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Businesses The Almighty Buck

$70k Salaries Didn't 'Backfire'; Gravity Payments' Profits Have Doubled (inc.com) 500

AmiMoJo writes: In April, Dan Price, CEO of the credit card payment processor Gravity Payments, announced that he will eventually raise minimum pay for all employees to at least $70,000 a year. The move sparked not just a firestorm of media attention, but also a lawsuit from Price's brother and co-founder Lucas, claiming that the pay raise violated his rights as a minority shareholder. But six months later, the financial results are starting to come in: Price told Inc. Magazine that revenue is now growing at double the rate before the raises began and profits have also doubled since then. On top of that, while it lost a few customers in the kerfuffle, the company's customer retention rate rose from 91 to 95 percent, and only two employees quit. Two weeks after he made the initial announcement, the company was flooded with 4,500 resumes and new customer inquiries jumped from 30 a month to 2,000 a month.
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$70k Salaries Didn't 'Backfire'; Gravity Payments' Profits Have Doubled

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  • In other news.... (Score:2, Insightful)

    by Nidi62 ( 1525137 )
    Good PR that ties in with a current hot button issue is good for business! Film at 11.
    • by Sun ( 104778 ) on Wednesday October 28, 2015 @10:34AM (#50816715) Homepage

      While undoubtedly true, I'd rather companies use such things for PR than what you usually find them doing.

      I don't think he did this in order to get the good PR, but even if he did, he made the world a slightly better place. Good for him.

      Shachar

      • by Penguinisto ( 415985 ) on Wednesday October 28, 2015 @11:04AM (#50816957) Journal

        It's pretty simple: It's his money, he can do what he likes with it; there's no governmental coercion involved, so good on him for doing it.

        Now I am curious to see what would happen if every business in his town did the same thing. I'm also curious to know if he gave a similar bump in salary to those employees who were already making over $75k.

        Also, yeah he was flooded with resumes: janitors, receptionists, payroll administrators... I'm pretty certain that few of them would have been for positions that normally paid way more than $75k.

        • Re:In other news.... (Score:5, Interesting)

          by microbox ( 704317 ) on Wednesday October 28, 2015 @11:50AM (#50817483)
          The minimum wage in Australia is much higher... about $US15 per hour depending on which "accord" (industry) you are in. Having lived and worked in the US, Canada, and Australia, I can attest that minimum wage earners *work* about 4x harder than they do here. You see, hundreds of people line up for jobs that they then try to *keep*, since you earn about $US30k per year on them. (That is about the median US salary.) And the unemployment rate is comparable or lower, and the debt is less, in part because there is less need for social services. (Australia is one of the lower tax OECD countries.)

          This situation arose by a law passed in the early 80s that made it illegal for unions to campaign for pay raises without showing an increase in productivity. Businesses, in turn, had to pass on some of the increased earning from productivity gains. All of a sudden, we have unions and businesses on the same page, with unions responsible for their own worker productivity, and the amount of hours-per-year lost from industrial action was an order of magnitude lower than any other OECD country.

          Neoliberal economics gets a lot right, but there is a flaw in its theory surrounding labour law. People are not replaceable units, and workers are "sticky", in that they have families and other commitments. This is not true for some industries (like some types of internet work), but it is mostly true. This sets up a very big power differential between businesses and workers, and a type of "prisoners dilemma" where individual businesses act in a way that is helpful to themselves but detrimental to the aggregate.
        • Re: (Score:3, Insightful)

          by pla ( 258480 )
          I'm also curious to know if he gave a similar bump in salary to those employees who were already making over $75k.

          I wondered that as well - If I made $70k as a highly skilled professional at that company, and suddenly the mail boy jumps from $35k to $70k but I remained at $70k, I'd feel pretty pissed off!

          Not because I want others to make less, but because I have put a lot of time and effort and even straight-up money (via college and CE) into making myself worth what I earn. If suddenly that investmen
        • by spire3661 ( 1038968 ) on Wednesday October 28, 2015 @12:33PM (#50817917) Journal
          " I'm also curious to know if he gave a similar bump in salary to those employees who were already making over $75k."

          Why? This is part of the problem, it shouldnt matter. $75,000 is more than enough money to live off of almost anywhere in the country. I HATE that people expect to be raised up equally every time we try to lift the floor up a few inches for those on the bottom. It shouldnt matter what your coworker makes as long as you have enough in your bowl.
          • by bev_tech_rob ( 313485 ) on Wednesday October 28, 2015 @01:40PM (#50818573)

            Why? This is part of the problem, it shouldnt matter. $75,000 is more than enough money to live off of almost anywhere in the country. I HATE that people expect to be raised up equally every time we try to lift the floor up a few inches for those on the bottom. It shouldnt matter what your coworker makes as long as you have enough in your bowl.

            Where's my mod points when I need them? Totally agree! When someone has "scratched shit with the chickens" as my mom used to say and have lived thru what they are going thru, you tend to appreciate what the folks on the bottom of the totem pole face on a daily basis and are happy to see their lot in life improved by something such as this instead of snorting "Where's my fucking raise?". If I recall, even the higher earners got a 5K raise. Better than nothing, I say. You are already making enough money. Get over it.

    • Re:In other news.... (Score:5, Informative)

      by AmiMoJo ( 196126 ) <mojoNO@SPAMworld3.net> on Wednesday October 28, 2015 @10:54AM (#50816873) Homepage

      While that is undoubtably a factor, as TFA acknowledges, the point is that the previous reports of it being a disaster are wrong. Two people left, and they attracted a lot of new talent, and the company didn't tank. The predictions of dire woe never came true.

    • by jd.schmidt ( 919212 ) on Wednesday October 28, 2015 @12:30PM (#50817863)
      Not too long ago many were saying the common wisdom is the new salaries would ruin the company. Maybe we should all hold our horses and see how it works long term.
  • by tekrat ( 242117 ) on Wednesday October 28, 2015 @09:53AM (#50816401) Homepage Journal

    They like working for you... Who'da thunk?

    So when the revolution comes and the rich bastards are being lined up for the firing squad, Gravity's CEO will be the *last* against the wall. In fact, we might even retain him because we need that kind of thinking after, to rebuild.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      I hope this revolution you're talking about is people realizing they're being lazy dumbshits. 'cause I've been working since I was 12, and I gotta tell ya, in just 18 yrs of workin', there are a lot of dumb, lazy, motherfuckers out there. They do this deliberately. If I was a business owner, I want to pay you what you're worth; just like if I was a customer, I want to buy something I can afford and what I think is valuable to me.

      I am not a fan of my generation's idea of a high minimum salary. I don't earn 7

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        and I gotta tell ya, in just 18 yrs of workin', there are a lot of dumb, lazy, motherfuckers out there. They do this deliberately. If I was a business owner, I want to pay you what you're

        People are deliberately dumb? A business pays you what your worth and not the absolute minimum they can by any means possible?

        You might want to reevaluate your own intelligence before opining on others.

      • by Raseri ( 812266 ) on Wednesday October 28, 2015 @10:42AM (#50816781)

        Yet another AC rant that misses the point, but I'll bite, if only for the benefit of the peanut gallery.

        The point of this company's $70k minimum salary is an acknowledgement of the fact that every employee is valuable to the company, including the guy who cleans up your shit when you overflow the company toilet. If a position isn't vital to a business's operation, then there's no need for the position to exist. This has nothing to do with being lazy or entitled (nor is this about to become law, so don't soil yourself just yet). It's just a business owner who seems to have no interest in the usual M.O. of keeping as many employees as possible as close to poverty as possible.

      • by Anonymous Coward on Wednesday October 28, 2015 @10:46AM (#50816821)

        If they are being too lazy, why pay them at all? If you are offering a reasonable wage, you should have plenty of applicants willing to work hard and jump through hoops for the job. If your pay is crap, don't be surprised if you get crappy workers. That has nothing to do with minimum wage.

      • Re: (Score:3, Informative)

        by laie_techie ( 883464 )

        I am not a fan of my generation's idea of a high minimum salary. I don't earn 70k a year. And I certainly don't, absolutely, have to have it. 'cause I'm not buying lifted trucks, dropping $2,400 a month on a mortgage... and I didn't go to a college that would charge me $100k for the degree. In fact, I have enough money to pay off my student loans now, and I would be debt free -- completely.

        You're on the right track, but still a bit naive. Here are some rough numbers for a family of two in my city:

        70k - taxes = 49k
        49k - health / vision / dental insurance = 45k
        45k - 1 car loan = 42k
        42k - single car insurance for 2 drivers = 40k
        40k - moderate mortgage = 22k
        22k - plan with 2 smart phones = 19.6k
        19.6k - utility bill (water, gas, electricity) = 16.6k
        16.6k - food = 10.4k
        10.4k - gasoline = 8.8k ($30 / week)
        8.8k - tv / internet / landline = 3.6k (triple play = 100 / month)
        3.6k - property tax

      • by BVis ( 267028 ) on Wednesday October 28, 2015 @11:03AM (#50816945)

        I'll forgo the obvious "get off my lawn" jokes..

        No, you don't have to buy the lifted truck. No, you don't have to buy a house (but if you do, $2400 a month is not ridiculous - especially compared with rents in that area that are more than that), but if you want to go to a four-year college, you will be paying $100,000. My state university charges $24,000 a year. For in-state students.

        No, you don't have to have a smart phone, or a house with a bunch of land, or travel for vacation. You can live like a monk and be happy with the impenetrable amount of smug you have surrounding you, while your landlord fails AGAIN to fix your toilet. These things are not necessary, but they improve your quality of life. And that's really all people want, they want a salary that allows them to have a life that they enjoy outside of work.. and for there to be an "outside of work" where you won't get fired if you don't answer the phone from some idiot VP at 9PM harassing you because you're not still at work.

        For so long, we've just accepted the fact that your corporate masters are living off the sweat of your brow, leaving you with little to show for it other than massive debt (which they also make money on by investing.) It's been so long that we don't recognize what an equitable work arrangement looks like anymore - the "social contract" that used to exist between a worker and his/her employer has been demonized as socialism and laziness. Wages stagnate while productivity and profits rise, and anyone that points out this fact is immediately attacked for being greedy, lazy and/or socialist.

        The Millenials don't want anything that wasn't considered reasonable 40 years ago. They want a salary that they can live on, and they want to share in the success of their employer. These are not unreasonable things. Things have gotten so twisted that the dude offering this $70k minimum salary was repeatedly harassed by his peers in the business community - one of them actually said to him "If you pay your people that much, what incentive do they have to work hard?" The whole concept of getting what you pay for when you hire workers has completely fallen off the radar, because it would eat into the profits. No, these folks think that the less you pay someone, the harder they'll work. Which is bullshit. It should be the other way around, but we've all been convinced that this needs to continue so companies can be "competitive" (read: the CEO's third mistress wants another Porsche.)

        • by thaylin ( 555395 )

          No, you don't have to buy the lifted truck. No, you don't have to buy a house (but if you do, $2400 a month is not ridiculous - especially compared with rents in that area that are more than that), but if you want to go to a four-year college, you will be paying $100,000. My state university charges $24,000 a year. For in-state students.

          Is that for tuition and fees or tuition and fees PLUS housing? My state school, a top tier school, charges about 6k for tuition and fees, but 13K when you include housing and such.

        • by KGIII ( 973947 )

          I can attest that paying people MORE than what they're expecting (what they think they are worth) gets you hard work, dedication, quality work, and is an excellent investment. We used to have a fun game in the final interview which was more negotiations and form signing than anything. We'd tell them that we could not pay them the amount they'd requested but that we could pay them ten percent more. It is also worth relocating talent and cross-training talent. It is also worth investing in their eduction but

      • Chicken, meet egg. (Score:5, Insightful)

        by aussersterne ( 212916 ) on Wednesday October 28, 2015 @11:38AM (#50817321) Homepage

        As an employee, I can just as easily say that when I've worked at jobs at which I was compensated well, knew I could be rewarded even more, and certainly didn't want to lose the position no matter what, I worked my tail off and held myself to very high standards.

        When I knew that I could easily get another job at the same level of compensation, and that no matter how hard I worked it was unlikely to be rewarded with more pay, I put more of my time and energy into other avenues, like improving my skill sets and networking outside the company, so that I could transition elsewhere—as well as into simple quality of life stuff, since I knew that work wasn't going to enhance my quality of life all that much.

        So you're saying employees work less well = pay them less well.

        I'm saying pay them more = they'll work more and better.

        Chicken and egg. Which comes first? The rewards or the pay? You make one argument. I'll make another.

        Why are employees not as great as they could be? I'll go out on a limb and say it's because you're not motivating them to be as great as they could be, either through great leadership (which is rare), a great environment (slightly more common), or great compensation.

        And if you get great leadership, a great environment, *and* great compensation, I'm betting you'll somehow magically find that you have the best employees on the planet, who would do almost anything for the company—and do it at a very high level.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      After the revolution, when everyone is making at least $70,000/year, gasoline will be $7.00/gallon. A modest sedan will cost $45,000. Modest started homes will start at $500,000. Rent will be around $2000/month for a dump. A four year degree will cost a calm $300,000.

      Maybe by then, I'll be making a quarter mil annually. Thus starts another revolution for minimum wage to be six figures.

    • Customer inquiries are customer-initiated cold-calls. They have nothing to do with how happy your employees are.
      • Customer inquiries are customer-initiated cold-calls. They have nothing to do with how happy your employees are.

        Exactly. They're entirely related to how well you advertise. Those numbers will fall over time unless he figures out another method of advertising that can keep the numbers up - not likely.

    • Who'da thunk? Apparently damn few.

  • Just wait.... (Score:4, Insightful)

    by bobbied ( 2522392 ) on Wednesday October 28, 2015 @09:53AM (#50816403)

    As soon as your 15 min of fame is over.... Let me know how it's going then.....

    • Re:Just wait.... (Score:4, Interesting)

      by khasim ( 1285 ) <brandioch.conner@gmail.com> on Wednesday October 28, 2015 @09:57AM (#50816439)

      It probably won't change much, do to inertia.

      As long as his clients see the reward of staying with him as higher than the risk of moving to a different vendor, they will stay.

      And happy employees are one factor in his favour.

      • I don't think keeping customers will be his issue, nor will keeping employees. I expect similar levels of service and extremely low employee attrition.

        What I do think will be a problem for him is the cost structure for labor. He's likely to be at a disadvantage because his labor costs will be somewhat higher.

        It remains to be seen how all this will wash out. Right now he's getting a lot of free PR and has been able to turn that into a steady business, but over the long term, when he becomes "old news"

        • by khasim ( 1285 )

          Maybe. But he (and his competitors) have elasticity in their salaries. He reduced his salary and increased his employees' salaries.

          While his labour costs may be higher than his competitors', his overall costs can be the same. So he can charge the same as they do.

          Where this MIGHT hurt him is smoozing with other CxO's to get their business. Wearing the expensive watches and taking them to the expensive golf courses and showing off your expensive houses and expensive cars.

        • It depends on what percentage of his costs labor are as well as whether or not the higher salary allows him to choose better laborers. When you pay more money, you can be more discriminating in who you hire and will have a larger pool of applicants which are likely to be of a higher quality. If the higher wages allows him to have more productive employees it could well balance out, even if labor is a larger part of his cost.

          I don't know how it will turn out, but it makes an interesting case study. Too ma
    • Re:Just wait.... (Score:4, Insightful)

      by fredrated ( 639554 ) on Wednesday October 28, 2015 @10:21AM (#50816617) Journal

      The 15 minutes are up and they were successful, didn't you even read the summary?

    • It's already been 4 months. It's old news in a sense; I had forgotten about it. His company was supposed to tank already. At least, according to Limbaugh.

      • Re:Just wait.... (Score:5, Interesting)

        by PPH ( 736903 ) on Wednesday October 28, 2015 @11:09AM (#50816997)

        At least, according to Limbaugh.

        This made me remember an old joke:

        There was a cowboy and a carpetbagger riding on a train in the old west. At one stop, a beautiful lady boarded and sat across from the two of them. After a while, the salesman asked the lady, "Ma'am, would you sleep with me for ten dollars?" She paid him no attention.

        After some time had passed, he asked again, "Would you have sex with me for twenty dollars?" She just stared at him, angrily. As did the cowboy.

        Later, he asked, "Would you sleep with me for fifty dollars?" At this point, the cowboy stood up, drew his pistol and shot the man.

        The lady addressed the cowboy, thanking him for defending her honor.

        "Shucks, it wasn't that ma'am. I just didn't want some damned Yankee bidding up the price of prostitutes in Texas."

        Rush Limbaugh answers to conservative business interest groups who need people like him to keep the blue collar working class entertained and distracted. Beer, football and occasionally beating the wife are all OK. But don't get any ideas about changing the economic status quo.

    • Ask yourself this question: Why is there fame to be had here? Are people calling to hand them their money because they read their name on Slashdot, or are they calling because they feel they'll be treated better by a well paid employee?

      If it's the latter, then even if they go bankrupt next year, that means there's a market out there that doesn't rely on soundly screwing employees.

    • by AmiMoJo ( 196126 )

      In increased retention rate suggests that it probably will last. If more customers are sticking with them then there must have been an improvement in quality. Otherwise it would have remained the same, or even fallen as people who tried them after reading the news realized they were crap and went somewhere else.

      I don't think all of the benefits can be attributed to the free advertising.

  • Obviously... (Score:4, Insightful)

    by under_score ( 65824 ) <{moc.gietreb} {ta} {todhsals-nikhsim}> on Wednesday October 28, 2015 @09:55AM (#50816419) Homepage

    A great deal of this good news comes almost directly from the media coverage, not the fact of the the changes to pay structure. Still, it's an interesting case and I look forward to seeing how things are going in the 2 to 5 year range after the media coverage can be removed as a factor in the organization's performance.

    • Re:Obviously... (Score:5, Insightful)

      by willworkforbeer ( 924558 ) on Wednesday October 28, 2015 @10:07AM (#50816511)
      He is a genius, because he bought tens of millions of dollars' worth of PR by investing a small amount of money in comparison. He took a risk, and the reward is well deserved.
      In a commoditized industry like CC processing, advertising could eat a massive chunk of his profit. This was brilliant. He said his fortunes would rise if it worked, fall if not.

      Other companies should try it, seriously. Until it becomes old news, a major player from each industry has a window to do similarly by redirecting ad budget dollars into this type of structure.
    • Even after the media attention has died out, the awareness of the company has been catapulted forward in irrevocable way. No one knew who they were before, now they are known for their media attention getting pay policy, and now people actually know who they are for the business they do. So long as their service makes business sense, awareness acquired under one strategy is not that unreasonable to retain just by 'doing your job'.

      Not saying it's a bad idea or can't help or that it's a good idea and can't

  • A lot of people are going to see some sort of causal link between them raising the salaries and the business soaring. And while I'm sure a big salary bump does bring a certain stability to those who previously had the lowest salaries in the company, that morale boost probably doesn't explain, by itslef, the big sales increase the company has seen. I'm guessing the inrush of clients was caused by the PR storm this has created, and any try to replicate their growth will be met with less excitement.

    Get over it

    • The real question is, was this the original intent of the salary bump?

      I think that's a real question, but I think the more interesting question is still whether paying people more makes sense. And the answer, for these guys, is probably yes. Retention saves money, if you hire people worth a crap to begin with. Only businesses which are crap at hiring need to create a crap work environment that makes people quit.

  • by Anonymous Coward

    It is fallacy to assume that, just because revenue increased some time after this thing, it was because of this thing.

  • Not long a pizza chain local to the Minneapolis area raised their starting wage to $11/hour [bizjournals.com] and they've seen tangible rewards from doing this.
    • by boristdog ( 133725 ) on Wednesday October 28, 2015 @10:33AM (#50816709)

      Almost anything that increases worker retention and job satisfaction will be good for business.

      So many companies have forgotten this. Including the one I now work for.
      I am retiring in a few years. So to be a good employee, I hired a new college grad and spent the last 3 years training them as my replacement in a very complex semiconductor manufacturing data system.

      Well, profits were good, but slightly lower than wall street expected this quarter...so they laid off my replacement (among others).

      I am not going to spend my last three years here training another replacement. It takes years for a really intelligent person to learn this stuff. When I leave here there will be no one to do my job. Fuck 'em. I did what a good employee was supposed to do, in fact, had they laid me off I would have been fine. Happy even. But no, they had to screw over a bunch of young folks that should be the next wave of employees. I'm paid well, but I don't give a shit about this company any more. They don't seem to care about their future, so neither do I.

    • by Solandri ( 704621 ) on Wednesday October 28, 2015 @12:56PM (#50818147)
      This isn't new. Henry Ford stumbled across the same thing when he paid his auto workers $5/day - an unheard of figure at the time when average pay was closer to $2/day. He didn't do it because he was feeling altruistic. His factories were suffering from huge turnover, and it was expensive having to constantly train new workers. So he figured what the hell and jacked the pay up to reduce turnover.

      What he discovered quite by accident was that while the $2/day pay seemed to be favorable for the employer, it wasn't favorable for the economy overall. That is, too much of the company's income was going to the company's owners who wasted it on stupid things like gold toilet seats which don't really help the economy. A $5/day wage seemed like it would lower the company's profitability, but the boost it gave to the economy more than offset that decrease since the average worker spends a greater share of his income necessities which help the economy. Like being able to buy the cars that Ford was manufacturing. And the net effect was that his company made even more money than at $2/day.

      You can see the same thing if you compare the GDP per capita of various countries. The ones with greater income inequality tend to have lower GDP per capita [visualizingeconomics.com]. This is why despite being a fiscal conservative, I've never had a problem with unions (except in government jobs where there's no fiscal counter). Their functional mechanics may not be optimal, but they serve a valuable role in the economy.

      The U.S. is a stark outlier in the above graph. It has one of the highest GDP per capita, but it's been regressing in Gini coefficient for a few decades now. To me, that indicates our GDP per capita could be much higher if we could get our income distribution to be more equitable. Yes that'll mean CEOs and mutual fund managers won't be able to afford as big a superyacht. But that money in the hands of the middle class would be much more productive for the economy than cruising around enjoying the scenery while burning 10 gallons of fuel per mile. $70k as a minimum wage probably overshoots the optimal point, but we're far enough below the optimal point that I'm not surprised the dire predictions for the company didn't come true.

      (And yes, I really am a fiscal conservative. What both liberals and conservatives have to realize is that they're both right. Under certain economic conditions, liberal philosophies are correct. Under other economic conditions, conservative philosophies are correct. The trick is to figure out where the transition points are and not to stick with one philosophy long after you've left the regime in the solution space where it's true. Like believing that since some regulations are good, therefore completely regulating everything to make a state-controlled economy is best. Or if that since sometimes deregulation is good, completely deregulating everything is best. Even the Henry Ford example I gave above works only up to the point where workers start to lose incentive to improve due to insufficient increase in salary from those improvements.)
  • Well... (Score:4, Insightful)

    by EmeraldBot ( 3513925 ) on Wednesday October 28, 2015 @10:13AM (#50816573)

    This doesn't count because, as other Slashdot members have said, the news is a big contributor to this. Nontheless, I am very suprised no one's every run a study on this - paying employees more is cheaper in the long run because you save on training costs, you have higher morale, and you get much more quality for your money - one good worker at 80k per year can easily be worth 3 workers at 40k per year, and it also means less people to pay benefits for as well as a more tightly knit group with a smaller communication overhead.

    This practice started with some assholes in suits who wanted to pad out their already bursting accounts at the expense of those they are responsible for; not because any study actually demonstrated long term cost savings by getting many cheap employees with low wages over better trained higher ones.

    • I am very suprised no one's every run a study on this

      It's been a century... but really? No one... like a certain automotive manufacturer in 1914... http://www.forbes.com/sites/ti... [forbes.com]

    • Oh, it has definitely been studied, but like most things in economics is open to interpretation, is counter-intuitive to the MBA mantra, and most importantly subverts the employer as lord and master mindset (you know, the type that imagines being boss as telling everyone else what to do instead of seeing every customer as their boss).

      Gent I know who was GM at a Taco Bell broke it down to me like this:

      "You see every person here? They are a $10,000 investment I've made. They are going to cost me $10,000 in tr

  • by ErichTheRed ( 39327 ) on Wednesday October 28, 2015 @10:31AM (#50816683)

    This is what people who tout the "gig economy" and job hopping as the future don't get. There are some companies out there who will spend the time, hire the right people, and keep them for as long as possible by paying them and treating them fairly. They aren't sexy Web 2.0 startups, nor are they public companies for the most part, so you don't hear about them as much. Loyalty may be dead, but I think a lot of companies don't like the idea of churning through yet another batch of contractors/employees and would rather stay productive than retrain everyone constantly.

    The flip side is that the company is now forced to be extremely careful about who they hire. Sure, it's the US and you can get rid of someone because you don't like their shirt color that day, but you invest more in each employee by paying them more. So, a model like this can't work in a massive corporation that will hire hundreds at a time, not looking too closely at their qualifications. This is a good thing though -- hiring discipline makes sure you only bring on people who are actually going to do a good job. You just have to be dilligent and prepared to get rid of the people who are clearly coasting before they cost you too much.

    Personally, I'd like an environment like this. People are happier when their financial situation isn't dire and they can take care of their basic needs. Someone who isn't stressed about paying their mortgage or their other bills will be able to use those processor cycles taken up by worrying on the task at hand, which is probably what the owner had in mind. The truth is this, for every 10 crappy IT sweatshops, there are 1 or 2 decent employers who offer stable work. People who find situations like this tend to stay in them, which is good for productivity. I just wish we could get the sweatshop-to-stable ratio somewhere below 1.0 at least...

    It also helps that Gravity Payments is a credit card processor -- talk about a guaranteed, never ending revenue stream from which to pay your employees.

  • Take a company like Amazon, they show very little profit, and instead reinvest the money into the business. I'm not saying this company hasn't improved, but wouldn't something like average stock price over the last month compared to 6 months ago be a better indicator of how well a company is doing, assuming the hype over the move has died down?

    • The problem is that, especially for public companies, long term health of the business isn't really part of the narrative. Even small businesses like startups are just trying to survive long enough to IPO or get bought so the owners can get their payday.

      I think the business culture would have to change back to a point where people invested for the long term and business owners put their profits back into their businesses to fuel future growth.

  • by mbaGeek ( 1219224 ) on Wednesday October 28, 2015 @01:39PM (#50818561) Homepage

    the owner "paid" for the increase in employee salaries by lowering his salary.

    Also worth pointing out that people are making "at least" $70,000 - which implies that some (i.e. "more valuable") people are making more than $70,000. So this isn't some sort of "commune" [wikipedia.org].

    Under the "nothing new under the sun" category - Henry Ford did something similar during the early days of the assembly line (1914), introducing a $5 a day minimum wage (increasing from $2.34). The problem Ford had was people hated working on an assembly line. Employees would work a relatively short time then quit. The constant hiring and training was expensive - but more than doubling the daily wage was enough to increase employee retention and actually saved the company money ...

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