Owner of a Credit Card Processor Is Setting a New Minimum Wage: $70,000 a Year

As for what if someone better shows up, well if you were swapping out staff every time someone you thought was better showed up, irrespective of money, you would kill off your business. Stability is more important than chasing some vision of perfection if you are wanting to get stuff done.

I think the employer in this case made a good start by giving the employee a decent salary. It doesn't make much sense to think this is some scheme to swap them out for 'better' employees. Also, don't forget the kind of jobs this will affect. It will mostly be low skilled work. The upside of replacing this type of employee with someone who is a little bit better is just not worth the trouble.

The 'golden handcuffs' argument doesn't make a lot of sense either. Sure, it would be hard to give up a seriously overpaid job. But just think of the opportunities it gives you. You could save up a lot of money to start your own business. You could invest in your own education so you are able to land a higher paid job. That's all probably not even interesting because the company from the article treats its employees really well, so they are probably willing and able to help you with any ambition you might have.

I would not feel all that impressed with the idea if I were a senior level in my career and earning 75k and suddenly the mail boy makes 75k or the level 2 call taker does

For example, if they were hiring new college grads out of school at $40k, will the continue to do so at the same pace? Will they continue to hire new college grads at all?

I mention this because if they don't, they won't meet the CEO's stated goal -- rather they will slowly shift their workforce to weed out those with market rates below $70k.

The only way to prevent this will be to ask managers to purposefully hire candidates with less experience while simultaneously handing them a larger hiring budget.

You mean person.

Well it seems he specifically wanted to increase salary compensation, but I can bet that any organization making a choice this big went so far as to consider alternatives.

Paying your staff seems like a very good reinvestment of profit. In fact, it may well be what will allow them to pull ahead of their competition!

The biggest problem I see with this plan is not increased payroll tax but increased HR costs to weed through the many more job apps they're going to get these days.

What they're really doing is investing in their brand as an employer, in the belief that loyal, eager employees make a sustainable company. For a company working a space like credit card processing, that's probably a better bet than a big ad campaign or R&D investment.

What if the purpose of businesses wasn't to maximize profit/ROI?

At their current size/growth over the past 10 years it seems like they're a lifestyle business (urgh, I hate that phrase) where the company has grown organically from a small level of investment.

If Dan wants to provide his employees a higher level of pay from what probably seems to be a very predictable business, then that's his prerogative.

Businesses only have to act as psychopathic entities when they're run by dispassionate third-parties who's only motivation is literally increasing the profitability/value for shareholders.

If he's sensible he'll have taking his marketing director to the meeting. One of the most important things for a financial institution is being seen to be both ethical and trustworthy - setting out how you're not greedy and you want to improve the lives of your employees goes a long way to doing that. This move sets his company apart from the usual faceless, greed-driven credit card businesses, possibly to the point where they'll take a lot of the green/ethical/social business market.

Given that this move is already paid for, it seems to be a brilliant bit of marketing that also has a real positive impact.

CEOs can't steal from investors or run the company against their interests. But they have a lot of decision making capacity within those bounds. Salaries (and realistically, the more pronounced questions are around executive pay), are within that boundary. So are marketing expenses, R&D expenditure and such. Companies are run using instinct, worldview, eve morals.

It's not like investors can drag CEOs into court over every decision and demand they prove they're in shareholders' interests. If decisions are seriously, provably against investor interests they can, but in practice this means some sort of stealing. Crooked contracts with kickbacks, embezzlement. That sort of stuff. Apart from that it's 'normal' business. If investors don't like how the company is run they can replace him. Otherwise, sell.

What's more, it will have the opposite consequence. In his book "Influence", Robert Cialdini wrote that making CEO pay public had the effect of raising exec pay across the board rather than check it, as the lawmakers had hoped.

EDIT: Well, okay, if the given RDBMS doesn't contain rank or median functions, then it'll take a bit longer to implement. But not that much longer.

Traditional management theory has that money is a poor motivator because the effects wear off quickly and people soon come to believe they are "worth" their pay increase. Other perks / benefits are often valued disproportionately more than money.

Now a massive pay rise that takes people out of a problematic income zone may completely upend that, or over time it might have unintended negative consequences. Off the top of my head I wonder what consequences might be for the workers who were on higher salaries now perhaps feeling relatively under compensated.

"We report an analysis of more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 US residents conducted by the Gallup Organization. We find that emotional well-being (measured by questions about emotional experiences yesterday) and life evaluation (measured by Cantril's Self-Anchoring Scale) have different correlates. Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions. When plotted against log income, life evaluation rises steadily. Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ~$75,000. Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being."

What people argue against is legal requirements for other, or all, companies to do the same.

[1]: https://www.marxists.org/archive/malenkov/1949/12/21.htm

I just visited Australia for the first time in 9 years, after having lived there for the first 23 years of my life. I've been living in North America (Canada and the US)

Your comment is exactly how Australia feels. There are virtually no poor people, nobody is left behind. Even people working "dead end jobs" like retail are perfectly happy. I would say they're happier than "career" people in North America.

I'm not sure if he is still head of the board or what, but this is definitely a bold move. Still, $70k in Seattle is only like $52k in my lowly city of Myrtle Beach, SC. It isn't a whole lot of money for any professional salesperson, clerk, or the like to make. It will certainly be a big win for morale and one would expect, performance, and retainment/turnover.

I guess we will see.

We know that your first assumption is wrong, and I don't think any of us are in a position to know if your second assumption is wrong or not. It certainly doesn't seem unreasonable.

It appears the people working at this company company are providing enough value for the company to be able to pay them this amount. If it can sustain revenues, who's to say it has to return its profit to the shareholders rather than to its employees.

[edit] removed duplicate word

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.

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.

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)

[Source: My career is advancing]

There's money in every successful company that could be redistributed — it's a moral choice whether you do so. If you prioritise your own comfort over that of the people you stand on, feel free to do so.

PS: I didn't down vote you.

After all, it's mostly a taxation issue, if he pays himself a million in salary he'll pay one tax rate, but if he pays himself a lower salary and a chunk of the profits as dividends that's simply another tax rate.

So you can start your own company and pay yourself whatever you want as long as you stay liquid as long as you own the thing. As soon as you have other shareholders or co-founders you won't be able to do that any more.

Did they grow to be a billion dollar business in 11 years? No.

Has he created a successful business? I'm pretty sure you could argue a business with $23k/employee net profitability (after his changes in minimum salary) for a SME is pretty successful.