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The Almighty Buck Businesses

Company Testing Standardized Salaries Is Struggling 480

jmcbain writes: In April 2015, Dan Price, the CEO of online payments company Gravity Payments based in Seattle, announced that all employees would have their salary bumped up to a minimum $70,000. Slashdot covered this news. Since that time, however, things have not gone well. Some employees quit because they felt it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Furthermore, after reducing his own salary from $1M to $70K, Mr. Price is now renting a house 'to make ends meet'. On an unrelated note, Mr. Price's brother, who is a co-founder of the company, is suing him.
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Company Testing Standardized Salaries Is Struggling

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  • Ha! (Score:4, Insightful)

    by enigma32 ( 128601 ) on Friday August 07, 2015 @04:42PM (#50271723)

    Imagine that.

    Differences in pay exist for a reason: Because different people perform functions of different value to the company.

    • Re: Ha! (Score:3, Insightful)

      Just don't let anybody from the occupy movement hear that, or else they'll give you an earful about how they deserve both:

      1) A high paying job because dammit, they're human beings, and they deserve it!
      2) Low price rent in a high cost, high demand, area. Because again, being human and having feelings means they deserve it.

      • Re: Ha! (Score:3, Insightful)

        by Locando ( 131600 )

        You seem to have lost track of the topic of the article, which was that a CEO himself raised the wages of his lowest-paid employees. Are you saying there's something entitled about his running a business according to his values? Or do you actually have a problem with his values but are too... something (insecure? incapable?) to actually mount a coherent moral argument against them?

        The housing price stuff is a related but separate issue. Lots of NIMBYs causing that issue are otherwise quite conservative. And

        • Re: (Score:3, Informative)

          by iconeternal ( 889316 )
          He just wanted to take a cheap shot. Occupy was about the system being corrupt, nobody was demanding the communist utopia he's implying.
          • Re: Ha! (Score:5, Informative)

            by JDAustin ( 468180 ) on Friday August 07, 2015 @07:47PM (#50272777)

            Yea, they were. I had deal w/ the Occupy smell on almost a daily basis in Oakland. The hammer and sickle was a very common sign then.

            • by Mashiki ( 184564 )

              That hammer & sickle pretty common in every protest/march/parade in SoCal. Funny enough Occupy was working fine until it was co-opted, and the progressive stack happened. The things you learn when you research, and I'm still against the idea of it much like I was when it started up.

        • Re: Ha! (Score:4, Interesting)

          by NostalgiaForInfinity ( 4001831 ) on Friday August 07, 2015 @08:07PM (#50272867)

          Or do you actually have a problem with his values but are too... something (insecure? incapable?) to actually mount a coherent moral argument against them?

          What "moral values" would that be? Destroying a company that a lot of people worked hard to build, just in order to feed his own ego? Of course, if he owns the company, it's his right to destroy it. That doesn't make it a moral thing to do.

          Or we could of course go the route of public housing with standardized, non-market-based prices, but something tells me you wouldn't be a fan of that bit of hard-nosed realism

          You mean like this? https://en.wikipedia.org/wiki/... [wikipedia.org] With decades-long waiting lists for even getting one of those drafty, cramped, noisy apartments? Thanks, I'll take US-style capitalism over your "hard-nosed realism" any day.

        • Re: Ha! (Score:5, Insightful)

          by epyT-R ( 613989 ) on Friday August 07, 2015 @08:41PM (#50272995)

          Socialism doesn't work because people are NOT equal in ability or utility to an organization. Equalizing the payoff for everyone just disenfranchises those who end up doing the majority of the work. The real question is how much more of society are we going to ruin in vain attempts to disprove that. Sure he can run his own company any way he likes (assuming no shareholders), but it sounds like his attempt at social 'justice' isn't going any better than others have. It just builds resentment and infighting.

          Too much price fixing ends up damaging other companies providing prereq goods and services. Then the state has to step in to 'save' them as well. Eventually the whole 'market' is centralized and dictated by politics and feelings of a ruling class rather than the realities of cost and consumer demand. Then it rots away eg: the Soviet Union.

          • you're probably confusing socialism with communist dictatorship (as it existed in eastern europe and russia until 25 years ago). anyways, yes, what you describe is not working, but so is capitalism, whis seems to be in a major meltdown right now. time to find some new system (or at least some middle ground and some political leaders who can sell this without resorting to extreme positions)
      • Exactly (Score:5, Insightful)

        by Anonymous Coward on Friday August 07, 2015 @06:29PM (#50272383)

        Those who can contribute significant, above-and-beyond value naturally feel that people should be rewarded in proportion to their contributions.

        Those who cannot contribute significant, above-and-beyond value naturally feel that everyone should receive equal rewards, regardless of their contributions.

        By setting policies that pander to the second group, you wind up losing members of the first group, resulting in a company full of under-performing slackers. No surprise such a company doesn't do well.

        • Those who can contribute significant, above-and-beyond value naturally feel that people should be rewarded in proportion to their contributions.

          This is only natural. However, this ends up leading to promotions for people whose "above-and-beyond" contribution means working late frequently and getting the work/life balance out of whack. This can end up with a de facto situation that anyone who works damn hard during their allotted hours but never stays late is clocked as "underperforming". The CEO's point was to release that tension and expectation, freeing up employees to have proper downtime without stressing over perceptions.

          The problem is that it

    • Re:Ha! (Score:4, Insightful)

      by khasim ( 1285 ) <brandioch.conner@gmail.com> on Friday August 07, 2015 @04:51PM (#50271783)

      Not really. In the military, for example, no matter what your speciality is, you are paid the same. Based upon rank, time in service and time in grade.

      I think that he went about it in the wrong way. Not that the core concept is flawed.

      • Re:Ha! (Score:4, Informative)

        by jklovanc ( 1603149 ) on Friday August 07, 2015 @04:59PM (#50271851)

        Almost, there are some extra pay/bonuses for certain things [chron.com].

      • Re:Ha! (Score:5, Informative)

        by cirby ( 2599 ) on Friday August 07, 2015 @05:00PM (#50271857)

        ...except that's not actually true.

        For example, there's been the long-running practice of reenlistment bonuses. Different jobs get much higher bonuses for reenlisting.

        The base pay may be the same, but the difference between, say, a low-ranking cook and a low-ranking nuclear weapons technician is pretty startling when that bonus is calculated. As in "tens of thousands of dollars."

        • Re: (Score:3, Informative)

          by Anonymous Coward

          ...except that's not actually true.

          For example, there's been the long-running practice of reenlistment bonuses. Different jobs get much higher bonuses for reenlisting.

          The base pay may be the same, but the difference between, say, a low-ranking cook and a low-ranking nuclear weapons technician is pretty startling when that bonus is calculated. As in "tens of thousands of dollars."

          It's not just re-enlistment bonuses. Some people get additional pay every month or year depending on their job. To cherrypick an extreme example, the military doctor who happens to hold O4 or O5 rank makes tens of thousands (if not $100K) more than the average line officer of similar rank.

        • Re:Ha! (Score:4, Interesting)

          by swillden ( 191260 ) <shawn-ds@willden.org> on Friday August 07, 2015 @09:32PM (#50273143) Homepage Journal

          ...except that's not actually true.

          For example, there's been the long-running practice of reenlistment bonuses. Different jobs get much higher bonuses for reenlisting.

          The base pay may be the same, but the difference between, say, a low-ranking cook and a low-ranking nuclear weapons technician is pretty startling when that bonus is calculated. As in "tens of thousands of dollars."

          There is also extra pay for various specific skills. Some of them cut across job categories, for example you get more pay if you speak another language. Others are specific to the job; electronics techs get extra pay, medical personnel get extra pay, etc. People in high-skill jobs tend to get promoted faster and therefore be higher in rank than those in low skill jobs, which also boosts their pay.

      • Re:Ha! (Score:4, Insightful)

        by 0123456 ( 636235 ) on Friday August 07, 2015 @05:06PM (#50271901)

        Not really. In the military, for example, no matter what your speciality is, you are paid the same. Based upon rank, time in service and time in grade.

        And this company is doing the equivalent of paying a private on his first day the same as a Colonel who's been in the army for ten years.

        Who could have guessed that would cause problems?

      • Not really. In the military, for example, no matter what your speciality is, you are paid the same.

        Except for the generous re-enlistment and retention bonuses that are paid based on specialty. As a grunt, I never qualified for any bonuses, despite being an expert at using my entrenching tool [wikipedia.org].

    • Imagine that.

      Differences in pay exist for a reason: Because different people perform functions of different value to the company.

      I'm confused. Other than the very vague claim that they're struggling what is the actual problem? OK, some employees were butthurt. Yes, he had to adjust his lifestyle to match his reduced salary but other than being sued by his brother for paying himself too much prior to the 70k move how is the company struggling?

      • Re:Ha! (Score:5, Informative)

        by ganjadude ( 952775 ) on Friday August 07, 2015 @05:29PM (#50272063) Homepage
        people are leaving because they dont feel valued when someone who just got hired is making as much as them, having been there for 10 years.
        • I turned down a tech support job because a co-worker was still there and making the same amount of money I did when we worked together ten years ago. Because I did contract work for numerous Fortune 500 companies over the last decade, the company offered to rehire me for 80% more money than the coworker. Those 2% raises for staying in one position don't amount to much.
    • Re:Ha! (Score:5, Insightful)

      by waynemcdougall ( 631415 ) <slashdot@codeworks.gen.nz> on Friday August 07, 2015 @06:11PM (#50272287) Homepage

      Imagine that.

      Differences in pay exist for a reason: Because different people perform functions of different value to the company.

      No. This is a common mistake. It is wrong.

      Differences in pay exist because of supply and demand. If there are many people willing to do your job, then pay for that job will be low, even if your job is valuable (see nursing, teaching, etc). Yes, many jobs we "value" are highly-paid (but not all). But that is because there is greater demand (or less supply) for people to fill those jobs.

      In short, do not confuse correlation (high value jobs have high pay) with causation (we do NOT give high pay to people with high value jobs because we value the jobs).

      We pay people what we need to pay in order to find someone to do the job. That is the "value" of the job - as an economic valuation. Do not confuse that with the moral worth of the job. Or its intrinsic value to the employer.

    • Re:Ha! (Score:5, Interesting)

      by fahrbot-bot ( 874524 ) on Friday August 07, 2015 @07:31PM (#50272715)

      Imagine that.

      Differences in pay exist for a reason: Because different people perform functions of different value to the company.

      And some people feel they deserve more pay than others, regardless of whether that's actually true. Don't underestimate the power of "ego".

      Why, actually, does it matter to one person what another gets paid? If *you* are getting paid a fair wage for your efforts and can live the life you want/need to live, why does anything else matter? It's not a contest of whoever has the most wins.

      Personally, I make more than I need. I have deferred raises in favor of my teammates who need the extra money more. I have volunteered to take time off w/o pay, when the work load permits, to prevent teammates from being laid off. They have families and bills, my wife died in 2006 and I'm debt free. In the past 9.5 years, I've given about $100k to friends who were in trouble, through (almost) no fault of their own or who needed something extra to pursue bettering themselves. They didn't ask for help and were willing/trying to make it on their own -- I could help so I did.

      I have also had a few comments about my behavior. A few years ago, when I volunteered to reduce my hours to reduce the impact of a budget shortfall on my teammates, because I could live on less money, one of my manager's managers remarked that I could keep working and give him the extra money I didn't need. I replied that would be happy to give him *all* my money, if he'd give me my wife back. (Haven't heard from him since.)

      According to a NYT article, Dan Price bumped the salaries of his employees when he learned that many people were having trouble making ends meet on their salaries and decided to pay them a more livable salary. Some of his other employees got ticked off because of what they think people *deserve* to be paid.

      Some CEOs make 100-300 times what their lowest-paid employee makes. Based on the CEOs you know or know about is that right? Perhaps we'd all be better off if people concerned themselves less on what they *can* earn and more on what they need to earn and about the benefit of their teammates and, if you're in management, the benefit of the company as a whole. Employees that feel valued -- really valued, not that "employees are our most valuable asset" bullshit -- and secure are often better employees as they have less to fear and worry about.

      I will be writing Dan an actual snail-mail letter commending him on his actions and wishing him the best.

      Remember Sue... [tumblr.com]

  • GTFO! (Score:5, Funny)

    by tehlinux ( 896034 ) on Friday August 07, 2015 @04:43PM (#50271739)

    Wait, so great employees don't like making the same as their mediocre colleagues?! Get the #*@! out of here!

    • Re: (Score:2, Interesting)

      They evidently don't like it, but it's pretty dumb to quit because someone else got a raise, esp. when it means the CEO is now making less than you. I suppose the story was supposed to be "CEO sacrifices pay so engineers can upgrade Escalades to Ferraris," which of course would have been very heart touching.

    • Re:GTFO! (Score:4, Interesting)

      by CauseBy ( 3029989 ) on Friday August 07, 2015 @06:21PM (#50272337)

      There is an entire parable about this in the Bible, in Matthew 20.

      The gist is: fuck you, you earn plenty, stop griping about others getting a slice of pie.

      • by geoskd ( 321194 )

        There is an entire parable about this in the Bible, in Matthew 20.

        Funny thing about the Bible. Once you get past the crazy religious parts, its got a lot of good advice about living a happy fulfilled life...

    • Re:GTFO! (Score:4, Interesting)

      by Darinbob ( 1142669 ) on Friday August 07, 2015 @10:04PM (#50273239)

      Mediocre employees who mistakenly think they are great are upset that great employees who they think are mediocre are being paid the same.

      $70K was also the minimum. What they complained about was that the person making a subsistence living at $20K to sweep the floors may have gotten a huge raise whereas someone make $100K got no raise at all. People can be petty that way.

  • by K. S. Van Horn ( 1355653 ) on Friday August 07, 2015 @04:48PM (#50271761) Homepage
    This sounds like something out of an Ayn Rand novel. It's very similar to something that happens in Atlas Shrugged.
  • Just Like Walmart (Score:5, Insightful)

    by onkelonkel ( 560274 ) on Friday August 07, 2015 @04:51PM (#50271791)

    Same thing happened at walmart when they bumped their lowest paid workers up to the minimum wage.
     
    http://business.financialpost.com/news/retail-marketing/wal-marts-pay-raise-creates-thousands-of-unhappy-workers-its-pitting-people-against-each-other
     
    Senior workers got no raise and feel disrespected.

    • I don't get it. What the fuck does the "minimum" in "minimum wage" mean?

      Has the US redefined the English language?

    • Translation: Selfish assholes throw a temper tantrum that someone they feel is "beneath" them might actually have a chance at supporting themselves with hard work.

  • by The-Ixian ( 168184 ) on Friday August 07, 2015 @04:53PM (#50271805)

    It's kind of weird the way this was implemented but I like the notion.

    I think that if you are willing to work, you should be able to support yourself comfortably. I am not sure that absolutely equal pay for everyone is exactly right although I do think that people who quit over having someone else make as much as them is pretty petty and entitled.

    I would personally not care one bit if a fast food worker got paid as much as me or more.... good for them, I wouldn't want to do that job so why would I complain?

    • I would personally not care one bit if a fast food worker got paid as much as me or more.... good for them, I wouldn't want to do that job so why would I complain?

      There were no fast food workers at that firm.

      A better comparison would be someone at YOUR company, who's a newer hire than you, has less experience and can't code as well as you, and basically just clocks in and out without contributing much, and because of a SJW CEO's action now makes the same salary as you.

      • Yes, you are right, bad analogy.

        But anyway, as long as I don't take a pay cut... why would I care?

        It is none of my business what other people make... as long as I have what I need to get by, I couldn't care less who makes what.

        I am not better than anyone else. I learn new things from all kinds of different people every day no matter their age....

        • if everyone around you gets a raise, and you dont. you ARE taking a pay cut (in buying power) as costs will go up on general goods
        • by cas2000 ( 148703 ) on Friday August 07, 2015 @06:26PM (#50272361)

          send this guy back for more brainwashing.

          you're supposed to resent people beneath you getting anything at all, despise them for being worthless losers. poverty is not a circumstance that people find themselves in, it's a moral failing caused by their own failure as human beings. they deserve to be fucked over.

          you're also supposed to envy people above you, their success proves that they are sublime beings of great moral worth who also deserve what they get. and if you worked harder and longer and stuck your nose ever further up your boss's arse you too might one day deserve it.

          didn't you watch TV at all? or are you just immune to the non-stop re-education programming?

    • I am not sure that absolutely equal pay for everyone is exactly right although I do think that people who quit over having someone else make as much as them is pretty petty and entitled.

      Say you are a college graduate who has worked for the company for 5 years, including the startup where you barely made a living wage, work ten hour days (often weekends) and have little time off. What if a high school dropout who just got hired in the mail room working 8 hour days 5 days a week makes the same as you? I know I would be pissed.

      • You should stop worrying about other people: happiness comes from within. Are you earning enough with the correct balance to live a life you enjoy? If yes, then go and live that life and enjoy it! If no, then go get another job. If you're enjoying your life it does not detract from it if someone else too es enjoying theirs.

    • by eulernet ( 1132389 ) on Friday August 07, 2015 @05:44PM (#50272141)

      There is a saying in France that says:

      "the heart is on the left, but the wallet is on the right."

      While I partly agree with you, I would like to share my own experience.

      20 years ago, I worked for a game company where the boss wanted full equality, so he paid everybody around the same salary.
      While the approach is humanist, in the end it did more bad than good.

      There was a huge trust between members, but beginners were terrible and were slowing down the experienced people.
      I wholeheartedly loved working for this company, but it collapsed after finishing the first game.

      The lessons are:

      1) pay people as low as you can, but as much as they need to live a comfortable life (and won't want to quit your company). Everybody has different needs, and I don't count "home cinema" as a need !
      2) pay well your better workers, don't count on their faithfulness especially if you fire people randomly
      3) be frank. People (especially the awful workers) are obsessed why they don't earn as much as their colleagues. Tell them why they don't deserve a higher salary.

  • wtf (Score:4, Insightful)

    by rogoshen1 ( 2922505 ) on Friday August 07, 2015 @04:59PM (#50271853)

    whenever CEO pay comes up on this site, people bitch about how much more the CEO makes vs rank and file. Okay, valid complaint.

    Here a CEO bucks that trend, nukes his own salary and gives everyone a *minimum* 70k salary -- which is different from everyone getting 70k. He not only does a commendable thing: paying employees more than necessary; but walks the walk and takes a massive paycut himself.

    The real story here is the crab-pot mentality. If I'm making 100k, and my cubicle neighbor goes from 35k to 70k, that doesn't have any impact on me whatsoever*. Why complain?

    *small scale, intra-company comparison here, yes I know if the minimum wage was suddenly 70k, that's a different beast.

    • The real story here is the crab-pot mentality. If I'm making 100k, and my cubicle neighbor goes from 35k to 70k, that doesn't have any impact on me whatsoever*.

      Of course it does. Money for wages isn't spontaneously generated, it has to come from somewhere. Spending too much on employees who aren't worth the money (because you could get them, or someone just like them, for much less — obviously this was the case) means that the company's bottom line suffers. It's a waste of money which could be used for something useful. It also impacts the maximum wage that other employees can make, since it's got to come out of the budget. It absolutely does affect you.

    • by 0123456 ( 636235 )

      If I'm making 100k, and my cubicle neighbor goes from 35k to 70k, that doesn't have any impact on me whatsoever*. Why complain?

      Of course it does.

      If I'm working a stressful 60 hours a week to take home $100k, and the company suddenly starts paying the janitor $70k, I'm quitting and becoming a janitor.

    • The real story here is the crab-pot mentality. If I'm making 100k, and my cubicle neighbour goes from 35k to 70k, that doesn't have any impact on me whatsoever*. Why complain?

      Say you make $70K/yr in a job that required a university degree and ten years experience and have worked for the company for five years. Your work week is usually 60 hours and you often work weekends to get projects complete. Say a new guy is hired in the mail room. He is a high school dropout works 9-5 seven days a week and never works weekend. What would you think if he also made $70K/yr?

      It does impact you financially as well. Every company has a budget for wages. When some wages go up others are held dow

    • Sorry but, a company run that like has no future. While the media like to claim they leave because of 'unfairness', in reality anyone with half a brain would leave because by valuing all labor as the same, the company is setting a cap on value of knowledge, experience and skill. Think about if you were on $70k already. Well no matter what, your pay rise will almost certainly now be tied to the 'average'. So now you are trapped in job that doesn't allow you to benefit from gaining knowledge, experience and
  • by Bearhouse ( 1034238 ) on Friday August 07, 2015 @05:03PM (#50271881)

    Having run a company, I can get this...it's a refreshing and seemingly decent approach to sharing the wealth.
    Great contrast to all the money-grabbing, "screw the employee" bosses that are in the news all the time.
    Maybe where he went wrong is not allowing an "upside".
    Sure, not everybody who *thinks* they deserve extra really do.
    But in my experience some sure as hell do...the trick is to identify them and give them fair value.
    (My top staff regularly got 20% over market rates - they earned me far more, so I was happy to pay.)

    Snip: "You can ignore economics, but economics won’t ignore you.
    That’s the tough lesson Dan Price, CEO of Gravity Payments, a Seattle credit-card processing company, is learning.
    Four months ago, Price announced he’d slash his own multimillion-dollar pay and set a company-wide $70,000 minimum wage.
    He got the idea after a friend explained her difficulty paying back student loans and surviving on $40,000 a year — a salary many Gravity employees were making.
    Price’s stand against income inequality made him an immediate darling of the left.
    But key employees saw it differently.
    Financial manager Maisey McMaster liked the idea at first — until she thought about it.
    “He gave raises to people who have the least skills and are least equipped to do the job,” she told The New York Times. Meanwhile, “The ones who were taking on the most didn’t get much of a bump.”
    She thought it would be fairer to give smaller raises, with the clear chance to earn more with experience. Price brushed off her doubts; she quit.
    Also out the door: Web developer Grant Moran. He says, “Now the people who were just clocking in and out were making the same as me.” Plus, having your pay level a very public matter is a problem, with “friends now calling you for a loan.”
    Moral of the story: Some people work harder than others; some have stronger skills — and they don’t think it’s fair that they’re paid the same as others.
    Price will soon be left only with workers worth his chosen minimum wage — or less.
    The company is already in chaos thanks to the policy — but the big problem is ahead, as it tries to keep growing and innovating with only mediocre talent"

    • by laird ( 2705 ) <lairdp@nOSPam.gmail.com> on Friday August 07, 2015 @05:21PM (#50271999) Journal

      Don't leave out that the business is booming, doing much more business than before, and getting tons of applications from high quality candidates attracted by the higher wages.

      So yes, the transition might be bumpy. But nobody's salary went down, so they're all making at least what they agreed to for their job. It seems weird to me that people are angry that while they got a raise, but so did lower paid workers, so they aren't making as much more than the other guy as they used to.

      A good writeup is at http://www.forbes.com/sites/mi... [forbes.com] .

      • by Anonymous Coward on Friday August 07, 2015 @05:42PM (#50272127)

        Indeed. Gravity Payments isn't struggling. They've lost a few customers, but they've gained so many new customers that they had to hire new employees to handle them all. The CEO's salary reduction isn't enough to cover additional new hires forever - he went from a million dollars salary to $70k, and gave all that money to the employees. So the company has to pay for the new hires' minimum 70k salary, and pay it out of the millions they're making from the massive growth surge Price has created with his generosity.
        Yes two employees have quit. Yes Price is being sued by his brother. Sour grapes, all of them, pissed off because others were getting goodies and they weren't.
        The big story here is how economists somehow fail to report the hugely increased profitability of the company.

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Don't leave out that the business is booming,...

        How is this not modded up?

        There was a time when the discussion on Slashdot had an element of genuine curiosity - when people were actually interested in fact and reason. Now, it seem to be mostly just people trying to push their own simplistic ideology - even against basic observation and logic.

    • by Shadow of Eternity ( 795165 ) on Friday August 07, 2015 @05:36PM (#50272107)

      And in the meantime those two selfish assholes who quit solely because they couldn't stand to see other people not treated worse than them have made themselves radioactive. Why would I ever want to hire people who might throw a huge public tantrum and quit because I don't treat other people badly enough to soothe their ego?

  • You should not expect any kind of loyalty from your employees, so you have no obligation to have any for them. Use them, work them down, toss them, replace them.

    They do the same with you.

  • by MobileTatsu-NJG ( 946591 ) on Friday August 07, 2015 @05:51PM (#50272177)

    The 'trouble' this article talks about is some drama amongst the workers, part of that fueled by the public spectacle of what happened. A critical ingredient of what's missing from this story are the answers to questions like: "Did the increase in pay cause profit margins at the company to drop?" and "... by how much?"

    All this article really says is extreme actions have consequences.

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