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Great! Here's hoping the PR pays off. Imagine if other companies noticed it was a net gain to do this sort of thing and the practice picked up steam (unlikely/

Great! Here's hoping the PR pays off. Imagine if other companies noticed it was a net gain to do this sort of thing and the practice picked up steam (unlikely/impossible I know). The horror of it all!

totalrobe 11y ago
And then those overpaid employees will be laid off...
- deong 11y ago
  If you're buying the company for its "goodwill", why would you then very publicly torch that very same goodwill by laying off all the employees?
  - chatmasta 11y ago
    Because revenue needs to be greater than cost for a business to survive.
    - deong 11y ago
      Of course, but my point is that you know this going in. The assumption was that you'd buy the company not because it was so insanely profitable, but because you reaped a PR benefit. So you buy the company for the sole reason that you look good for paying everyone well, and then take away all the money to increase profits. This makes no sense -- you look far worse PR-wise for revoking the raises than any benefit you originally got from buying them in the first place, and PR was your reason for the deal. This is like buying Santa's workshop so kids will like you and then executing all the elves. You should have just bought a profitable company in the first place.
chatmasta 11y ago
The problem is it's unsustainable. The employees aren't providing $70k of market value. The CEO is changing his pay to attract attention and build customers. Companies are not going to adopt paying 2x market salary as a standard business practice. If people will work for $40k then that's where the costs will "gravitate" (hah) to.
- dragonwriter 11y ago
  > The problem is it's unsustainable. The employees aren't providing $70k of market value. How do you know this? Sure, if you make the assumption that the before this one change, the world worked perfectly in line with the kind of simplifying assumptions that you might see in an Econ 101 class, then that would be true, but then, if the world worked that way, this raise wouldn't have happened.
  - chatmasta 11y ago
    Because they were willing to work for $40k.
    - dragonwriter 11y ago
      > Because they were willing to work for $40k. That doesn't mean that they weren't providing $70k of market value, unless you assume that (at a minimum): (1) they were maximimizing their pay in choice of job, and (2) they had perfect knowledge of all the alternatives jobs that they could otherwise have obtained. These are the kind of assumptions that are typical in Econ 101, but to which real humans do not actually conform, particularly the second.
    - waterlesscloud 11y ago
      If someone volunteers for a non-profit for no pay, does that mean they're providing $0 in value? After all, they were willing to work for $0.
    - emodendroket 11y ago
      How long would they be willing to stay at that rate? Raises aren't entirely altruistic.
    - dllthomas 11y ago
      Ignoring a lot of caveats, that means that the labor they were providing was worth less than $40k to them. It says nothing about how much the labor was worth to the company. That the company was willing to pay them $40k says their labor was, with similar caveats, worth at least $40k but there is no implied upper bound.

totalrobe 11y ago

And then those overpaid employees will be laid off...

deong 11y ago
If you're buying the company for its "goodwill", why would you then very publicly torch that very same goodwill by laying off all the employees?
- chatmasta 11y ago
  Because revenue needs to be greater than cost for a business to survive.
  - deong 11y ago
    Of course, but my point is that you know this going in. The assumption was that you'd buy the company not because it was so insanely profitable, but because you reaped a PR benefit. So you buy the company for the sole reason that you look good for paying everyone well, and then take away all the money to increase profits. This makes no sense -- you look far worse PR-wise for revoking the raises than any benefit you originally got from buying them in the first place, and PR was your reason for the deal. This is like buying Santa's workshop so kids will like you and then executing all the elves. You should have just bought a profitable company in the first place.

chatmasta 11y ago

The problem is it's unsustainable. The employees aren't providing $70k of market value. The CEO is changing his pay to attract attention and build customers. Companies are not going to adopt paying 2x market salary as a standard business practice. If people will work for $40k then that's where the costs will "gravitate" (hah) to.

dragonwriter 11y ago
> The problem is it's unsustainable. The employees aren't providing $70k of market value. How do you know this? Sure, if you make the assumption that the before this one change, the world worked perfectly in line with the kind of simplifying assumptions that you might see in an Econ 101 class, then that would be true, but then, if the world worked that way, this raise wouldn't have happened.
- chatmasta 11y ago
  Because they were willing to work for $40k.
  - dragonwriter 11y ago
    > Because they were willing to work for $40k. That doesn't mean that they weren't providing $70k of market value, unless you assume that (at a minimum): (1) they were maximimizing their pay in choice of job, and (2) they had perfect knowledge of all the alternatives jobs that they could otherwise have obtained. These are the kind of assumptions that are typical in Econ 101, but to which real humans do not actually conform, particularly the second.
  - waterlesscloud 11y ago
    If someone volunteers for a non-profit for no pay, does that mean they're providing $0 in value? After all, they were willing to work for $0.
  - emodendroket 11y ago
    How long would they be willing to stay at that rate? Raises aren't entirely altruistic.
  - dllthomas 11y ago
    Ignoring a lot of caveats, that means that the labor they were providing was worth less than $40k to them. It says nothing about how much the labor was worth to the company. That the company was willing to pay them $40k says their labor was, with similar caveats, worth at least $40k but there is no implied upper bound.