And the CEO of the year award goes to....

I wouldn't rule out double...I've probably paid double for more-ethical stuff before.

In reply to GameboyRMH:

Paying double for Tom's Toothpaste or Eco Shoes is not the same. They only represent a very small percentage of your expenses.

Labor is generally an expense to a business that is 50% or more of it's overall expenses.

I doubt you would pay double for any product or service that represented 50% of your expenses, regardless of how ethically produced it was.

HiTempguy wrote: In short, duke believes in the American dream; if he works "harder" than other people, he will earn more. This is a patently false idea,

It's not patently false, it is just so grossly oversimplified as to be laughable. Of course, success is dependent upon lots of factors; some internal and some external, some random chance and some not. "Working harder" is no guarantee of success. But given similar circumstances, the person who does work harder definitely has a much greater chance of having more success. That should not be interpreted to mean that all circumstances are similar.

Well this guy could afford to pay double and he chose to...let's say gas was half as much and I could squeeze out paying double for it. Maybe I'd pay double for ethical biogasoline.

(Face palm).

You're killing me.

For the record, I absolutely meant my very first post. I am interested to see if this is sustainable. I don't bear the guy any ill will, or think he's stupid or a pinko.

But I will be equally interested to see if/when/how the law of unintended consequences bites him in the ass.

In reply to GameboyRMH:

Actually, maybe that is the point I am making.

You say he can afford to pay more, so he did..

I say it is unproven, and a publicity stunt. He can ONLY afford to pay more IF production grows significantly.

He's not playing with his own money. He's gambling with money that represents the value of the company.

IF it works, he's a hero.

If not, he will still succeed, but it will come out of the hides of those same employees who he is "valuing". He wins either way.

No investor or lender would be happy with him spending 80% of the company's profits to increase salaries by double.

Might work, but if it doesn't none of us will ever see the reality, and we will continue to imagine him as a hero, and basic math computations as some kind of magic.

Giving away the company's profits, even if it is for "ethical" reasons is not ethical if it is not sustainable.

He doesn't need a huge increase in production to cover the costs, working with a $7.52m budget he needs revenue to be 12% greater 3 years from now.

Yeah he's making a gamble, but it's a pretty safe one, and if it doesn't work I don't think his employees will be too upset if he cuts all their pay 25% instead of laying people off.

Duke wrote:

06HHR wrote: This. We live in a world that values a lot things, labor isn't one of them. While I love boobs and butt as much or more than most, the fact that the Kardashian clan stands to be worth billions before their fad is over with for simply being Kardashians IMO kind of proves my point

Let it be known that the majority of the Kardashians' fame and money comes from their value to and status within the downtrodden, uneducated masses that you are claiming are subjugated by this very system. I agree it's idiotic that anyone even has heard their names... but people vote with their wallets. If these same people said "ain't nobody got time for that E36", the Kardashians would disappear back into obscurity just like whoever was in hairdresser magazines in the '70s, and the '80s, and the '90s.

Actually the majority of their fame and money came from them boobies and dat azz, T&A are like gold, just gold that has an expiration date.. but I digress. Not claiming subjugation by any means, slavery is not as prevalent as it once was so it's not like people are being "forced" to work. But, there is a seemingly natural effect in wages that has the appearance of collusion between employers, even though it's not. A job pays what it pays, regional effects (job market, employment conditions) notwithstanding. labor performing the same job generally makes about the same rate of pay (we won't go into public v. private sector, that muddies the waters even deeper) Even though this guy may have given his people these amazing raises, everywhere else in the market, the wage rate will not change as it's highly unlikely his competitors will join him in his generosity. Just the way it is, and will be until something drastic happens.

Giant Purple Snorklewacker wrote: ...We want to use a contractor based model for tech and management to avoid Obamacare".

Did you really just "Thanks OBAMA!" this? Too funny..

SVreX wrote: He didn't say he plans to pay himself $70K.

From the article:

If it’s a publicity stunt, it’s a costly one. Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

Obviously I like the cut of this guy's jib. He owns his own company and if he wants to pay typists 70k because he wants them to be happier people then good on him. Why work so hard to throw salt in his game so as to spin this in such a way that this isn't a positive for his employees? He's making a decision and cutting his own pay by $930,000 to do it. The guy's move is incredibly self-sacrificing and noble no matter how much work you put into saying it's merely a PR stunt.

Having witnessed a couple of interesting rounds of bonuses and such at a couple of companies, I just want to point put that altruism is much easier when you don't have to worry about money any more. I would bet that this guy doesn't actually need the money he's making and paying extra salaries makes him happier than making more money would. The question is whether or not this is sustainable when he decideds to retire. What then? Can they attract a qualified CEO for what he was paying himself? Maybe the company is sold? Then what? I like that he did this. I'd love to see a lot more people give this a try and see if it really changes the world.

mazdeuce wrote: The question is whether or not this is sustainable when he decideds to retire. What then? Can they attract a qualified CEO for what he was paying himself? Maybe the company is sold? Then what?

If he's worked there for 2 years before, he can live off his first year's pay and retire on the second's, easy peasy.

My old company paid exceptionally well. Basic soldering skilled positions were paid at $25 an hour, where they average around here is $11 to $15 an hour. So last year when our company moved and no one went with it, those same people were screwed. They had all bought far above their pay scale and many were forced to start liquidating their assets. You have to be very careful when handing out salaries, which can seem harsh.

In truth, certain jobs are only worth certain amounts of money. No matter what Alfa Driver says (who I usually agree with), the guy picking tomatoes is worth far, far less than the guys up the food chain. In truth, you probably have to employ several to do the job of one person as one won't show up for work every other day, and the others goes and gets drunk at lunch. Many of the rest simply won't work at all, then complain when they don't get raises. I have quite a bit of direct experience in dealing with this. Its sad that there are people like this, but all people are not the same.

This can also be true up the food chain as well, but not nearly as much. And the stress level gets exponentially greater the higher up you are. I know several CEOs, and if you think all they do is watch over everything in disdain, you are sadly, sadly mistaken. Most have great concern about their employees, and are ALWAYS working. There is no down time like you or I might think. It is non-stop about their company, even on vacation. And a good CEO is almost irreplaceable. You can slot any guy into picking fruit, but the wrong CEO can sink the entire company.

In the end, if the company doesn't survive and make money, it ceases to exist. Unlike the government, they can't print their own money and run negative forever. Companies simply cannot be socialist, they will not survive.

GameboyRMH wrote: He doesn't need a huge increase in production to cover the costs, working with a $7.52m budget he needs revenue to be 12% greater 3 years from now. Yeah he's making a gamble, but it's a pretty safe one, and if it doesn't work I don't think his employees will be too upset if he cuts all their pay 25% instead of laying people off.

I have no clue what you did to that math.

Since we don't know his revenues, how do you come up with 12% revenue increase?

$7.52 million is NOT the payroll budget. It would take $8.4 million to pay 120 people if the AVERAGE was $70K. But that's the minimum, so it will take a lot more.

It's $9.4 million if he reinstates his own salary like he said he would.

And THAT assumes it's OK for the company to continue to have no profits. You might need to add back the $2.2 million.

Revenues are gonna have to grow a heck of a lot more than you think.

But your last statement is the oddest one to me...

It sounds like you are saying it's OK to offer an IMAGINARY raise of 100% phasing in over the next 3 years, but take from them a REAL pay cut of 25% if it doesn't work out before that.

Any you don't think these folks will be upset about that?

mazdeuce wrote: I like that he did this.

He didn't DO anything.

He SAID he will do something over the next 3 years.

In reply to racerdave600:

Thank you, well worded and thought out.

I assumed nobody at the company was currently making over $70k, and he obviously doesn't need profits, because if this was a publicly traded company his shareholders would be tearing him a new shiny happy person for doing this.

Yes people would be upset about a 25% pay cut, but it's still a 25% pay increase over 3 years ago. Again, hard to get upset. It's probably a ballpark above what the competition's paying.

His poor children. They may actually have to live like the rest of us.

In reply to PHeller:

Nah, he's probably so progressive that he eliminated himself from the genepool.....

racerdave600 wrote: My old company paid exceptionally well. Basic soldering skilled positions were paid at $25 an hour, where they average around here is $11 to $15 an hour. So last year when our company moved and no one went with it, those same people were screwed. They had all bought far above their pay scale and many were forced to start liquidating their assets.

Sounds as though the company should have put some effort into educating their workforce about business trends and salaries.

Nobody blamed the tech companies of the .com bubble for paying unrealistic and unsustainable high salaries, and many people lost their jobs, homes, cars, etc, but today those people are probably better for it as they better understand the risk of getting in over your head.

It's not like people don't do that on regular salaries either. Think of how many people depended on a common salary in the auto industry? Or coal? Or steel?

yamaha wrote: In reply to PHeller: Nah, he's probably so progressive that he eliminated himself from the genepool.....

If he's real progressive he'll adopt kids.

PHeller wrote: His poor children. They may actually have to live like the rest of us.

You know, I categorically refuse to get pissed off about the mere fact that some people have more than I do. I find that about as useful as being pissed about the weather.

SVreX wrote: No investor or lender would be happy with him spending 80% of the company's profits to increase salaries by double.

Then maybe it's probably best that this economy stop letting investors and lenders make the financial decisions that ultimately have a negative impact on the people who do the real work that make the wheels go 'round. There are many employee owned companies which engage in profit sharing; I don't see a whole lot of difference between those and what this guy is doing.

SVreX wrote: Might work, but if it doesn't none of us will ever see the reality, and we will continue to imagine him as a hero, and basic math computations as some kind of magic. Giving away the company's profits, even if it is for "ethical" reasons is not ethical if it is not sustainable.

It's not a giveaway. Any salary paid to the people who ultimately make the whole thing work is an investment. A giveaway is when one guy makes 300x what the bottom rung does and insulates himself from economic forces. This brings us back to employee owned companies again.

Xceler8x wrote:

SVreX wrote: He didn't say he plans to pay himself $70K.

From the article: If it’s a publicity stunt, it’s a costly one. Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

Right. I didn't miss that.

From the article:

"He said he planned to keep his own salary low until the company earned back the profit it had before the new wage scale went into effect."

With all due respect, that is not a commitment to keep his salary at $70K. It is a commitment to cut his salary (as part of the phase-in over the next 3 years) for an undetermined season, based on profits.

I can read too.

GameboyRMH wrote: I assumed nobody at the company was currently making over $70k, and he obviously doesn't need profits, because if this was a publicly traded company his shareholders would be tearing him a new shiny happy person for doing this. Yes people would be upset about a 25% pay cut, but it's still a 25% pay increase over 3 years ago. Again, hard to get upset. It's probably a ballpark above what the competition's paying.

The article says 70 employees currently make under $70K.

50 others make more.