I froze the salaries of my executive team to benefit other workers
theguardian.com
theguardian.com
Perhaps if senior executives received minimum wage paychecks for two months (and no bonuses), they might gain some empathy.
This was a really insightful comment. I had never thought about it that articulately, but yeah if you are only dealing with stress temporarily, you can't even comprehend what it's like to deal with that FOREVER. It's just an impossible concept to grasp for someone who has that level of a safety net.
I think you'd have to limit their usage of previously acquired funds. Once you're rich, you can ride out a 2 month storm like it's nothing.
Poverty tourism is bollocks.
The greedy behavior that leads to the kind of inequality faced by today's society is now so well established that it has become hard to recognize for what it truly is.
The fact that this article's author seems to find it novel to trickle down the proceeds of the company to the bulk of it's employees is a pretty good indication of that.
So in other words: It no longer requires any malice to pay this way, as it's just a cultural norm in the business world.
By the way, it's also a cultural norm in the US to complain about the lack of generosity among those richer than you, and yet spend almost 100% of your salary helping yourself, when you could just as easily spend it on those less fortunate. Charitable donation is trivially easy, even easier than raising the minimum wage at your company. Yet how many people in these comments are highly-paid millennials who would rather buy the newest iPhone than donate that money to those in need?
If we want to understand the psychology of those at the "top," we need only look no further than ourselves. Unless you're at the bottom, you're also at the top as far as people less fortunate than you are concerned.
Sure. But I don't think this is a sufficient defense — at the extremes, cultural norms can result in horrific things even though individual actors may not be motivated by malice.
> By the way, it's also a cultural norm in the US to complain about the lack of generosity among those richer than you, and yet spend almost 100% of your salary helping yourself, when you could just as easily spend it on those less fortunate.
There's definitely an incongruity between people's expectations of those above them and what they contribute themselves. We should all give more! But even if I were to donate 100% of my salary, it would barely dent things for those 500 employees.
When we complain about people above us, we're (usually) not chastising individuals but calling for systemic solutions to these issues. The overarching goal isn't for people to donate more of their resources, but to structure things in a more equitable way so that people don't rely on individual generosity in the first place.
At which point you are better served by targeting the cultural norm and the harm it does, rather than shaming the individuals following it as malicious. Not only is it more accurate, but it's more effective.
> When we complain about people above us, we're (usually) not chastising individuals but calling for systemic solutions to these issues.
I wish this was the case, but 99% of the rhetoric I see is chastising individuals.
There's a lot more people like you than billionares in the world, though.
............ THAT'S THE PROBLEM
And if you're talking about wealth... Well, having all the world's billionares give up their money at once wouldn't have much of a positive impact either. (The 1% in the US - not exactly billionaires, $10,000,000 puts you there - had about 35% of US wealth in 2007)
Analyzing this situation in terms of a qualitatively homogeneous property differing between people only in magnitude (income or wealth) is a mistake, in my opinion. (And so is taking a psychological approach.)
The most important thing the people at the ‘top’ have here is not any particular amount of money or income, but a radically different relationship to labor and the workplace than the mass of people who work under them. They have special powers (e.g., the power to set wages) and their income comes not only from producing things or providing services using their brains and muscles, but through owning and managing capital. At the very peak of the top, there are owners of capital of whom virtually no management at all is required.
It's because there are people, and of necessity a minority of them, in such a position at all, that the interests of society (as well as its privileges) are divided in such a way as to produce the inequality we have.
When wage laborers _do_ have control or input over things like wages, we _don't_ see the same enormous gaps between the highest and lowest paid employees at those firms. And in the case of that more agreeable outcome, too, the cause is not psychological— it's not that wage laborers are kinder or more generous people than executives, but that their position entails certain interests which are different from those of executives, and given the chance they will guide the firms they work at accordingly.
But the comments here are primarily attacking the "greed" of people richer than them, who would rather spend more money on themselves than on those in need. They're making a psychological argument, and so I am responding in kind by pointing out that these very complainers are hypocritically spending their paychecks the same way: on themselves, not on those in need.
Businesses _shouldn't_ exist for the purpose of making the executive team and the shareholders rich at the expense of the employees. American dream or not, businesses serve a purpose in _society_ not just the tiny fraction of society who have the skills to start and run the business.
The goal now is to make executives and shareholders disgustingly rich, and use the government to subsidize the underpaid workforce that generates that wealth. We've created a socialist state for corporations.
I know you think you’re arguing against me, but what you described supports my position.
It doesn't matter if it is hard to recognize, if you are unable to understand something then you are by definition incompetent with respect to the task or idea.
So, yeah, it's out there.
This is a great insight which unfortunately doesn't get much attention in the inequality debate. I'm now rich enough to be in the top 0.5% of the world. The marginal utility/value of money is so low for me that I've begun valuing my time and optimizing for it.
I, however, do think about it once in a while. I could give away a non-trivial amount of money without getting materially impacted. The same money though will make a massive difference to someone below or around the poverty line. E.g., sponsoring a student, helping a business loan, etc., The capital that's getting accumulated in the richest top 1% people is such a massive waste that could help a huge portion of humanity.
Purely from a utilization (of money), perspective inequality is a suboptimal state, a massive one at that.
https://www.givingwhatwecan.org
I really recommend focusing on cost-effectiveness when you give, however much or however little you give. See GiveWell for amazing research!
Should we give up not working at weekends because it's a "non-religious sabbath"?
10% is a nice round figure. It's small enough that many people can afford to give up that fraction of their income without getting into money trouble. It's large enough that many people will be doing a really substantial amount of good to the world if they give that much of their income to well-chosen charities. And, yes, it happens that some religions have used the same figure, which probably helps "give 10% of your income" seem like a reasonable thing to suggest.
Is there anything bad about any of that? If there is, I don't see it.
I don't claim that there's anything optimal about giving 10% of your income. But I don't see any reason to sneer at people for doing it, either.
Doesn't it? What else motivates things like progressive taxation?
Please, do not start believing you will be making a difference through charity.
I observed rich people in the past that out of some half-conscious guilt started thinking they need to give back in some way. But they don't want to be inconvenienced by doing it personally or by evaluating which people deserve a donation or have an important material problem solved, by themselves. They prefer to unload their guilt -- or the need to feel good about themselves -- through a 3rd party. Basically, buying goodwill and good conscience with money.
That's not giving back.
I have known several rich people and they go through a very similar process. It's very saddening to observe.
If you want to make a difference with money -- go out there. Physically! Meet people with less. Talk to them. Ask them what is the hardest thing in their lives at the moment. Ask them what's a regular concern for them. Do that 100 times, or 500 times. Understand their struggle. Many would just squander the money in a week, even if you gave them a bag of it. Try and aim your efforts and money where it will truly count.
It's not an easy thing to do. But it's a worthy cause to pursue, much more worthy that a random charity.
Apologies for off-topic.
IMO, what you're saying is akin to saying: Criminals on the streets? Why pay to hire more cops when you can physically go out on the streets and BE the cop?
You are also very generously assuming that charities actually do what they are supposed to. Here in Eastern Europe where I live this has been proven to be false, many times. Are you convinced it's better where you live?
Granted this is anecdotal evidence but my overlook on a number of average people flaws -- and I am including myself in this group, I am not pretending like I am on some sort of a moral high ground, mind you -- indicates that most people are not... ready to receive money, if that's even the right word.
It's more or less "OMG money money money!!!!" out of them and they just mess up.
But truthfully, and this is not sarcasm, I'd love to be proven wrong.
It makes no sense to me why the CEO and higher ups of the company I work at still work there. They are already set for life many times over. I can only speculate that they share a character flaw that they all see as virtuous. However it isn't--they are impeding someone's chance to "make it" in life, especially the older executives who could have stepped aside a decade ago or more. Even if you just look at the absurd salaries, it doesn't paint a pleasant portrait of greed in America.
There is a great absurdity to life in America. We basically work for the appearance of something that ends up being eaten away to a large degree. Taxes and inflation keep the goalposts moving away but we don't rebel because it's a magic trick and who doesn't like magic?
I don't work because I enjoy it but because it is a means to an end that is a better formula than some other arrangement. I would happily volunteer my time, travel, read, or simply do nothing if I could.
My theory is that they simply like their work and get satisfaction from it. They get paid a lot but they also work a lot and I can’t imagine anybody doing this to themselves if they didn’t genuinely like it.
The work argument is bullshit too. I'm convinced with a few months of hands on training, any passionate and competant person can do the job of a CEO. It is really a job that lacks any qualifications beyond managing a small network of people. CEOs don't work 100x as hard as someone working full time and a second job to make 1% a CEOs pay.
I think most CEOs - used to working extra hours/hard have the least idea what they would do after they retire.
[0]: https://en.m.wikipedia.org/wiki/Psychopathy_in_the_workplace
I expect a large number of middle/upper-middle class people would already be made for life if they just moved to a low cost area/country and simplified their lifestyle.
But we carry on because we want more.
At very large-scale companies, it doesn't always work as well as coud be hoped. A company ten times the size of this company may not have ten times as many extremely-highly-paid executives, but it probably has ten times as many people further down the pyramid.
For example, the CEO of United Airlines is compensated $18 million-ish. There are 88,000 employees of United. That's $200 dollars per employee per year. You'd have to find a lot more money than that before you started seeing benefits to average employees on the same scale as here. Even if you assume all the highly-compensated execs can account for 5x-10x that, you're still well short of $14k/yr.
I'll start with this: http://ir.united.com/corporate-governance/company-leadership
This says there are 24 executives at United (I counted). If you assume literally every single one of them is paid as much as the CEO is and redistribute all that money across the whole of United, then that's 24 * $200 = $4800. $200 was rouding a bit ($207 is ungainly to work with), so it's actually closer to $5000.
Now, $5000 a year isn't nothing. It's undoubtedly and unquestionably a life-changing amount of money for a lot of people struggling to get by on manifestly unreasonable and unfair minimum wages.
That said, $5k is also far short of the $14k number above. And we had to make several unreasonable assumptions to get here.
Realistically, the policy proposed here is freezing salaries and re-directing raises among executives. Most compensation would be unaffected. Further, not every executive will be paid as well as the CEO. Assuming generous 10% yearly raises and that other executives are paid around half of what the CEO is, you get a result that looks like $5000 / 2 = 2500 * 0.1 = $250 / yr.
Which isn't far from the initial result. (And still includes some unreasonable assumptions)
I'm actually surprised how merely broadening the calculation a bit already results in a quite significant amount. 5k is quite a bit!
Anyways, thanks again :).
1) Pegged the CEO <-> lowest-paid worker (or contracted worker, so you can't just contract out the janitors) to no greater than 10 to 1.
2) Balance out the next few layers of management to reflect that cap.
3) And see what pay looks like for the lowest-paid workers.
If you don't like 10-to-1, maybe we do 20-to-1. Find a nice low ratio, though, and if people want to make more, they can run the business such that everyone makes more.
There's this idea we're dealing with here that there's massive, virtually untapped, make-everybody-well-paid amounts of money being wasted on management overhead. It's a very reasonable idea. Managers at the top get paid an amount of money that's clearly and obviously incredibly excessive and has absolutely no connection to anything!
Yet, it might be worth considering that this might not actually be true in the important broad sense. What if there isn't a vast pool of money locked up in management salaries that would dramatically improve the lives of workers? What if there isn't the "fix the car money" or "send a kid to college money" another poster was rhapsodizing about for every worker? Might it be worth considering that in most cases, managers aren't actually paid vastly more than their direct reports?
Besides, there are plenty of ways to structure businesses that would get around something as simplistic as a compensation ratio.
There will always be another "But what if we run the numbers differently?" scenario.
When 10 people own as much as half of the population of the country, there's something there. Calling it not "a vast pool of money" might be semantics, because there's definitely something there.
It's perhaps worth considering that most companies might not replicate that structure internally. Given the numbers above, this strikes me as good reason to suspect that the approach you describe - while definitely a good idea to promote equality! - might not have the the numerical outputs you expect.
You have to be wildly fantastical to get there, though. Meaning it's not a number that should be taken at all seriously as anything other than a work of numerical fiction. $250 is a number that's likely much closer to reality, though probably still too high unless you can find a much broader swath of people to freeze the salaries of.
EDIT: Also, you're taking income off the top of the tax brackets and giving it to someone at the bottom of the bottom, so you get a tax multiplier where you take $1 from me and give $1.50 to someone else. Also, you probably don't need even a 2% or 3% haircut off the engineers' salaries to make every support position a $100k/year job with full benefits and 401k matching, unless your engineer : support ratio is crazy.
EDIT EDIT: Yeah, pushing everyone to $100k/year is probably overselling the idea. You could still free up a life-changing amount of money for people making minimum or near-minimum wage.
I'm not sure a 3% haircut on engineers at Google would give them enough funds to make every support position $100k while also doing what you suggested and bringing all the contracted services in-house.
If we assume a 3% haircut on an average engineering compensation of $250k, and 45% of the organization, you have $6k and change per support headcount. And this is without bringing TVCs in-house.
Unless the support staff are all making right about 95k, this seems like it might not quite work out.
However, one point of definitions, I am not using "support staff" to refer to "non-engineers", I am using it to refer to "workers who perform services that are not part of the company's operations, such as building maintenance, cleaning, and cooking". Most of the non-engineering staff at Google are not support staff, they are non-engineering employees doing non-engineering work equally related to the core operations of the business. Sales, partner relations, data center management.
I also don't know how much these individuals are payed, although I hope to god it is "well above minimum wage".
In any case, sure, you're probably right and you can't actually bring everyone up to SWE-minimum-wage (100k$+benefits) with a small haircut off the engineering staff, but a small haircut off engineering, distributed to the 10-20% of employees and contractors being paid the least is a life-changing amount of money. +$15k / employee / year to the bottom 20% of earners is "quit your second job" money, it's "get the car fixed" money, it's "have money to put aside for a rainy day" money, it's "send the kid to college" money, while $7.5k less per year is "retire three months later" money for an engineer.
I know lots of people focus on less profit-driven motives for their career, but I bet even more do not, especially at places like Google.
I know my engineering curriculum hasn't focused on empathy, or ethics much at all. Unfortunately you can't educate the selfishness out of humanity.
I find these notions curious, and rather at odds with how I expect thinking humans to interact with the world around them.
Perhaps there's something else you think our universities might be failing to teach?
The 2015 SEC filing includes 8 named individuals in its executive compensation program. In 2015, they received between $500,000 and $1.25M in base salary, and between $1 million and $10.7M in long-term incentives. In addition, they received between 110% and 150% of their base salary in annual incentives (bonuses). Two of them received additional monthly cash payments of $100,000 and $40,000 for temporary duties in addition to their normal post.
Granted, that's only the top 8 individuals at the company, but if the lowest-compensated individual among those 8 is taking home >$2M I'm fairly certain that there are a lot more than 10 making more than $500k.
It's also still the case that that pile of money is not much divided among 88,000 people, but you could still raise the income of the lowest-compensated 10k employees by several thousand dollars, or fund employee daycare, or something other than give it to a small group of people.
I'm not rich per se, but I make enough that I can give away 10% of my pre-tax income to nonprofits without it materially impacting my quality of life, so that's what I do. If my society won't distribute wealth in a sane way, then I'll do it for them. If anyone else has similar feelings, consider taking a percentage off the top of your own salary and allocating it to charities that will help the less fortunate.
>In order to figure out whether selfishness leads to wealth (rather than vice versa), Piff and his colleagues ran a study where they manipulated people’s class feelings. The researchers asked participants to spend a few minutes comparing themselves either to people better off or worse off than themselves financially. Afterwards, participants were shown a jar of candy and told that they could take home as much as they wanted. They were also told that the leftover candy would be given to children in a nearby laboratory. Those participants who had spent time thinking about how much better off they were compared to others ended up taking significantly more candy for themselves--leaving less behind for the children.
Trying to take a single minor difference in behavior in a controlled setting and apply it to an entire demographic is bad psychology. Imagine someone doing this with a demographic distinction other than SES.
Perhaps we're all just flawed, self-centered people trying to keep up with what our environment defines as the good life.
An executive making a luxury purchase is different if their company is successful versus laying off lots of employees.
Buying a yacht can be part of an understandable (although expensive) hobby/lifestyle as opposed to something simply wasteful like buying solid gold toilet seats.
Building beautiful architecture, commissioning art, or adventuring/exploring (e.g. being the first person to climb X or to cross Y) can contribute to the vibrancy of society even if it isn't super practical.
https://en.wikipedia.org/wiki/List_of_European_countries_by_...
When I lived in the US I thought more Europeans lived in gorgeous architecture and had excellent public transport. Living in Europe, I find a lot of people think Americans are wealthier than reality (though if they're thinking of tech salaries, they're probably right - that EU/US disparity is enormous).
Also, your original post needs a qualifier on the scope of "European countries".
At what point does someone need to be ashamed of the money they make? Is anything over the $50k figure that is quoted as the maximum happiness per dollar figure considered shameful?
Buy a boat for $100,000 and it'll cost you money to maintain and run.
Buy a boat for $100 million and it'll earn you money if you lease it out or take passengers during the 11 months of the year that you're not using it.
Note that a boat is a bad example on your part. There are lots of other things you can do that are more likely to earn money.
For that matter if you can afford a $100 million boat, the crew cost is a line item that you can ignore and thus your boat sits in port 11 months just so you can have your boat. If you really like that boat it isn't a big deal that you are losing that much money.
If you invest it directly you support whatever you invest in. (you might or might not get it back depending on if the investment is successful) The best case you supported a new things that everybody buys, thus creating a company that employees a lot of workers.
If you buy luxury goods you directly support all the employees of the companies that make those goods, keeping them in a job.
Even if the investment choice was a life saving drug, the luxury purchase means those employees have money and they are likely to donate to research of life saving drugs.
1. You spent the money on consumption. By definition, consumption means that whatever you buy ends up being less valuable after you are done with it (otherwise we would consider it investment - note that unsuccessful investment is also a form of consumption under this definition). Consider an extreme example, where you commission a massive yacht to be built for you, then use the yacht recklessly and sink it. All of the time of many people, all of the materials that went into building it have been wasted. In aggregate, we are all poorer as a result. The fact that the yacht company now has more money just means that they now have a relatively larger claim on a smaller overall economic pie than they did before.
2. You invest. Instead of spending money on yourself, you instead use the resources you have a claim to that the money represents (e.g. the people and the resources that could have resulted in a yacht for yourself) to create real value for others. This makes the overall economic pie larger (and also changes the distribution of claims on this pie that people have).
3. You donate money to other people, burn the money - neither consume nor invest. The overall economic pie is unchanged, but the distribution of claims on this pie by various people has changed.
Of course, there are caveats and nuances, but in general option 2 makes society richer in aggregate, option 1 makes it poorer, and option 3 merely changes who gets to decide what to do with the resources that we have while neither growing nor shrinking this resource base.
That said, we shouldn't depend on the largesse/good nature/etc of a few rich individuals - if there is sensible minimum wage, sensible labor laws (and enforcement of these laws), sensible housing laws etc, we probably wouldn't be in this situation in the first place.
We have already tried the "markets will fix things, markets will regulate themselves" blah blah strategy - it doesn't seem to work. When was the last time a big company voluntarily cleaned up its own oil spill or other environmental disasters?
There has to be minimum wage laws (and environmental laws etc etc) and they have to be sensible. It boggles my mind that you'd argue against this. If you want to encourage small businesses to start, there are other ways to help them - interest free loans, tax free zones etc
When I started here the first thing they sent me to a mandatory class: 2 hours to say (in different ways) "All the drains outside go directly to the river, so if you see a chemical going towards a drain you are to find the cover near to the drain (a sticker) and block that drain, then call maintenance to figure out what it is".
The above happens several times a year, and you never hear of it because we clean up our own mess. (almost all the mess is the brake line on a delivery truck breaking)
It's useful to remember, though, what the world looked like before climate regulation. Rivers in industrialized cities were once choked with toxic effluent from tanneries and heavy industry. Even in Silicon Valley semiconductor manufacturers dumped heavy metals down the drain, contaminating groundwater and causing many billions of dollars of damage to be cleaned up by the taxpayer.
I do know the EPA fines are a cost of doing business to some. A few of them have decided that the public relations problems were getting too bad and cleaned up their act.
Minimum wage laws, like employer healthcare mandates, are a feudal solution (specifically, viewing employers as feudal lords responsible for the minimal upkeep of their employer-subjects) to a capitalist problem. They are better than nothing, but worse than making minimal upkeep a public function, taxing appropriately to support it, and doing less to impose additional costs or barriers to mutually beneficial employment.
It is entirely possible to put in laws that are reasonable for larger companies to follow, but not hurt small business growth.
For example health insurance costs 10x or more either via either the public exchange or for a small business to offer relative to corporations in the same market. That's a huge disincentive for employees to work for you.
If we were really interested in making it easier for small businesses we'd improve social safety nets, not weaken them further with re-regulation. We need to reduce the risk/pressure for employee rather than concerning ourselves with how cheaply we can exploit an underclass.
I wish he had shared the numbers.
For budgeting, you take the hourly x 2080, so $15,600 before taxes. I've filled out one too many government SF-424 forms back in the day.
I was told, when I was a contractor, to use 1920 x bill rate, so I had a realistic idea of the yearly with 4 weeks off.
But the bottom 50% earns just 11% of all income, a little over $1 trillion. You could really improve their standard of living with even modest redistribution of the $9 trillion earned by the top 50% to the bottom 50%. But unfortunately middle class taxation is a complete non-starter in the US, even though that is how almost all European countries pay for their welfare states.
A society where the top 90% pitches in to help the 10% in distress is very different to the one where the middle 50% takes from the top 25%, and leaves some scraps to the bottom 25%. - Milton Friedman
1/3 of any fines collected in this way would be payable to citizens who report the problems.
It's totally unfair for the taxpayers to subsidize businesses by feeding and housing their underpaid employees.
The point of the draconian 4x charge is to make it less expensive for companies to do the right thing and quit with the starvation wages already.
But legislatures work for their donors, not their citizens, so it won't happen.
Hiring someone to work part time who is a single mother: company gets saddled with massive fines.
Doesn't seem like the best plan.
It would need careful writing, otherwise it might introduce more precarity by encouraging employers not to offer full time contracts.
While the lowest income groups have historically had low college participation, I saw it as a reflection of a class of people not even daring to dream an impossible dream, as it would cost too much. Making it free would of course change the idea around it.
For every good private college I know of (and almost every good public school) prices are free or enormously close to so for people in the bottom quarter of incomes. Making it free for everyone might change the psychology, but not the reality for lower-income people today.
When you reach school leaving age, you have a choice, start full time paid work now (with the social safety net if you can't find work), or spend at least 3 more years of full time education without that safety net, doing part time work when you can, possibly taking loans, all in the hope that you'll get a much better paid job at the end of it (which, nowadays, is not a given).
It also isn't just a case of poor kids with good potential not having the money to pay for higher education, but also of poor kids with good potential not having the grades to get into higher education.
Home factors (sleep, nutrition, reading at home, stress, extracurricular activities, peer pressure from the wrong crowd) make a significant difference to education outcomes in children.
Universal healthcare, on the other hand, is truly about equal opportunity for all. Illness is neither an indulgence for which people have to pay, nor an offence for which they should be penalised, but a misfortune, the cost of which should be shared by the community. No society can legitimately call itself civilized if a sick person is denied medical aid because of lack of means.
The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. -
Free college has always been a poor-to-the-middle class program.
If you look at countries that have free college, most have college completion rates similar to or lower than the US: https://www.in.gov/che/files/DMatthews.pdf. The vast majority of the EU population lives in the U.K., Germany, Italy, France, and Spain. All of those countries have lower college completion rates among people 25-34 than the US, even with tuition being cheap or free in those other countries. While tuition is not a barrier to college attendance in say Germany, college is still primarily something for the middle and upper middle class.
Programs that theoretically offer “equal opportunity to all,” but where the middle class gain the lion’s share of benefits, is not an efficient way to better the lives of the poor.
(The same thing with Medicare for All versus the ACA. In Europe, the middle class pay for their own health care, and also subsidize the poor. In Germany, public health insurance premiums are 15% of income, with folks making above $70,000 being exempt from the public system. The ACA is similar—premiums are capped at 0-10% of income for folks making less than $50,000. That’s even more generous than the German system for folks making low incomes. The folks who feel the pinch are middle class people, for whom a 10% premium is a lot when they’re used to having a much lower tax burden than what they would have in Germany. Consequently, replacing ACA with Medicare for All would primarily benefit middle class people, especially if funded through a progressive tax.)
The plight of the poor (who are worse off in the US than the poor in the big EU countries), is unfortunately being used as a fig leaf. The American middle class (who are better off than the middle class in the big EU countries) wants the safety and security of a European style welfare system, but doesn’t want to pay a 40% tax as they would in Europe, a 20% VAT, etc. Even though you could dramatically improve the lives of the bottom 50% through targeted programs, progress on that front gets held hostage to a broader push to have the rich pay for middle class welfare.
Are they just overpaid sales people?
If the upper 5% at my company earned enough to double the wages of the other 95%, I'd be pretty damn mad about those leeches.
Especially if the company is already struggling.
https://www.glassdoor.ca/Overview/Working-at-CareCentrix-EI_...
* Chief Executive Officer
* Chief Medical Officer
* Senior Vice President, Human Resources
* Chief Customer Officer
* Chief Legal & Strategic Solutions Officer
* Chief Financial Officer
* President and Chief Operating Officer
* Chief Compliance Officer
* Chief Technology Officer
* Chief Growth Officer
Growth is either achieved organically or you are just forcing your way to a lucrative exit without bringing any value. Artificial and forced growth is toxic for the economy at large.
The rest of the roles mostly make sense although I believe some of them can be merged so further savings can be accomplished.
I explain to everyone about my role that it's not the responsibility of the Growth team to deliver Growth, it's our responsibility to put Growth more under the companies control. We act like a team of scientists to empirically try and understand what drives our growth and then build out systems, tools and processes to measure & improve those factors.
YC has a good guide on what kinds of roles a Growth team is responsible for and what good Growth people do: https://blog.ycombinator.com/growth-guide2017/
Bringing real value for customers should weigh much more than the approval of a bunch of golfers.
"Growth" in the terms you describe should be more like "marketing": what other market niches can we fill, are our prices reasonable, can we expand to country X, etc.
I've also seen it used as a a C-level title for head of sales (along with Chief Revenue Officer). In the cases where I've seen the role be a head of sales, it usually indicated that the sales org took a very active role in dictating the rest of the companies priorities.
It's sort of like data science teams - some data science teams are truly data science teams in the traditional sense of the word, doing advanced statistical and machine learning work. While other data science teams are just doing basic reporting but under a more politically valuable moniker.
A million years ago when I was young the IPO market used to be the end of the bullshit, you actually had to make money and have a long term plan. That is no longer true, the fictional growth narrative is demanded over actual money now.
* Chief Executive Officer - someone shareholders can sue
* Chief Medical Officer - someone patients can sue
* HR - someone employees can sue
* Chief Legal Officer & Chief Compliance Officer - someone anyone can sue
* Chief Financial Officer - someone the IRS can sue
* Chief Technology Officer - someone that can be sued in case of a hack.. off the top of my head. Shouldn't be too difficult to add in the remaining posts
There's not much space there for a hierachy with much of a pay gap, unless you're going to pay a direct superior >500% more.
Same with most other roles at such a company.
Mind you - they didn't get involved in hiring at all - only processing people during acquisitions and handling layoffs and disciplinary matters.
I'm pretty sure every large company in America matches that criteria.
Sounds like a situation right out of Yes, Minister. HR staff not being forthcoming with the obvious answer of increasing pay to lower attrition rates from 30-40% due to the attitude of the board/CEO and anticipation of their negative response.
Why would anyone stick around, or care to do more than the most basic job requirements? These jobs are totally disposable to employees, just as the employees are disposable to the company. If you don't want your employees to leave, don't treat them as disposable, and don't belittle them by pretending you're a team.
This guy thinks he stumbled on some grand new lesson, and it's hilariously terrible.
How else can we improve things if we don't allow people to change their views? Mocking a CEO for changing his view is the opposite of what we need.
That's the crux of the problem right there.
If you need somebody to start living with their kid in a car to get this grand epiphany then you are hilariously mis-prepared to be any kind of a leader.
To be a leader, you need a much better [emotional] education than this.
You need to sympathise with people and honestly, I very rarely see that in any executive. So the selection process right now is definitely broken.
The self centered ones kiss up, slack off, ask others for "help" etc and don't get fired.
Why would anyone deal with a minimum wage job being, I'm assuming, a call center operator when a) you can get paid the same to do far less stressful work or b) get paid more to do the same level of work?
Secondly, notice how he never gives updated turnover numbers - an omission of note, that probably means they didn't really improve much. This guy most likely hasn't solved any problem other than what bullet point he's going to put on his resume when he parachutes to another company.
The fact that he needed to hear what his employees "were going through" to justify paying them more than literal poverty wages is a problem. That shouldn't require a learning experience, it should be a day 1 realization.
How you could make that much and expect loyalty and sacrifice from your staff who make a fraction of that, I won't ever know.
Employer B takes the money they save by paying employees less, and invests in newer, better facilities or R&D or whatever. Now employer B is selling a better product than employer A. Who will customers choose to purchase from? Who will lose business, and end up having to fire employees?
To be a successful business, compensation decisions can't be based on people's feelings. You have to consider when a new store or hotel or restaurant will come around and put them out of business, and stay ahead of the curve. You pay what you need to to get the job done. There are some good examples like Costco, but there are only so many people with sufficient disposable income who can afford to shop at Costco and similar stores, and they're not competing with Walmart/CVS/Dollar Store or other bottom tier vendors.
In practice, Employer B takes the money and pays Employer B (ie the senior staff) with it.
Great, good point, so let's base it on what's equitable and humane instead. People aren't mad because their feelings are hurt, they're mad because they can't make ends meet or prepare for the future.
Employer-B's customer service and general care of its facilities & inventory will suck, and they will have much higher turnover costs, even if they have better products.
So, what is the relative advantage?
Moreover, the article was specifically about the tradeoff in executive pay vs low-end pay, and how a small sacrifice at the top made huge differences both for the low-level employees and for profits overall
As I prefaced above, this is true for business where customers aren’t differentiating between vendors except on price.
Had a lot of discussions with the former manager of our local DG, and... while not 'eye-opening', it was interesting to hear the pressure she was under. $x/week budget to schedule all the staff, targets to be hit (dollar targets, merchandising display targets, etc). It's "retail", but the numbers she had to play with were pretty low given the volume, imo. FWICT, she wasn't on more than perhaps the equivalent of around $13/hr, although I do think there were small performance bonuses thrown in. But, I think she was 'salaried', so lots of 50-60 hour weeks for probably not much more than ~$35k?
This is a somewhat ruralish area, and this was also... 4 years ago? She's moved on since then, and we lost touch so I don't know if things have changed much with the newer managers or not.
FWIW, she did keep that store ticking over. She was a bit bristly at times with other staff, but ... there was a pretty noticeable decline in staff behaviour, sheving, cleanliness and overall experience at the store within a couple weeks of her leaving, and it's never quite recovered. I'm guessing had they paid her an extra $100/week she'd have stayed and continued going above and beyond, but... .hey... profits...
That said, anecdotally, I do the grocery shopping and prefer WalMart. The produce is better, there’s a larger selection, and I can get the odd household item while out for groceries without paying an extortionate price. I’m saving at least 10% on my grocery bill without even trying. Hell, Walmart even does free curbside pickup where the other grocery chain wants to charge me.
It is not only lower labor costs. And they are clearly willing to spend on the appearance of customer service, paying 'extra' people to be greeters, etc.
Viewing it as if the people who produce your products and services are a mere cost instead of an asset is stupid.
And, just because a lot of "successful" finance types implement this view, dies not mean that they are also not stupid.
Oversimplifying is not a solution to most problems.
I still prefer Southwest over Spirit and any other airline but i’m just one anecdote.
Again, I’m not making anyone a hero or adversary, I’m just pointing out that some businesses can’t survive unless they compete on price, and that means lowering their own costs. It’s quite a blessing to be able to work in a high margin business.
As other comments have pointed out, simply raising the minimum wage doesn’t accomplish the same thing. Instead, all those people who were marginal at $7-8/hour simply don’t get hired, and employers use automation or forego the opportunities that additional labor offers.
Effectively what is happening is that those without power are subsidising the business by supplying them labour below cost. Generally in economics, making a business only viable through subsidies is a bad thing. It is much more efficient to give that labour to better businesses.
There is a wage where employee A costs more than the value they create. By mandating a wage that is higher than their productivity they are simply not hired, they do not get a chance to gain experience/knowledge, they loose the chance to be as productive as Employee B.
The result is they are now on welfare/unemployed/etc. They lose the chance to get on the employment ladder.
In general people improve so we you shouldn't be making the low wages for long. But what do we do about people who don't improve - either we push them out of the workforce or we subsidize their lifestyle to meet a minimum threshold.
That's only assuming that the ladder is just that, and not a single rung. Time spent in most minimum wage jobs are hard to sell as giving you a leg up when moving into the higher professional strata.
Businesses are a thing we've invented to shuffle resources around; there's currently enough resources for everyone in the world to be fat and happy (the world produces 3,500 calories per capita per day), it's just so very unequally distributed that 1 in 10 working Americans faces food insecurity, and 1 in 8 Americans overall lives in poverty.
Anyone working a full-time job should be able to live comfortably, and if you can't work full-time, society should take care of you anyway.
How do you define "cost"?
I.e. living costs + healthcare costs + groceries & other expenses + a little saving.
This is the base cost of a person, and thus the base cost of labour.
For one thing, someone has to cook the fries, sweep the back room, and help customers. Unless you invent insanely cheap and powerful automation or raise the wage to a point that it's uneconomic to open a new store (and please take the employers who say "if you raise the minimum wage, I'm going to take my marbles and go home" with a grain of salt), it's hard to actually get rid of minimum wage jobs.
For another, remember that you will be injecting money into a sector of the economy that tends to spend it immediately. Minimum wage workers are likely to buy more fries and day care, causing more demand for other low-wage jobs.
There’s a lot of slack in how many customers per hour a team can serve in a fast food restaurant. Look at In N Out burger at lunch time versus the average Wendy’s.
You can pay an experienced team 2x to serve 5x as many meals. But you’ll need 1/5th as many restaurants.
In such situations, it becomes an irreversible effect, as the cost to transition was mainly up front.
So the real question is: at what point does minimum wage draw automation as a response?
And that of course depends on the economics of automation at any given point in time — if a human isn’t drawing enough value (compared to the cheaper alternative), then the only rational thing is to replace the job entirely.
But minimum wage is also independent of automation (or any other alternative) costs, which is why its a bit of a hamfisted solution — it ignores the possibility that human labor simply isn’t worth that much. So you get this awkward line where everyone above the line is better off, and everyone below the line is homeless — the line being how much value you can produce.
Using India again as an example, that line doesn’t really exist — you have a fluid scale of wealth, where the bottom-most aren’t jobless (we can always produce enough work, if the price is right; you don’t want a daily maid?), but they barely make anything, and they live a lifestyle that we as a first-world country would deem unacceptable, but they find acceptable (especially compared to the alternative — no job/money at all).
Notably the poor indian probably lives better than the poor american, because the economy of the poor is significantly more developed. Partly because there are so many poor people in india, and partly because their income is allowed to be so much more fluid.
So there’s also the additional question of whether minimum wage “starves out” the poor economy, compounding how bad life can be at the bottommost rungs of our society
India is also a place where if you were to have 10 children and 6 of them survived, that’s good odds. In America, if you have 10 children and 1 dies, that’s a tragedy.
Source: I lived there for a few months.
India, and every other third world country, has their (many) problems, but nonetheless, the economy of those living on a dime is far superior to whatever exists in the US.
Minimum wage, as all regulation does, strangles such poor economies (there must be an official term for this; anyone know it?) by virtue of creating a hard line where things simply cease to exist, be it half-functional cars, drugs, housing, wage, etc. Anyone above the line is better off (all options are now guaranteed to be at least decent), and anyone below simply has no options.
Whether we really want this depends on the context and subjects (drugs, banks are high-return targets for regulation; cars and wage perhaps less so), but that regulation deletes a market, by-design, should always be a part of the consideration, though it rarely seems to be.
About 100 years ago, minimum wage used to be a socialist concept. Now, all parties in America support the minimum wage. The only debate is whether it should go up or stay the same. Your view on minimum wage and absolute deregulation is so radical that only the anarchist party is likely to share your views. I swear, some people just want to see the world burn.
The economics term you are searching for is probably a “deadweight loss”. In theory, when a $1/pack tax is introduced on cigarettes, there is a decrease in the volume of cigarettes packs sold. That volume reduction numeric value is the deadweight loss. In practice, cigarettes are an “inelastic” good and nicotine addicts keep buying packs to support their nicotine addiction even when the price goes up by a dollar. Thus, the deadweight loss on cigarettes is much lower than with usual goods.
Regulation does not delete a market. Just because we have printed nutrition facts and safety checks on almost all of our foods does not mean people have stopped selling food and people have stopped buying food. Just because drivers must stop at stop signs doesn’t mean people have stopped driving. Just because banks are required to only safeguard 10% or more of their account holder’s balance doesn’t mean banks are unprofitable and have ceased to exist. These all just mean the equilibrium has shifted in some amount in some direction and the market has established a new equilibrium.
As far as I can tell, you seem to have instead opted to respond to nothing I said, in the previous post...
>Your view on minimum wage and absolute deregulation is so radical that only the anarchist party is likely to share your views.
Is it really..? It seemed like an obvious thing to me: creating a glass floor traps people underneath it, but (ideally) makes life better for those above it. Glass ceilings are trivially accepted — and ceiling is just a floor to the guy above it. Is it so radical to apply it where the people above aren’t in the top 10%?
Also I’m not arguing absolute deregulation — I’m arguing that regulation inherently removes a subset of the market, and this should be accounted for. It might be worth it, it might not be. But its certainly not without consequence.
That, and that the extremely poor can live a better and more complete lifestyle in other countries than whats found in the US.
>The economics term you are searching for is probably a “deadweight loss”. In theory, when a $1/pack tax is introduced on cigarettes, there is a decrease in the volume of cigarettes packs sold
This doesn’t seem to be exactly what I’m getting at; I’m trying to refer to the idea that, when certain quality controls are globally enforced, the base cost goes up, and those who relied on lower costs can no longer be served. These barriers always existed — there’s a minimum cost to doing anything, really — but that hard-line bar has been raised. And that means the chunk of market that once existed inbetween the previous minimum and the new minimum... vanishes.
>Just because banks are required to only safeguard 10% or more of their account holder’s balance doesn’t mean banks are unprofitable and have ceased to exist.
I’m not suggesting it would remove the entire market of a given domain (I mean, regulation can, but usually doesn’t, and doesn’t strive to) but rather, it removes certain previously available options for banks which perhaps reached a sector that is now no longer served. That is, some people were not well off enough to afford such a safegaurd; the equilibrium shifts, along with the bare minimum required to enroll. Where previously “shithole” banks could serve that population, now a void exists (perhaps replaced by something worse, or better, or nothing at all).
But banks that cheat are probably globally good to regulate out of existence. Banks that safegaurd 10% vs 12% perhaps less obvious. But if 12% drives up the cost significantly, then some group of people are being pushed out.
Loan sharks don’t find borrowers because of a wealth of viable alternatives... they’re all thats left when you’ve exhausted all better options. The higher the minimum bar, the more likely someone ends up in such a state.
Until you realize that no level on minimum wage is adequate in SF, while $10/hr is livable in rural Arkansas.
It's not a silver bullet even with COL factored in. Higher staff costs? Replace them with automation. You can see the largest employers of minimum wage employees (eg. Mcdonalds) hedging against a rising minimum wage with kiosks to replace cashiers. At $15/hr for labor, those capital investments start looking like a mighty fine ROI.
Wages currently are responsible for about 4% of the cost of the burger. https://www.purdue.edu/newsroom/releases/2015/Q3/study-raisi...
It’s more likely the best employees will move towards the company that pays more, along with their experience and know how, probably producing a better product. On one side you’ll have the best people and on the other side you’ll have ones that may be good but also very upset about the disparity.
I would still question if saving on personnel brings the most benefit in most cases. It’s short term benefit, enough for an executive to get the bonus. It may also be long term if everyone is doing it so an employee has no option.
Rise up comrades, and shake off the bourgeoisie! /s
That sounds like a great way to encourage pro-union stances...
Who will lose business unable to hire enough employees?
Unemployment rate in US is very low at the moment, well under 4%. Last time it was this way in 1970.
A different one is that employees leave Employer B for Employer A (or others). So Employer B makes more money per employee, but he has less of them now.
The problem is fundamentally this: A typical Wal-Mart store has around 300 employees. If you take the manager's entire $100,000 and distribute it to the employees, they each get less than $500/year, a raise of less than $0.25/hour.
Meanwhile you're never going to get a good manager for the price of a stock clerk, because it's skilled vs. unskilled labor. But you still need a manager.
And nice as it would be to pay all 300 employees $100K/year, that would immediately bankrupt the store. Moreover, it would be more than the amount it would cost to automate most of those jobs.
This is not a problem with glib or moralistic solutions. And the solutions that do exist are probably more along the lines of making housing cost less so lower income people can afford it, rather than chastising the employers who actually employ unskilled workers.
I don't think everyone necessarily expects $100k/employee. But many (most?) of them work for 30-35 hours per week - not out of choice, but because their schedule is controlled by the management. And they've generally been paid at or under $10/h. In the last few years there's been moves to increase that, but even moving from full time (which not everyone gets) at $10/hr to, say, $14/hr... That's $28k? Loaded cost with taxes and stuff might be ... $35k? $40k? Maybe? That's still a far cry from "we can't afford to pay everyone $100k". Sure, you can't, but that doesn't explicitly justify paying most people $9/h part time when they want full time (and the store has a need for full time staff, they just don't want to have to provide X benefits that come with full time).
Sure, but that's the point. Should the manager not get $100K just because there is no way the employees could? What if that's what it takes to get a good manager?
And even at the numbers you're suggesting, multiplied by hundreds of employees, turns into millions of dollars a year. That's more than the store's entire profit. And it's also still above the threshold where it becomes profitable to automate many of those jobs.
> Sure, you can't, but that doesn't explicitly justify paying most people $9/h part time when they want full time (and the store has a need for full time staff, they just don't want to have to provide X benefits that come with full time).
But whose fault is that? Employers generally shouldn't provide any "benefits" -- they originally came about as a tax dodge at a time when non-monetary benefits weren't considered taxable income to the employee, and that's still the primary reason they exist. Company cars disappeared when they became taxable income, employer-provided health insurance didn't because it's still a tax deduction. But in every case the employees would be better off with the equivalent in cash and the only reason they don't have it is dumb laws.
It's even worse for low income employees because the rules keep trying to "help them" by giving employers huge incentives to cut their hours.
> The problem is fundamentally this: A typical Wal-Mart store has around 300 employees. If you take the manager's entire $100,000 and distribute it to the employees, they each get less than $500/year, a raise of less than $0.25/hour.
Walmart has 2,867,125,000 shares outstanding * $1.96 per quarter * 4 = $22,478,260,000 per year spent on dividends alone. If you take all that money and give it to the 2.1 million employees listed that comes to $10,703 a year in additional wages alone. I haven't even looked at executive salaries or the costs from lawsuits Walmart gets from it's shady tactics. Or that many employees are part time and the per hour wage increase would be much higher than it indicates.
> And nice as it would be to pay all 300 employees $100K/year, that would immediately bankrupt the store. Moreover, it would be more than the amount it would cost to automate most of those jobs.
No one is asking Walmart to pay a bagger 100k a year. Most people are asking a decent wage for where they live. For most places that is $15 an hour... $30k a year. In California that is more. If Walmart can't pay that then maybe they deserve to fail and Costco, which does pay well and comply with the law, can take their place.
Compared to Microsoft or Apple, which can easily afford to pay the contract labor they use in place of union janitors, technicians, drivers, etc. Despite their margins they still use it and those people live in poverty because of it.
Walmart overall is a poor example as they push lower costs at every level including using dubious or illegal tactics. Certain property tax strategies, pressuring employees to work on unrecorded hours, pushing manufacturers to low cost sweat shops overseas.
These costs don't show up in people's wages, the products they buy, or a company's 10-k. They show up in the quality of life in our towns, the unemployment rate, and the budgets of our governments. Microsoft, Apple, Wall Street banks, even McDonalds is a better example. (McDonalds operating margin is 42% compared to Walmart's 3.34%. Source: MSN Money.)
Where did you get those dividend values? According to this [0], annual dividend was $2,08 per share for fiscal year 2019.
[0] - https://news.walmart.com/2019/02/19/walmart-raises-annual-di...
Their quarterly dividend is ~$0.53/share:
https://stock.walmart.com/investors/stock-information/divide...
Moreover, let's suppose you take that entire amount and give it to the employees. Then the company has zero ROI and the stock value drops to the level that it's profitable for corporate raiders to buy the company to liquidate its real estate holdings etc., and everyone loses their jobs.
Shareholders get paid because they invested money. You can't avoid paying them market rates unless you can operate without capital. Somebody has to pay for the land the store sits on and the trucks that deliver the goods. They have to get a return if you want to get an investment.
> I haven't even looked at executive salaries or the costs from lawsuits Walmart gets from it's shady tactics.
The numbers for top level executives will be even less valuable than for store managers, because they get paid hundreds of times more money but have ten thousand times more employees under them.
> If Walmart can't pay that then maybe they deserve to fail and Costco, which does pay well and comply with the law, can take their place.
Costco can't replace Walmart because Walmart customers can't afford membership fees and bulk purchases, or they would already buy at Costco. The thing that replaces Walmart is dollar stores. That is not an improvement for anybody.
> Compared to Microsoft or Apple, which can easily afford to pay the contract labor they use in place of union janitors, technicians, drivers, etc. Despite their margins they still use it and those people live in poverty because of it.
Those people live in poverty because the cost of necessities is high compared to the value of unskilled labor. If janitors at other companies make $8/hour, Microsoft isn't going to pay more just because they have more money.
To improve the lives of those people, what you need is either more demand for labor or more supply (i.e. lower prices) for necessities.
> Microsoft, Apple, Wall Street banks, even McDonalds is a better example.
None of these companies are good examples because they're all titans. The large majority of people work for small and medium businesses with low margins. Setting policy based on Apple and McDonalds is exactly how you get policies that only work for Apple and McDonalds. You destroy the small businesses that actually employ people and drive the demand for labor while you increase corporate profits and consumer prices from the lack of competition.
Forget about punishing Walmart and McDonalds. Figure out how to make it easier for the family owned corner store to better compete with them. Figure out how to reduce housing and education costs.
Walmart could sell 100 oz boxes, but then they wouldn't have the same customers. People who don't have the cabinet space or the money to buy everything in bulk couldn't shop there anymore. Then some other discount store selling in smaller quantities would spring up to serve those customers and they'd be the ones who couldn't pay higher wages.
All those Walmart store managers make 6 figures as you say, some as much as $250k, but the one thing they can always fall back on is they all started out as a low paid Walmart employee as well.
It doesn’t change the inequality dynamics but it’s better than something like this story of the healthcare execs making $300k+ bonuses compared to their minimum wage coworkers, where the execs never started out making min wage with the company...or consider the horror story’s of those certain tech companies who don’t even treat low wage employees as regular workers and encourage regular high wage workers not to socialize with the low wage workers.
Walmart has 2,867,125,000 shares outstanding * $1.96 per quarter * 4 = $22,478,260,000 per year spent on dividends alone. If you take all that money and give it to the 2.1 million employees listed that comes to $10,703 a year in additional wages alone. I haven't even looked at executive salaries or the costs from lawsuits Walmart gets from it's shady tactics. Or that many employees are part time and the per hour wage increase would be much higher than it indicates.
sacrifice? c’mon
Without intelligence guiding them, such systems can easily destroy themselves with feedback loops. Power differentials etc, in an amoral environment, lead to low-level employees getting screwed and owners/upper management getting rich. This feedback loop can eventually destroy a company, or a society.
So what I find hard to understand isn't that employees go along with this system that screws them (they need to eat, y'know?), but rather that they think it's good, that it's what's best for everyone, that maximized profits will be equitably distributed. We have an angry, populist working class that has completely accepted the systematic inequalities of neoliberal-flavored capitalism, and the socialist welfare-state hacks that come with it mostly to keep the whole thing from self-destructing this year at least. They're mad they're getting screwed, but think their bosses are completely right to screw them.
It's really hard to grok that.
Such a thing does not exist. It is the study of exchange between individuals, any model that brings down morality to 0 will not be useful, practical or a applicable.
There is a reason why the most iconic political economists were all philosophers!
Yes. You exchange your labor, divided into an unseen number of customers for another one's labor, divided into an unseen number of customers.
Remove individual interactions and see everything disappear. Its the building block of society.
They are called promotions or achievements for your next role. That's a terrible attitude to have above, and as someone who started out working minimum wage, people who had that attitude generally didn't do as well.
Minimum wage says to employees that if slavery weren't illegal and it wouldn't be a PR nightmare to do so besides, they would totally pay you nothing and expect servitude.
It's easy to forget how the lowest-paid in a company are often key people in having operations run smoothly. If they have trouble paying their bills, often on sick-leave, etc, it can have an impact on everyone else (causing delays, quality issues or security issues). Ideally, you invest in fixing both the technical and the underlying social issues.
I suspect there is more to the story. Either the raises paid for themselves via lower attrition, or perhaps came with added productivity. If you look up the company on Glassdoor, there is a lot of negativity towards management.
"Our margins had declined and our revenue growth had stalled. ... I was becoming increasingly worried about our team and our turnover numbers. We are a people business and in some divisions we were losing 30 to 40% of our teammates within a year.
My HR staff suggested that we re-think our recruiting and training – which made sense – but I thought that we could do more. I thought we needed to reconsider how we supported and paid our team. For our entry level jobs – where turnover was the highest – we paid the federal minimum wage of $7.25 an hour (or less than $16,000 per year).
...
I took my concerns to my team. After many tough conversations, it became clear that we could not simply raise wages and hit our budget."
This just doesn't make any sense whatsoever. Recruiting and especially training has a very real cost for non-trivial jobs. Why would they pay minimum wage when they seem to be acknowledging that not paying minimum wage would increase their profits? This is something companies learned in the early 20th century. Henry Ford was the first employer to institute a higher minimum wage for his employees (doubling the average pay of the time). He didn't do it because he was a nice guy, he did it because he found that increasing the minimum wage reduced turnover which meant less spent on training and a general increase in productivity and profits. The same reason he would also go on to standardize what we now consider the normal 8 hour work day / 40 hour work week.
This seems very much like a story of a very poorly managed company. A minimum wage is appropriate when it's appropriate. When you're losing 30-40% of your employees, likely in meaningful part due to wage, and it's costing substantial amounts to replace and retrain for their roles - it's not appropriate. It seriously seems like at times that MBAs should be relabeled to masters of business annihilation because that's invariably where these incredibly myopic views on labor:costs:revenue seem to come from.
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edit: confirmed. Here [1] is their board. And indeed it's just an MBA pack.
A lack of fulfillment in the majority of straight out of undergrad private sector career paths is what got me interested in grad school, to spend my time and effort working on a topic that's explicitly not bullshit.
So... do executives think this means something to people? This incentive seems comically out-of-touch. I guess because CEOs live and breathe stock valuation-based bonuses they naturally assume that everyone gets motivated the same way. But it seems like a stretch that strains credulity to think that someone making $15/hr and getting a microscopic slice of revenue would develop a sense of motivation from the fact that their personal call-center interactions might maybe increase their share of revenue by a few pennies a week through slightly happier customers.
Translation: in an economic down turn they killed the bonus, raised the pay for customer service reps, and are now claiming a moral victory as if the growth was caused by paying people more.