Certainly if I did decide to start paying considerably above-market rate, I would do it in the form of profit sharing, because anything else would be taking a considerable risk should profits decline. However, there's still the question of whether that's the thing to do. I mean, certainly it would be a nice thing to do. But so would giving more to charity, or to my parents. Or lowering the price of our product for that matter. The only difference is that, as you say, the employees help generate those profits. But only to a point; the first developer I hired was after the company was profitable, and she's actually moved on to her own startup. So it would be more about sharing the current wealth than rewarding people for getting us where we are.

Still, obviously it's something I'm considering, or I wouldn't have posted. And I guess it doesn't have to be all or nothing; I can obviously choose to share any amount of the profits.

Really don't follow the last argument. I would hope if my employees got a sudden large raise, they would put most of that money into their own retirement savings, rather than just increasing their spending. But even if they didn't, by your argument the best thing I could do would be to just blow the profits myself buying cars or whatever. I think the money does the economy just fine in an investment account, providing capital to public companies and the government.