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I'm not sure why he would not phase this in gradually. Also, I've read somewhere that paying someone significantly above market rate can lead to more stress du

by pcurve 12y ago

I'm not sure why he would not phase this in gradually. Also, I've read somewhere that paying someone significantly above market rate can lead to more stress due to increased fear of job-loss. $70,000 is great, but only if you're able to convince your employees that they're worth $70,000. (edit: I missed the part about 3 year phase in. I still wonder about the effects of paying someone 60% above market rate.)

AJ007 12y ago
If an employee is living paycheck to paycheck on an above market salary it is a set up to lose everything. This is definitely an intentional management technique.
- caseysoftware 12y ago
  It's worse than that. About half of people spend more than they make at least a few months each year. While they may still be net positive for the year, there are times they are likely paycheck to paycheck in there. And about half have no plan for building savings either, so they're unlikely to change the situation. Ref: http://www.huffingtonpost.com/2012/05/17/americans-spending-more-than-they-earn_n_1523920.html http://www.huffingtonpost.com/2012/05/17/americans-spending-...? Further, I forgot about another aspect.. many tax deductions start phasing out at $50k and are completely gone by $80k (iirc), so at $70k they're not only in a higher tax bracket, they also have less deductions so their overall tax burden will go up.
caseysoftware 12y ago
Hopefully he adds some money management training to go along with this. Someone who is used to living on $48k/year (their current average) suddenly making $70k/year is a huge change. And unfortunately, most people will adjust their standard of living to whatever their making instead of banking the difference. As a result, I can easily see your concern about "increased fear of job-loss" because of what they're making.. and how hard it is to be "poor" again. It's the definition of golden handcuffs.
- pcurve 12y ago
  To be clear, I'm not implying that the current market rate wage is a fair one. It's entirely possible that, had real median wage kept its pace with economic and productivity growth, the market rate would be much higher. But the $75k equals happiness is largely predicated on it being significantly higher than median wage. If all other companies followed suit and pay the same amount, we'd have to move the yardstick much higher than $75k.
bitJericho 12y ago
Spoken like a true republican.
- pcurve 12y ago
  quite the contrary, I'm a union-supporting liberal.
  - bitJericho 12y ago
    Then I'm at a loss as to why you'd be against a fair wage.
    - oldmanjay 12y ago
      It's never a particularly compelling argument to start from the position that you can't understand that other people hold opinions different from yours.
    - clarky07 12y ago
      Paying more than what the job is actually creating in value isn't a fair wage. It's the type of thing that is likely to put a company out of business. Then instead of having a 70k job they didn't earn they are unemployed.
      - jonah 12y ago
        But the employees are creating more value than they are being paid. The company is a going concern and are still making a profit even while paying everyone at least $70k. OTOH, take a startup that's paying everyone over $120k and is running in the red on VC money. Those employees aren't (yet) creating enough value to cover their salary. It's just that it's become so ingrained that companies must maximize profit for their owners at the expense of the employees that we've lost sight of whether it's right or not. (I posit it's not.)
        Illotus 12y ago
cdcarter 12y ago
He's doing it over three years. How much more gradually do you want from a startup?
addicted 12y ago
He's phasing it in over 3 years. How much more gradually can he do that?
kondro 12y ago
I think the fact that he's marketing this as a minimum wage thing to promote happiness will side-step most of the issues regarding job-loss fear. It's not like these people were all hired at an above-market rate because they were trying to prove they were above-average employees.
kyllo 12y ago
You mean only if your employees can convince themselves and others that they're worth $70,000.
archiceo 12y ago
It is interesting to consider what this does to the psyche of the 45k/yr employee. Do they become less likely to risk leaving this role? Do they value less the opportunity to test out a different career, even if the potential salary is higher? Do they become more devoted to the wellness of the Company? How does this impact their drive? Results? Retention? It would be fascinating to see their HR metrics 10 yrs from now.(assuming Gravity Payments doesn't put itself out of business)
spacemanmatt 12y ago
Getting a big salary change in this climate can trigger the ole Imposter's. I hope they have someone involved with the group to educate them about being very realistic toward a life change even when it's positive as this. [Source: My career is advancing]

by pcurve 12y ago

AJ007 12y ago

If an employee is living paycheck to paycheck on an above market salary it is a set up to lose everything. This is definitely an intentional management technique.

caseysoftware 12y ago
It's worse than that. About half of people spend more than they make at least a few months each year. While they may still be net positive for the year, there are times they are likely paycheck to paycheck in there. And about half have no plan for building savings either, so they're unlikely to change the situation. Ref: http://www.huffingtonpost.com/2012/05/17/americans-spending-more-than-they-earn_n_1523920.html http://www.huffingtonpost.com/2012/05/17/americans-spending-...? Further, I forgot about another aspect.. many tax deductions start phasing out at $50k and are completely gone by $80k (iirc), so at $70k they're not only in a higher tax bracket, they also have less deductions so their overall tax burden will go up.

caseysoftware 12y ago

Hopefully he adds some money management training to go along with this. Someone who is used to living on $48k/year (their current average) suddenly making $70k/year is a huge change. And unfortunately, most people will adjust their standard of living to whatever their making instead of banking the difference. As a result, I can easily see your concern about "increased fear of job-loss" because of what they're making.. and how hard it is to be "poor" again. It's the definition of golden handcuffs.

pcurve 12y ago
To be clear, I'm not implying that the current market rate wage is a fair one. It's entirely possible that, had real median wage kept its pace with economic and productivity growth, the market rate would be much higher. But the $75k equals happiness is largely predicated on it being significantly higher than median wage. If all other companies followed suit and pay the same amount, we'd have to move the yardstick much higher than $75k.

bitJericho 12y ago

Spoken like a true republican.

pcurve 12y ago
quite the contrary, I'm a union-supporting liberal.
- bitJericho 12y ago
  Then I'm at a loss as to why you'd be against a fair wage.
  - oldmanjay 12y ago
    It's never a particularly compelling argument to start from the position that you can't understand that other people hold opinions different from yours.
  - clarky07 12y ago
    Paying more than what the job is actually creating in value isn't a fair wage. It's the type of thing that is likely to put a company out of business. Then instead of having a 70k job they didn't earn they are unemployed.
    - jonah 12y ago
      But the employees are creating more value than they are being paid. The company is a going concern and are still making a profit even while paying everyone at least $70k. OTOH, take a startup that's paying everyone over $120k and is running in the red on VC money. Those employees aren't (yet) creating enough value to cover their salary. It's just that it's become so ingrained that companies must maximize profit for their owners at the expense of the employees that we've lost sight of whether it's right or not. (I posit it's not.)
      - Illotus 12y ago

cdcarter 12y ago

He's doing it over three years. How much more gradually do you want from a startup?

addicted 12y ago

He's phasing it in over 3 years. How much more gradually can he do that?

kondro 12y ago

I think the fact that he's marketing this as a minimum wage thing to promote happiness will side-step most of the issues regarding job-loss fear. It's not like these people were all hired at an above-market rate because they were trying to prove they were above-average employees.

kyllo 12y ago

You mean only if your employees can convince themselves and others that they're worth $70,000.

archiceo 12y ago

It is interesting to consider what this does to the psyche of the 45k/yr employee. Do they become less likely to risk leaving this role? Do they value less the opportunity to test out a different career, even if the potential salary is higher? Do they become more devoted to the wellness of the Company? How does this impact their drive? Results? Retention? It would be fascinating to see their HR metrics 10 yrs from now.(assuming Gravity Payments doesn't put itself out of business)

spacemanmatt 12y ago

Getting a big salary change in this climate can trigger the ole Imposter's. I hope they have someone involved with the group to educate them about being very realistic toward a life change even when it's positive as this. [Source: My career is advancing]