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Minimum Wage

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Minimum Wage

An interesting article from this week's NY Times.
A boss of a company in Seattle has set a minimum wage of $70,000 for all his employees.
Minimum Wage
Will other companies follow his lead?
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Re: Minimum Wage

Wages go up, prices go up, the value of the money in their pocket goes down, so ultimately they won't be any better off if other companies follow suit...
That's assuming of course, as a company they don't end up broke and bankrupt... Grin
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Re: Minimum Wage

Did you bother to read the article? It doesn't appear so.
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Re: Minimum Wage

Do you have a psychic mind to come to that conclusion? I didn't think so.... Grin
I have a friend over in Texas who runs a manufacturing business who's already explained the difficulties this idea has caused, so, no need to read it, but I did anyway, it talks of equality in terms of pay scales (bad move in a capitalist country like the US of A, he'll be branded as a communist now), how he pulled the business out of the recession, etc., but, if other companies follow suit with this, then for one, prices would have to increase to cover the wage increase, as profits cannot be guaranteed to be there to sustain such an endeavour, and as the prices go up, the values of the money drops, so $70k could end up being physically worth about $40k of 2 years ago, but they still have to push up the numbers to make things work...
Then of course is the problem of incentive, if Sweepy Joe the Janitor earns $70k a year, then what's the incentive for him to move up the employment ladder to become Joe the CEO? It'd cause a lot of staleness in the employment sector if people are just taking low-end, simple jobs and not training up to be the best they can be, it'd end up like how the torygraph is saying kids here don't know what a welder or a glazier is, you have to have the money scales there to create the incentive to learn new skills and move up to bigger and better things...
Hate to liken this to the USSR, but, farmers back then had no incentive to grow food, because no matter what they did, they got the same end result, and that resulted in wheat crops rotting because they didn't feel the need to do the work, as it was all fair and equal, apparently...
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Re: Minimum Wage

Quote from: twocvbloke
Hate to liken this to the USSR, but, farmers back then had no incentive to grow food, because no matter what they did, they got the same end result, and that resulted in wheat crops rotting because they didn't feel the need to do the work, as it was all fair and equal, apparently...

And the sharing went wrong because some people didn't care.
I remember my dear old Mum saying that in her village they all shared a horse for plowing etc. But one person who used the horse never ever bothered to care for it properly so if your turn came after them the horse was so out of sorts it would be next to useless for days.
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Re: Minimum Wage

Other companies are already following Dan Price's idea. Interesting follow-up with him today. Obviously not all companies will set a $70k minimum as it will depend on a companies' median wage level. He is not setting $70k for all employees. Some already earn more than this and will continue to benefit from wage increments.
There is also a benefit to the government which could also work in the UK. Many of the lower paid employees have their pay topped up by the government and this will not be necessary under this plan.
nanotm
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Re: Minimum Wage

so hypothetically (numbers for effect only)
my company employees 650k people, the bottom 140k are all on minimum wage at £6.50/hr with an average of 20 hours a week, the next 500k are all tech/engineer types on salary of £35k/yr with average hours of 35+/wk  the next 9.95k are managers at various levels and work an average of 40 hours a week and earn an average of £70k/yr with the last few being top level execs on £150k+/yr, to save on costs I contract out all the lower 2 tiers of workers to employment agencies, if I brought all my workers into direct employment I wouldn't actually spend any more on wages but the workers would get a fully paid NIC and get slightly more cash in their skyrocket...
if I were to follow this model and remove the top level execs from the wage slough it would cost me hundreds of millions to put everyone else onto the same minimum salary package of 35k /yr, to cover the monsterous increase in costs and extra admin staff required to facilitate it I would have to increase my prices for the service I provide to the country, so if i'm running say BT I just increased my costs by 250 million a year and as a result I increase the line rental charge to consumers by £5 a month and for business's by £25/mt to cover this huge increase,
all my managers told they were going to get such a huge pay cut will of just quit the jobs leaving me unable to provide the service i'm contracted to and every phone line /broadband customer in the country will be screaming about the cost increase and every problem that gets reported cant get fixed because I have no managers to arrange it ......
roll the clock forward 5 years, no matter how many people I recruit non of them stick around for more than a few months because there all so disheartened at the idea no matter how hard they work, no matter how much they get promoted there still being offered the same salary as the floor sweeper..... morale is bad the business is collapsing and I keep having to increase wages thus costs, my communist experiment is an unmitigated disaster but there is no possible way I can reverse it wihout breaking employment law (cant drop a wage without unilateral agreement from the workforce) where does my communist company go from here ?
just because your paranoid doesn't mean they aren't out to get you
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Re: Minimum Wage

Quote from: nanotm
where does my communist company go from here ?

Down here:
nanotm
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Re: Minimum Wage

and therein lies the problem with all the "great" socialist agenda's, they sound good at the start but very quickly turn into the brown n smelly stuff.... because the people who dreamed up the ideas were all narrow-minded idiots incapable of seeing past the end of the first few months and totally incapable of capturing the "big Picture" in "real terms"
buzz words that socialist politico's toss around like smarties without ever getting a wiff of understanding about what such terms actually mean!
just because your paranoid doesn't mean they aren't out to get you
Community Veteran
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Re: Minimum Wage

More mixed up thinking in your 2 posts today.
Firstly the company owner is not a socialist.
He is paying a minimum wage of $70k - not a maximum. Some employees enjoy bigger salaries and will continue to retain them and to receive increments in line with company policy.  Nobody on the staff will take a pay cut.
He works in a very competitive field and will not be able to pass new wage costs on. The company has to work more efficiently.
nanotm
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Re: Minimum Wage

the only mixed up thinking is yours to be honest,
you called it minimum wage and linked an article across about how great it would be if every employer did the same thing and that article other than to explain that some moron in the finance industry figured out if he paid his processing clerks enough cash they wont take bribes to jack peoples cards ...... explains quite readily that every person in the business with be getting the same 70k a year from the top to the bottom, only after a challenge from more highly paid employees did he change that original statement to his company and he wont be able to make up the difference from his expected 2 mill profit, in fact according to the maths he's going to be loosing money by enacting his plan.....

its a stupid idea for two reasons, the first is that the business will fail quite spectacularly in short order if it doesn't grow, the second is unless all the other related businesses do the same thing all their low paid staff will be going on strike / walking out /refusing to work until they get a commensurate salary which will have knock on effects on the industry and massively increase the charge ratios per transaction making banking more expensive for everyone.

what the owner should have done was, implement a business pay policy whereby there was a maximum pay bracket tied to the lowest pay bracket of say 10x salary, this would allow for far greater flexibility and allow them to grade increases, guy at the top wants a 5% pay rise that's fine but guy at the bottom needs a 55% one to make it happen (funnily enough the exact same sort of rule that used to exist in the UK until the "welfare first" (labour) party got into power and repealed it (along with dozens of other regulatory powers that controlled the pay gap)
but that's just one of the many flaws in all the arguments about "pay gap" and "worker moral" or "worker loyalty", those are all things you get right when you have provide the right environment and the right amount of slack and don't be a money grubbing fat cat chasing the bottom line!
just because your paranoid doesn't mean they aren't out to get you
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Re: Minimum Wage

In an interview Dan Price made it clear the $70k was a minimum but some employees will still get more so that they strive to better themselves in the company.
As he said the move will not mean any increase in his fees as he must remain competitive in the industry.
Time will tell if your half-baked ideas are correct or his, and who turns out to be the moron - you or him. I know where my money would go Wink
nanotm
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Re: Minimum Wage

he wont cover the salary gap for 70 people jumping from 45k to 70k (25k *70 = 1.7mill) 30 people doubling their 35k to 70k (30*35k= 1.05 mil) giving you a total wage increase of 2.8mill paid for out of 2.69mill (based on the figures given in the article you so kindly linked to, that means the company is loosing 110k a year (because you cannot use the guessed at growth to fund the actual running cost before it occurs) he will be running at a loss and end up bankrupt rather quickly if he follows through with his announcement!
he is gambling that he will get more cash through expansion and still return a large enough profit to run the business but what happens if he doesn't ? he's going to get deposed as CEO by the board and then there going to have to actually pay another mill on top for the new one !
his numbers don't make sense and nor does his announcement as reported in the NYT, much like the green parties socialist ideal manifesto......
just because your paranoid doesn't mean they aren't out to get you
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Re: Minimum Wage

Do you really think this is something that hasn't been costed? Naturally his projections includes growth and he has already seen this where companies are using his services as a result of his announcement.
This is how business works. Business is always a gamble but a calculated one.
Time will tell.
nanotm
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Re: Minimum Wage

and when the market contracts in a few years time and he still has a huge outlay on staffing costs he will be undertaking layoffs as there wont be the capital sat in the bank to weather the storm with because he spent all the money when the sun was out instead of saving some for a rainy day
in essence repeating the mistakes that the communist regimes of Russia or china made and indeed the labour party here in the UK have always made
the problem with spending money you don't actually have yet is that the worst case scenario always occurs!
just because your paranoid doesn't mean they aren't out to get you