Also, it does impact you directly. As those around you get paid more, there is more disposable income which impacts pricing. Now, a hundred employees in a large city has zero actual impact, but the psychological resistance is already there because it will have an actual impact at larger scale (also could impact if there is a company store/cafeteria or such, but I don't think that applies here).
Then there is the notion of unequal raises. If someone else gets a 200% raise because the company has enough money, you are left wondering why you didn't get one. Did you not do good enough? Even if you already had a raise, if it was for some other reason, you are left wondering why you don't get one. Once again, even with a rational reason (because you were already making above the new minimum), the emotional damage is still there. Such a raise doesn't feel fair, regardless if it is or isn't.
Finally, considering how many times people are denied wages 'because the money isn't in the budget for it' (even if that is just used as an excuse), there is a chance one who deserves a raise can be denied it because the budgeted money for raises was already spent on other raises.
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.
All else being equal, people were happier earning $70,000 knowing that their peers earned $50,000, and unhappier earning $90,000 knowing that their peers earned $110,000.
I am likely wrong on exact numbers, but studies are well-known enough to be quoted in "Fooled by Randomness", "Predictably Irrational" and some other pop-psych titles.
Whether you agree or disagree, that's how I think those who are offended by this sort of change see it.
Do you not understand the logic of people who feel that way, or do you simply not believe in it yourself? If you were getting paid $35k/year to do the same job as everyone else who was getting paid $115k/year, would you feel that it was somewhat unfair?
In some respects they ARE taking my money ... the company now has less money to distribute based upon merit.
Also, I would immediately become a 9-5 employee and enjoy my weekends like my now equally paid peers.
1 - My productivity is X per month. (Whatever your definition of productivity, it must be, because I can ask for a bigger salary.) 2 - This other guy productivity is X/2 per month. (By the same rationale.) 3 - The other guy gets a raise, and now is paid twice for the same work. 4 - It follows that I'm losing the opportunity of a raise, because I do more than him.
It's not logically rigorous, it may not be true at all, but it's not an irrational reaction either.
For many people, it's about the relative ranking of their worth as a person.
I hope CEOs don't use the same thought process to keep their pay at 300x their minimum wage workers when the minimum wage is raised to $15.
I wonder if on the grave marker of humanity it will not read "THEY CARED TOO MUCH ABOUT SOCIAL SIGNALLING". The Universe is far too personal (and, curiously impersonal at the same time ) to care about whether other people are "winning". They'll get theirs, you'll get yours.
Question to you: how does others who used to earn less than you now earning the same as you affect you?
- Prices of products or services increase to compensate for the increase in salary.
- Higher paid employees don't get raises since the money that was previously allocated for that is being used to pay for the minimum wage increase. (This seems to be happening in this case, where more experienced workers received little to no increase in compensation).
- Other benefits are removed or reduced to cover the additional cost (health insurance, vacation, sick leave, etc)
- The company can no longer be profitable with the additional costs and reduces the size of their workforce or shuts down completely.
Which of these side effects (if any) occur, depends on the company and its current profits, management and/or investors, as well as how much they are already paying employees.
My guess is the latter.
The argument against minimum wage increases is that it has a ripple effect and raises other wages as well.
I can totally defend the desire to quit out of not wanting to have golden handcuffs, but quitting because someone "below" you is now not as far "below" you (or is now "shackled" to you, a ridiculous thought) is just spiteful and self-damaging.
I like to consider myself a regular at my neighborhood council's meetings (NE Seattle). When the city shows up to present development plans, only older generations who feel somewhat entitled to their neighborhood's "culture" show up and berate the plans. At the last one, some lady was pissed because a new apartment building might block partial sunlight in her yard, which is apparently more important than 400 market priced units becoming available in a city starved for housing.
Then these same people get upset at Amazon (I have no affiliation) for bringing in tech money and causing a massive housing shortage. They then allow their short term memories to forget what a shithole South Lake Union was before Amazon bought and developed on the land.
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.
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.
By the way, conservatives would not object to developing a neighborhood if that development meant more economic opportunities and more jobs.
If you want to split hairs over a dictionary definition, conservatives would prefer to keep things how they are and continue economic growth through expanding the private sector rather than expanding government to direct businesses on how to operate.
Regardless of dictionary definitions, if we agree that building restrictions are a bad policy, it is a valid and IMO interesting empirical question whether most people supporting it self-identify as liberal, conservative or something else. (I honestly don't think I could guess the answer.)
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_...
The thing is, like most words in English, "socialism" has taken on multiple meanings. Like it or not, there's the "textbook" definition and then then colloquial usage. And in America, "socialism" has come to refer to anything that involves redistributing wealth, providing social safety net(s), or otherwise trying to actively manage social inequality. It's a broader, more expansive definition, and I understand why purists hate seeing words diluted, but what can ya do? You can't put the horse back in barn, that ship has already sailed, can't un-ring a rung bell, etc., etc.
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.
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.
The basic premise of socialism is that the means of production are in social ownership. Paying employees based on the economic benefit they bring is not contradictory to socialism.
People call this socialism because, after so long hearing the term bandied about as a catch-all fear word, they simply apply it to anything that doesn't match their view of the one true God's own capitalism.
My salary has never been set by my value to the company - it has been set by my ability to negotiate.
From the article, it sounds like his business had a host of employees below and above that threshold, and the ones above felt resentful and unappreciated, with some people quitting. Remains to be seen if it will have any effect on the business, but it's the people above that level that tend to do non-trivial work, and are harder to train and replace.
It depends on the CEO's reasoning for paying the employees more. If he paid them more for economic reasons, reducing turnover, or incentive pay for increased performance, or a retention bonus or something like that then it's capitalism. If he paid them more because he's moralising about society, or out of pity, or fear of some kind of social backlash, then I would say it's socialism that motivated it.
Okay after reading the article, I would agree with Rush's take on calling it socialism.
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.
I am baffled by this mindset. You had something that you were happy with, but now it's suddenly not good enough, because someone that you consider your inferior has it too and it's messing with your sense of superiority. This isn't even throwing a tantrum because the neighbor kid got a better toy--this is throwing a tantrum because the neighbor kid got the same toy.
I've never really understood that mindset, back when I worked for other people I didn't give a shit what other people earnt as long as what I earnt was enough to cover my overheads and seemed reasonable for the work I was putting in.
I'd love to talk to somebody overpaid by three orders of magnitude but only to find out how it happened, in a "The Man Who Would Be King" sort of way. The world is far too arbitrary and random for anything like that to have too much meaning.
Indeed, someone in the office next to me in a dying company went on to harvest quite a bit of stock options - I spoke with her husband years after. She was definitely worth it, but it's still like the opposite of a tree falling on you.
The second rule is that what I make is important, but only to me and no you can't find out. Consistency has its limits.
There is a Ken Burns film about Mark Twain, who went broke trying to fund a printing process ahead of its time in the manner of a bad gambler. It's heartbreaking.
Bob Wills went broke on a failed entertainment venture, but made it good at considerable personal cost.
"Life entails a parcel of risk" - Mr. Merriwether, "Little Big Man".
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.
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.
That's a good way to put it. Most people it seems have extremely negative opinions of her, but I'd wager that most of these people have read only opinions of others about her rather than anything actually written by her.
Although, I can definitely agree with the sentiment that her fiction is...weird, especially reading it today with the significant cultural changes that have occurred since it was written. But her non-fiction I think is pretty well written - whether you agree with it or not, it's far from a joke as most people who've never read any of it make it out to be.
"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."
Back to our subject, the pay scale that this business owner proposed is not actually socialist much less communist. It was just a communitarianist approach with centrist leaning on the right-left spectrum but these Limbaugh bots just freaked out like useful idiots that they are when they heard about this more egalitarian, considerate, humane compensation scheme barking at the business owner.
This is really pathetic and it's really disheartening to know about this silly reaction from these brainwashed people.
Finally, I must congratulate this brave guy on his ethics and I wish him all the luck even though I might have some reservations or concerns regarding infusing the workplace with political messages and using business ventures as political conduits to spread these messages about certain social causes but after all I support his decision of seeking a flatter pay scale and doing what he could to close the income inequality gap between the poor and the rich even on a micro-scale like what he did inside his organization.
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.
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.”
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.
Or he just wanted to do what he thought was the right thing. I hire day laborers through a local service on a regular basis. I pay the workers directly and I am supposed to give them $9 an hour. I typically pay them $15-$20hr an hour at the end of the day.
He may or may not be right, but if shaking things up even outside his company was the intended effect, mission accomplished.
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...
Isn't that literally un-doing a good deed?
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)
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.
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).
I'm mostly saying he should have thought it through more, even if he did go through with it.
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.
Human nature is predictable and depressing.
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.
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.
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.
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.
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.
WTF? Low gas prices are almost uniformly good for the economy. The only companies it isn't good for are oil companies. And they make so damn much money no matter what that it really doesn't hurt them very much.
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!"
"Uh, you'll try not to let the door hit you on the way out?"
Interesting that people have struggled with this concept for at least 2000 years...
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.
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.
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.
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.
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.
Is your hypothesis that the higher income, even if temporary, may afford significant relief from this?
curious all the quitters said the same thing (if you read the article)
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.
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.
It sounds like the dev was inexperienced which is why he was talking about improving skills to work at a tech company.
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.
[0] - Tax Credit for Businesses That Share Profits - http://www.nytimes.com/politics/first-draft/2015/07/16/profi...
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.
It asks "do you mean unbridled capitalism?" and then gives me only results for unbridled capitalism.
... is a 'small business'!?