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Comment by bko | Hacker News Reader

This is a valiant effort but I wonder how the practical allocation of the jobs is determined. If the market salary for an employee is 50k, if you raise it to 70k, you will probably have a lot more applicants than positions. Do the current employees get grand-fathered into the job despite more qualified candidates? When hiring new employees, how do you decide among the increasing rank of equally qualified candidates?

That being said, a bump in pay will almost certainly help reduce costs associated with retention and retraining and may turn out to be a good business decision, not to mention the publicity.

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Think about it: how much does the lowest paid staffer make there? 25,000? 30,000? These lower-paid staff will be very loyal, because they're getting a very significant and possibly life-changing raise. They're not going to quit on you, and they're not going to kill the golden goose.

Recruitment has real costs. Hiring and training, and dealing with the hiring mistakes you make, all cost money. Having a happy staff saves a lot of money, time, and headaches.

> They're not going to quit on you, and they're not going to kill the golden goose.

Especially if by going somewhere else they have to take a significant cut.

I also wonder if this company even has low paid staffers. The business I work for doesn't directly employ anyone under ~60k. Instead the kitchen staff, the cleaning people, the mail room, document processing people, etc. etc. are all contracted out.

Actually, it's a significant chunk. From the article:

> After Monday's announcement, anybody making less than $50,000 -- more than half of the company's 120 employees -- immediately got bumped up to at least $50,000, according to a company spokesman. The minimum will increase to $60,000 by the end of 2016 and $70,000 by the end of 2017.

can we really make this assumption? if everyone is paid the same where is the incentive to do more? how is morale affected in the reverse when you know you make as much as someone else who decides to slack?

while there are some benefits to increasing salary very large increases may negatively affect those already at a higher pay scale and some may dissociate effort with reward.

now if you dangle the carrot out there as a truly obtainable reward for meeting fair targets, then it truly becomes incentive for both retention and reward

>if everyone is paid the same where is the incentive to do more? how is morale affected in the reverse when you know you make as much as someone else who decides to slack?

The U.S. federal government has this in spades. Lots of people making the same salary, and no incentive to do more, and no way to weed out poor performers. Yet the government bureaucracy is still able to perform, sometimes admirably.

The private sector has an important tool: fire the slackers. If someone is not performing well at a higher-than-average salary: lay 'em off. Hire someone motivated to perform and make a higher-than-average salary.

If you really want to trap someone into working for you forever, pay them way more than they could make anywhere else. The goodwill and loyalty that engenders are really only minor components in keeping the person on-board; since people tend to spend (and get debt based on) however much money they make, you're essentially buying lock-in and making it so even if they want to quit and get an analogous position at a competitor, they probably won't be able to afford to do so.

Are otherwise qualified employees fired the moment a more qualified candidate expresses interest in their job? I don't see that being an issue. Perhaps what determines "qualified" will increase along with pay? I think it will certainly increase the overall quality of employees over time, and this may push out the least capable folks over time.

Has there been any comment by the higher-paid-but-by-no-means-rich contingent of the company? I imagine there are quite a few developers, engineers, and other technical folks in the $90-125k+ range there whom this does not affect directly, but may impact their ability to get raises? The article states company profits are going from $2MM to $500k so the odds of this impacting someone's 3% raise if they make $125k is slim but still a possibility depending on team size and composition (I would think).

This kind of broad policy will almost certainly have unintended consequences that will be interesting to watch play out.

I agree. Realistically I think this will be a short-lived experiment; everyone who got the raise will keep it, but I wouldn't be surprised if they go back to paying new hires a market-competitive salary within 12 months.

>a bump in pay will almost certainly help reduce costs associated with retention and retraining and may turn out to be a good business decision, not to mention the publicity.

I was thinking about this when reading the article myself. It has to help retention as it instantly becomes less desirable to move company if the market salary is far below what your current company is paying, which is what this will do.

For the time being it's great for all involved. The employees benefiting from it should be careful in terms of how they adjust their lifestyle based on the extra income though, because if the company went under or there were redundancies or similar they are almost assuredly going to experience a significant drop in their earnings.

Is there a direct correlation between higher qualifications and better performance and output? If having two equally qualified employees, is their salary requirement the only decisive distinction?

I think this experiment will have quite a few positive net outcomes (publicity, reduction of cost with recruitment and retention, etc) but on the longer run employees making 70k will automatically know that they are on the lowest pay scale so I'm unsure how that will work out.

It can definitely foment discontent when, say, a low-mid-level software engineer pulls the same as clerical workers. I wonder if that will have any effect on the company's ability to hire professionals. Maybe they'll expect a commensurate salary bump; if you're paying 1.8x the normal salary for a clerical or support worker, shouldn't you pay 1.8x the normal salary for a professional? What kind of message does that send about how much the company values professionals, and will pros be more comfortable at companies with more conventional pay structures (even though I doubt any would admit that publicly)?

That could be one way of doing things (all salaries raise in proportion to the minimum). It would make the company highly attractive for prospective employees and raise the stakes for current staff so would be an interesting "experiment".

I think that if you're looking at the entire field and see that, in terms of the entire market, you're being well-compensated, you probably wouldn't spend a lot of time being resentful of other people in your company. I guess I could be wrong.

That would be definitely the case if your salary is way above market standards, but if ~70k is around what you would be making anywhere else, then it would like be a stress factor.

I mean, this is just a supposition I'm making. Maybe all salaries raise in line with the minimum.

Imagine if you were paid $500K/yr, but you knew it was the lowest salary paid to anyone in your company. How would that affect your morale? I know, personally, I would go home from work every night, absolutely thrilled at being the lowest paid person in my company :)

As an employee, your compensation is always tied to your notion of self-worth, or so I believe. Granted that the 70k seems like a very good salary for most entry level and some of the mid-level positions at any company but I think that the perception would change over time.

Let's say you are a developer making 70k and you know the receptionist makes at least the same. Or imagine you were paid 5K/yr and you knew you were paid the same as the CEO. Would you be happy with that too?

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