I would think that would be hard to scale over time.

The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries

That's great news, for those 30. Not so great for the 30 other people he could have hired, as discussed previously.

Some other potential downsides:

• Gravity Payments will be at a disadvantage compared to the competition. Customers might approve of the CEO's generosity, but not be willing to pay extra for the product. All else being equal, this business will be more likely to fail, which is bad for all employees.

• Clerks and service reps will be making far more than they can earn elsewhere. They may be appreciative and perform better, but they will also cling to their position and refuse opportunities that require relocating, or postpone retirement. It could end up as a positive sense of loyalty, or a negative "not leaving till they fire me."

• There will be little incentive for formerly lower-paid employees to perform beyond what is necessary to keep their job. Again, this may be more performance than they did to earn $35K, but when the corporate ladder is horizontal, there's no need to climb.

• A clerk that earned $35K must have brought more than $35K worth of revenue to the company, or they would not have been hired. It is not likely that they brought $70K worth of revenue, or they could probably have gotten a better-paying job elsewhere already. Paying above revenue amounts to charity. Charity is a very good thing, but it may be hard to justify should lean years come. Even if the company prospers, the accountants may recommend using automated tools rather than human clerks which lower the bottom line.

• When the company does need a new clerk, an applicant who is only qualified as a clerk will be at a disadvantage compared to an applicant who also has other skills. The lower-skilled worker will be unable to negotiate based on salary for an opportunity to get a job and learn new skills.

Thanks for sharing this; I am glad to learn of this guy's example, and hope he can make it work.

On Apr 26, 2015, at 13:30, kzcondor wrote:

As far as I can tell from the article, it's only those making less than $70k who are getting a raise. If I am making $75k, because my labor is worth that much, I am going to be pissed that some guy making $40k, because that is all his labor is worth, gets $30k/year for nothing. For that matter, I'd feel the same way if I were making $65k and only got $5,000/yr while a lesser producer got $30k. Not all labor is equally valuable, and treating it as if it is devalues your more productive employees.

On Sun, Apr 26, 2015 at 3:20 PM, wasoxygen wrote:

Is that "I, kzcondor" or "I, imaginary and faintly straw-smelling employee" who holds a grudge against their boss who elects to transfer some of his income to lower-earning employees.

On Apr 26, 2015, at 16:14, kzcondor wrote:

That's the odor of human nature you smell, not straw. Do you really doubt that the great majority of people would feel resentment at their co-workers getting an unearned $30k while they get nothing? Do you really? Really? I don't even mind breaking out an O veni on this one - come on, man! Of course this will generate resentment. Have you ever spent any time around humans?

And the resentment isn't entirely unjustified:

-- Maybe (generic) I am earning more because I went $100k into debt getting an MS degree, and since part of my salary goes to paying that loan down my disposable income was no more than that of the $40k guy. And now I am worse off than he is, precisely because I made myself more valuable.

-- Giving undeserved raises to low earners leaves less money available to give merit raises to everyone else. Sure, dude said it's all coming from his own salary, but that is pretty much meaningless given that he owns the company. He also said his salary would return to its old value when the company had returned to its previous level of profitability, which means that the would-have-been merit raises will go towards restoring that profit level rather than to the owner's salary. Whatever, it's all the same pot.