I froze the salaries of my executive team to benefit other workers • Hacker News Board

Re: I froze the salaries of my executive team to benefit other workers

#161

Post by Const-me » Thu, May 16, 2019, 3:11 PM UTC

lotsofpulp wrote: post #102

SketchySeaBeast wrote: post #88

Earlier quoted context omitted.

I was watching a sitcom called Superstore a little while ago, features the employees in a Wal-Mart like store, and the protagonist got a promotion to the head of the store. There was a whole plot line about how her wage was now in the 6 figures, and I was incredulous until I did a bit of research - Wal-Mart store managers can absolutely make that much money while their employees live in poverty. How you could make th…

Supposes employer A chooses to pay their employees more than other employers. Employer B chooses to pay their employees less. Both employers are selling products or services that the purchaser finds the same, i.e. they have no preference for who they buy it from. Employer B takes the money they save by paying employees less, and invests in newer, better facilities or R&D or whatever. Now employer B is selling a bette…

Labor market is a market, too.

Who will lose business unable to hire enough employees?

Unemployment rate in US is very low at the moment, well under 4%. Last time it was this way in 1970.

Re: I froze the salaries of my executive team to benefit other workers

#162

Post by mcv » Thu, May 16, 2019, 3:16 PM UTC

Chris2048 wrote: post #135

mcv wrote: post #105

Earlier quoted context omitted.

Are we still talking about stimulating the economy? Then yes, making sure they have money to spend will ensure they spend it, increase demand, and grow the economy. But yes, reject humiliating jobs. I'm not sure why you'd actively want people to be miserable. But if you want a bigger picture: create better opportunities, and make sure they are accessible to everybody. The whole reason people withdraw from society int…

This feels like the glass-makers fallacy If the money if free, distributing it will stimulate the economy. But since that money comes from somewhere, any growth due to that distribution competes with the lack of growth due to wherever you took it from, e.g If you took it via taxes, people have less money to spend because of the higher taxes. If you took it from the rich because they don't spend it on things, they als…

In this case, we're comparing giving money to the rich to giving it to the poor. It's coming from the same place in both cases. In this case, it's quite likely that the financial problems of the poor people in the company has been hurting their productivity (the article doesn't really go into that, but it starts with that the company was stagnating). For the rich, their growth is just a number; they don't really need that extra money for anything, because they already have plenty of it.

Of course in general, it's best to use the money wherever it will give you the best growth. I think that in general, that will be where the most growth is needed; where the most shortages are.

> serving fast food is humiliating to people with people who think of themselves as better

Well, you were the one calling it humiliating. I've got nothing against serving fast food, but in general, I think jobs shouldn't be humiliating, and I feel strongly that people should have the freedom to reject humiliating jobs. A job is a major part of your life. It shouldn't be sucking your soul out, it should stimulate and/or empower you.

> You seems to think the only problem is lack of opportunity, it isn't.

It's not the only problem, but a lack of opportunity is absolutely a problem. And a very real one, for a lot of people.

> For example, if a community has a drug problem, a better economy isn't going to fix that.

No, but that drug problem comes from somewhere, and humiliating or punishing people isn't going to fix it. If anything, that seems likely to make it worse.

Re: I froze the salaries of my executive team to benefit other workers

#163

Post by minikites » Thu, May 16, 2019, 3:16 PM UTC

WhompingWindows wrote: post #133

allworknoplay wrote: post #85

This is insane -- paying a $7.25/hr minimum wage to people you call "teammates" and expecting them to stick around is preposterous. In anything but a terrible economic downturn, minimum wage says to employees that you just want a body doing a job right at this moment, but aren't willing to invest any further in them. Why would anyone stick around, or care to do more than the most basic job requirements? These jobs ar…

He took action and doubled the pay to 15/hr, then it further increased to 16.50/hr. I didn't think he was stumbling on a new lesson, your reading was a bit more cynical than mine. Simply put, he hadn't realized the plight of those on 7.25/hr until he heard what his employees were going through. How else can we improve things if we don't allow people to change their views? Mocking a CEO for changing his view is the op…

>Simply put, he hadn't realized the plight of those on 7.25/hr until he heard what his employees were going through.

The fact that he needed to hear what his employees "were going through" to justify paying them more than literal poverty wages is a problem. That shouldn't require a learning experience, it should be a day 1 realization.

Re: I froze the salaries of my executive team to benefit other workers

#164

Post by mcguire » Thu, May 16, 2019, 3:18 PM UTC

coredog64 wrote: post #148

res0nat0r wrote: post #107

Earlier quoted context omitted.

Sounds like a great argument to increase the federal minimum wage so everyone is forced to pay their employees more.

In economic theory, this is what’s known as an efficiency wage. If you pay more, there’s more competition for your openings and you attract a better class of employee. As other comments have pointed out, simply raising the minimum wage doesn’t accomplish the same thing. Instead, all those people who were marginal at $7-8/hour simply don’t get hired, and employers use automation or forego the opportunities that additi…

For your second paragraph, that is a bit more complicated than simple economic theory might say.

For one thing, someone has to cook the fries, sweep the back room, and help customers. Unless you invent insanely cheap and powerful automation or raise the wage to a point that it's uneconomic to open a new store (and please take the employers who say "if you raise the minimum wage, I'm going to take my marbles and go home" with a grain of salt), it's hard to actually get rid of minimum wage jobs.

For another, remember that you will be injecting money into a sector of the economy that tends to spend it immediately. Minimum wage workers are likely to buy more fries and day care, causing more demand for other low-wage jobs.

Re: I froze the salaries of my executive team to benefit other workers

#165

Post by estebank » Thu, May 16, 2019, 3:19 PM UTC

fwip wrote: post #141

username444 wrote: post #112

Earlier quoted context omitted.

Great idea. Until you realize that no level on minimum wage is adequate in SF, while $10/hr is livable in rural Arkansas. It's not a silver bullet even with COL factored in. Higher staff costs? Replace them with automation. You can see the largest employers of minimum wage employees (eg. Mcdonalds) hedging against a rising minimum wage with kiosks to replace cashiers. At $15/hr for labor, those capital investments st…

The cost of technology falls much faster than wages rise. Wages currently are responsible for about 4% of the cost of the burger. https://www.purdue.edu/newsroom/releases/2015/Q3/study-raisi...

So you're saying that by increasing the cost of the burger by ~5% some of their employees could double their salaries? That's great!

Re: I froze the salaries of my executive team to benefit other workers

#166

Post by agent008t » Thu, May 16, 2019, 3:20 PM UTC

bluGill wrote: post #110

agent008t wrote: post #39

Earlier quoted context omitted.

You seem confused. It is much, much better for the world if the money is invested than if it is spent on frivolous personal consumption.

It doesn't really make much difference. If you invest it directly you support whatever you invest in. (you might or might not get it back depending on if the investment is successful) The best case you supported a new things that everybody buys, thus creating a company that employees a lot of workers. If you buy luxury goods you directly support all the employees of the companies that make those goods, keeping them i…

Consider what happens to the actual resources in the different cases:

1. You spent the money on consumption. By definition, consumption means that whatever you buy ends up being less valuable after you are done with it (otherwise we would consider it investment - note that unsuccessful investment is also a form of consumption under this definition). Consider an extreme example, where you commission a massive yacht to be built for you, then use the yacht recklessly and sink it. All of the time of many people, all of the materials that went into building it have been wasted. In aggregate, we are all poorer as a result. The fact that the yacht company now has more money just means that they now have a relatively larger claim on a smaller overall economic pie than they did before.

2. You invest. Instead of spending money on yourself, you instead use the resources you have a claim to that the money represents (e.g. the people and the resources that could have resulted in a yacht for yourself) to create real value for others. This makes the overall economic pie larger (and also changes the distribution of claims on this pie that people have).

3. You donate money to other people, burn the money - neither consume nor invest. The overall economic pie is unchanged, but the distribution of claims on this pie by various people has changed.

Of course, there are caveats and nuances, but in general option 2 makes society richer in aggregate, option 1 makes it poorer, and option 3 merely changes who gets to decide what to do with the resources that we have while neither growing nor shrinking this resource base.

Re: I froze the salaries of my executive team to benefit other workers

#167

Post by mcguire » Thu, May 16, 2019, 3:20 PM UTC

setr wrote: post #116

res0nat0r wrote: post #107

Earlier quoted context omitted.

Sounds like a great argument to increase the federal minimum wage so everyone is forced to pay their employees more.

One interesting result of that is it becomes more viable to look for strategies that eliminate the employees altogether, eg the food-ordering terminals that are going up everywhere, as the relative cost diminishes with wage increase. In such situations, it becomes an irreversible effect, as the cost to transition was mainly up front.

One interesting question: is the tipping point for switching to automation in the range of the minimum wage? Does increasing wages move you across that tipping point, or is it cheaper to get rid of employees no matter what the minimum wage is?

Re: I froze the salaries of my executive team to benefit other workers

#168

Post by dahart » Thu, May 16, 2019, 3:20 PM UTC

WhompingWindows wrote: post #133

allworknoplay wrote: post #85

This is insane -- paying a $7.25/hr minimum wage to people you call "teammates" and expecting them to stick around is preposterous. In anything but a terrible economic downturn, minimum wage says to employees that you just want a body doing a job right at this moment, but aren't willing to invest any further in them. Why would anyone stick around, or care to do more than the most basic job requirements? These jobs ar…

He took action and doubled the pay to 15/hr, then it further increased to 16.50/hr. I didn't think he was stumbling on a new lesson, your reading was a bit more cynical than mine. Simply put, he hadn't realized the plight of those on 7.25/hr until he heard what his employees were going through. How else can we improve things if we don't allow people to change their views? Mocking a CEO for changing his view is the op…

I’m so torn! I agree completely with you and I want to give the charitable interpretation and I want this to set a good example for other CEOs. That’s how I was feeling reading the article, but all of a sudden after I finished I started thinking this is nuts. 500 people is not that many to be that far out of touch with employees. It’s one thing at Walmart or McDonalds, but at a healthcare company with only 500 to have 20 execs making millions and employees at minimum wage in the first place, and for the execs to not know what their pay ratio is -- meaning not knowing how many employees could be hired for the amount of money they’re each paid -- seems like more than an oversight, and is definitely one more example of the hundreds of stories we’ve heard about how crazy modern business has become. So, anyway, I agree with you and I agree with the parent comment too, it is insane.

Re: I froze the salaries of my executive team to benefit other workers

#169

Post by njepa » Thu, May 16, 2019, 3:21 PM UTC

setr wrote: post #116

res0nat0r wrote: post #107

Earlier quoted context omitted.

Sounds like a great argument to increase the federal minimum wage so everyone is forced to pay their employees more.

One interesting result of that is it becomes more viable to look for strategies that eliminate the employees altogether, eg the food-ordering terminals that are going up everywhere, as the relative cost diminishes with wage increase. In such situations, it becomes an irreversible effect, as the cost to transition was mainly up front.

Which is generally fine. Because that is going to happen one day anyway. You want people to be paid well because then the transition becomes gradual. The most unproductive businesses and positions disappear first. People getting paid just over living expenses is the worst case scenario, because then everyone gets replaced over night as automation becomes cheap enough.

Re: I froze the salaries of my executive team to benefit other workers

#170

Post by ok_coo » Thu, May 16, 2019, 3:22 PM UTC

thrav wrote: post #93

yboris wrote: post #89

Earlier quoted context omitted.

Have you heard of Giving What We Can - an international community of people who pledged to give at least 10% of their income to charities they think are most effective at helping others? https://www.givingwhatwecan.org I really recommend focusing on cost-effectiveness when you give, however much or however little you give. See GiveWell for amazing research!

Ah yes, non-religious tithing.

I understand the sentiment but there are many good organizations that do positive things with people's money, like the ACLU, etc.