He's getting a metric butt ton of free publicity out of this and I'm guessing his "star" employees won't be tough to replace. It's not like there's a shortage of web designers out there. Per the article he's drawing in a lot of new clients but the profit on a new acquisition doesn't start rolling in for a year or so. Perhaps a short term loss for a long term gain? Unless his brother sues him out of existence. The joys of a family owned business. Either way, his company, and he's working hard to make it work, so what's the beef?


    A bit more detailed account:
    http://www.nytimes.com/2015/08/02/b...klash-against-the-raise-that-roared.html?_r=1
     

    GodFearinGunTotin

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    I've seen it time and again when you go playing games with salaries...People get pissed. When you're working your butt off, putting in extra hours, etc. and you find out somebody else is getting treated better that has a less stressful job, comes in 2 minutes before starting time, and is out of the parking lot 2 minutes after quitting time, it doesn't tend to lead to a harmonious work force.

    From another aspect, where are all the people that thought this was so noble? Why aren't they lining up to give this guy's company their business to support a policy they all thought was so great? I guess not everybody can get the Apple or Whole Foods love.
     

    BehindBlueI's

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    From another aspect, where are all the people that thought this was so noble? Why aren't they lining up to give this guy's company their business to support a policy they all thought was so great? I guess not everybody can get the Apple or Whole Foods love.

    While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year.

    Dozens in 3 months after the announcement.

    and as already quoted:

    Mario Zahariev, who runs Pop’s Pizza & Pasta, switched to Gravity after seeing Mr. Price on the news. When he learned his monthly processing fees would drop to $900 from $1,700, Mr. Zahariev decided, “I was not going to keep the difference for myself.” He used the savings to raise the salaries of his eight employees.

    So, he's also cheaper.
     

    GodFearinGunTotin

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    Dozens in 3 months after the announcement.

    and as already quoted:



    So, he's also cheaper.

    Wonder why he's having such a difficult time making it then? Maybe he's lost more customers than the "dozens" he claims have joined--dunno.

    Of course it may have more to do with what ever this means than anything to do with his spreading-the-peanut-butter-style-compensation-program.

    Making matters worse for Price is a lawsuit his older brother filed two weeks after the pay hike announcement.

    Lucas Price, who owns 30 percent of the company, accuses his brother of taking millions of dollars out of the company while denying him the benefits of his minority ownership.
     

    GodFearinGunTotin

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    Reread post 8.

    I don't know anything about credit card clearing or whatever it says his business is but I'm not sure why processing a bunch of credit card transactions would take years to start paying off. That had to be a really lean first few years of business.
     

    Hoosierkav

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    I am reading "Drive" by Daniel Pink; if the book is updated, this situation will make a great example on how paying well does not always pay off.

    One would think this is a no-brainer, but clearly there are problems.
     

    BehindBlueI's

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    I don't know anything about credit card clearing or whatever it says his business is but I'm not sure why processing a bunch of credit card transactions would take years to start paying off. That had to be a really lean first few years of business.

    Me either. I tried to look into what it takes to be a credit card processor, and it is apparently more complex than I would have thought. I had no idea so many different entities were involved in a "simple" credit card transaction. A transaction involves: cardholder - merchant - processor - acquiring bank - issuing bank - credit card association (Visa / MC etc). Everyone after the merchant takes a cut, but the fee is variable, and apparently even the type of business you are in, say grocer vs auto mechanic, can impact different fees along the chain. I thought Visa (or whoever) did the heavy lifting for logistics, but it appears they are more like the legislature, setting the rules and then letting the processors and banks execute them. My idea of credit card processing is "here's a box, swipe cards here, we'll take a cut, and give you cash in your account" but that's apparently sort of like saying "you machine things and swap things" to describe rebuilding a motor. I don't care enough to try and wade into that mess to figure out why the upfront costs are so expensive, if its logistics or licensing fees or underwriting fees or what, but I will figure if he built a multi-million dollar business doing it he knows.

    Take a look at the article I posted, he says a lot of his issues are from unforeseen legal costs as his brother is suing him over his decision. They budgeted for a downturn, they are phasing in the salary increases after making projections, but they didn't budget for infighting. His brother has been feeling "undervalued" and wanted the CEO to buy him out, and this was the anvil that broke the camel's back for him.
     

    IndyDave1776

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    If this guy set a $70K/year minimum wage, that means that every employee is earning the equivalent of $35/hour. In order for this to be sustainable, he has to get enough value from each employee to offset that cost. My guess is that this is a difficult thing to do. It, as previously addressed, gets worse if the better employees resent having dead weight prospering on their backs, which I am certain that there is dead weight to be found. I don't care how generous the pay is, most people are going to resent it when they see the guy next to them making that kind of money while having to do their own job and his both.
     

    jwh20

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    Any business that pays employees MORE than they are worth will not survive on its own. The minimum wage argument being used today has nothing to do with "value" but everything to do with "entitlement". These low-wage workers claim they DESERVE more because they WORK HARD and because they have BILLS to PAY. While I have some serious doubt about the working hard part, since what I see in many cases is the opposite, I'll even concede that point. But hard work does not equal value. I've operated a shovel in the past and it's hard work, no doubt about it. But is it VALUABLE work? No, almost anyone can do it, virtually without training and if I won't do it, someone else will.

    But what if you need open heart surgery? Is that hard work? To some degree it is, but a surgeon doesn't "work" as hard are a ditch digger, but he gets paid a LOT more. Why is that? VALUE! Just anyone is NOT able to do heart surgery. It takes years of study and years of practice and a good bit of specialzed skill that only a few are willing and able to develop. It's easy to say everyone deserves the same but that's socialism where pay is based on someone's idea of what people are worth and it doesn't work, it's NEVER worked anywhere, but it appeals to the lazy, the stupid, and the "entitled" because it promises them something for nothing.

    But if YOU were having open heart surgery would YOU want a minimum-wage surgeon? I sure wouldn't!!

    The leftists, of course, have no way to refute this argument. So they use the Alinsky tactic of attacking the PERSON of anyone holding this view. I'm a hater and a racist bigot because I hold this awful position. If you can't attack the position, attack the PERSON!
     

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