Backlash Against Boss Who Raised Minimum Salary

Gravity announced a minimum annual salary of $70,000. Almost everyone is unhappy.

pay-compensation-raise

Dan Price announced that he’d pay a middle class salary to all his employees. His clients, customers, and even the employees themselves are unhappy.

NYT (“A Company Copes With Backlash Against the Raise That Roared“)

[A] few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase — despite repeated assurances to the contrary — also left. While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees — now at a significantly higher cost — and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.

Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees.

[…]

Maisey McMaster was also one of the believers. Now 26, she joined the company five years ago and worked her way up to financial manager, putting in long hours that left little time for her husband and extended family. “There’s a special culture,” where people “work hard and play hard,” she said. “I love everyone there.”

She helped calculate whether the firm could afford to gradually raise everyone’s salary to $70,000 over a three-year period, and was initially swept up in the excitement. But the more she thought about it, the more the details gnawed at her.

“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” she said. To her, a fairer proposal would have been to give smaller increases with the opportunity to earn a future raise with more experience.

A couple of days after the announcement, she decided to talk to Mr. Price.

“He treated me as if I was being selfish and only thinking about myself,” she said. “That really hurt me. I was talking about not only me, but about everyone in my position.”

Already approaching burnout from the relentless pace, she decided to quit.

[…]

The new pay scale also helped push Grant Moran, 29, Gravity’s web developer, to leave. “I had a lot of mixed emotions,” he said. His own salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but the policy was nevertheless disconcerting. “Now the people who were just clocking in and out were making the same as me,” he complained. “It shackles high performers to less motivated team members.”

Mr. Moran also fretted that the extra money could over time become too enticing to give up, keeping him from his primary goal of further developing his web skills and moving to a digital company.

And the attention was vexing. “I was kind of uncomfortable and didn’t like having my wage advertised so publicly and so blatantly,” he said, echoing a sentiment of several Gravity staff members. “It changed perspectives and expectations of you, whether it’s the amount you tip on a cup of coffee that day or family and friends now calling you for a loan.”

Several employees who stayed, while exhilarated by the raises, say they now feel a lot of pressure. “Am I doing my job well enough to deserve this?” said Stephanie Brooks, 23, who joined Gravity as an administrative assistant two months before the wage increase. “I didn’t earn it.”

Price’s decision to raise the salary floor to $70,000 over three years was well-intentioned. As the report notes, “he was influenced by research showing that this annual income could make an enormous difference in someone’s emotional well-being by easing nagging financial stress.” A raise from $50,000 to $70,000 is much bigger psychologically than one from $70,000 to $90,000 much less $150,000 to $170,000. Presuming the business model of the enterprise can support that level of pay for the lowest-level employees, then, it’s a noble ideal.

As Gravity’s experience shows, though, leveling can have negative spillover effects.  I’ve experienced it from both sides in my own career.

Back in the late 1990s, my co-blogger Steven Taylor and I both started together as assistant professors at what was then Troy State University making $30,000 a year. At convocation our second year, the university president announced that henceforth the minimum salary would be $38,000.  That was a huge raise! The problem, though, is that it wasn’t coupled with a commensurate raise for the other academic ranks. Thus, we were suddenly making as much money as associate professors who’d been there for years. Ultimately, higher floors were set for associate and (full) professor ranks, too. Still, this meant that differentials for seniority disappeared. While I don’t recall any huge backlash, there was significant grumbling and resentment.

When I arrived at the Atlantic Council, it was a very flat organization with a president/CEO, a vice president for external relations, five or so directors, five or so assistant directors, and a handful of clerical staff and unpaid interns. As managing editor, I at the director level.  A few months into my tenure, the president announced that, in order to provide advancement opportunities—there was essentially no way for an assistant director to become a director without leaving the organization—there would henceforth be two more vice presidents and an associate director level. Suddenly, two of my peers were superiors and two or three of the assistants were associates. While it was great for those being advanced—and ultimately great for the organization—it meant that most of us had actually moved down the pecking order. As the size of the organization exploded, that meant that those who once had solo offices suddenly had shared offices or cubicles. An attempt to raise morale had the opposite effect during the long transition. Over time, as people moved on and new people came in, the new structure was beneficial in that there was indeed more opportunity. In the interim, though, people resented differential treatment of former peers.

At my current organization, the pay structure mirrors that of the civil service system, with grades and “steps.” Our grades and steps—and thus our paycheck down to the penny—are public information. The system has been the same as long as I’ve been there and there’s not a ton of kvetching about pay differentials.  Even there, though, there are some weird disparities with some assistant professors a few years out of grad school making as much or more money as full professors with 25 years in the profession and people who came in with similar experience at the same time making considerably different salaries. Like elsewhere in academia, these disparities are essentially permanent as salaries have their own inertia.

As the Gravity experience and my own suggest, then, while the actual salaries people make are quite important, people naturally pay a lot of attention to comparative salaries. A boost to a middle class salary from a subsistence one is a life changer, whereas incremental differences above that have decreasing economic and psychological utility. And yet people will naturally resent the hell out of someone less experienced, less qualified, and less valuable being given a raise that makes them peers. Paying low level employees a respectable wage is absolutely the right thing to do if it’s economically feasible. But managers also need to pay attention to pay differentials, ensuring that higher performing and more qualified employees are given commensurately higher pay to recognize their differential contributions tot he company.

FILED UNDER: General
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Dave Schuler says:

    Unless you’re the lead dog the view never changes. It’s just a question of whose butt you’re looking at.

  2. Tillman says:

    Mr. Moran also fretted that the extra money could over time become too enticing to give up, keeping him from his primary goal of further developing his web skills and moving to a digital company.

    I’m a tad confused here. He resents being paid more money because it would keep him from working a different job? Rather, it would make him abandon his plans to quit this job eventually?

    Reading the article suggests being public about all this was his downfall more than the decision itself, given some of the people who contacted them accused them of communist sympathies.

    A few were worried that fees would rise or service would fall off. “What’s their incentive to hustle if you pay them so much?” Ms. Brajcich said they asked.

    I’ve been unpacking this question too long. Can’t decide if it’s stupid or somehow profound.

  3. DrDaveT says:

    It’s a fascinating problem.

    I was the oldest child in my family, by quite a few years. I spent my entire tween and teen years watching my younger siblings get to do things that I had been forbidden, get toys I had always wanted, participate in activities I had not had a chance to do. From my parents’ point of view, they were (a) better off financially than they had been, and (b) smarter about parenting than they had been when I was a kid. It made sense to them; it rankled badly with me. Bad enough to lose the 100% focus of my parents’ attention that I had enjoyed for years; now I had to watch the interlopers get preferential treatment.

    I suspect the psychology here has a lot in common with that, minus (mostly) the irrationality and hormones of adolescence.

    That said, the diminishing marginal value of an extra $20k per year is not merely psychological. Basic nutrition, housing, and health care are fixed costs — quality of life is what happens with the money you make above and beyond that minimum level, and it goes up rapidly at first.

  4. Tyrell says:

    ” Gave raises to people with the least skills and least equipped to do the job” One effect that this sort of pay raise usually has is that people with the skilks and equipment will start applying for and getting the jobs of those who have those least skills.
    I knew a man who was the owner of a mid sized business and hired a lot of laid off textile workers during the textile industry crash of the ’70’s (caused by unfair trade agreements). He paid them more, gave better benefits, and they had much better working conditions than in the textile mills. He did have a requirement of some training and that some of them had to get their high school diploma (GED). Some of them balked at that, and went back to the mills when the textiles picked back up. Some stayed. But he commented on their loyalty to the textile mill; he couldn’t understand that.
    This is interesting : seems like some of thise unions that wanted the $15/hour minimum wage are wanting to be exempt from it !! Weird ! And people who pushed McDonald’s for a higher wage to flip burgers do not want it at the McDonald’s that they work at – they are afraid of losing their jobs to people with more skills, more education, and more work experience. It is that “be careful what you wish for” thing. See msnmoney.com
    The president has made some changes to the overtime pay rules concerning salaried workers. But some people are saying that this change could actually cause their pay to go down or longer hours. I have not seen a lot of details about this and I am researching. Some teachers that I have talked to do not want this applied to them – they would have to clock in and out. The administrators also don’t want it: nightmare of book keeping of hours. Teachers in my state do not have a set hour day – they are not on any clock.But they may be exempted from it.
    Sometimes something sounds and looks good, especially to politicians. But ends up not working out that way.

  5. Ben Wolf says:

    @Tillman:

    A few were worried that fees would rise or service would fall off. “What’s their incentive to hustle if you pay them so much?” Ms. Brajcich said they asked.

    I’d respond to this by asking why they should have to. Forcing people to work at an increasingly difficult pace hasn’t done shit for productivity growth over the last thirty years.

  6. Mu says:

    My prediction is that it will cost a lot of jobs in the long run. While the CEO might see it as a boom for lower paged employees the department head will reconsider the extra $70,000 secretary and upgrade computers. Same for the guy who has to decide between an extra machinist and another CNC machine. In the end it will be a German style economy, lots of machines doing the work and few of those E70/h (with overhead) union jobs.

  7. Argon says:

    @Tillman:

    I’ve been unpacking this question too long. Can’t decide if it’s stupid or somehow profound.

    Me too. One could flip it around and ask: What’s the incentive to hustle when you’re paid less? And, does that apply to people making several million a year?

    Some reasons to pay people well…
    1) Workers have an incentive to keep working hard in order to keep their jobs.
    2) A lot of other people in the job market want the jobs and you get to pick the best for your company.
    3) Less turnover.

    This is the same sort of crap pushback that Costco had to face in order to maintaining better worker pay and benefits, compared to places like Sam’s Club and BJs. Costco employees have better retention rates, knowledge of their products and business, and sales support than those at the other stores. This shows that having workers with better skills and loyalty can make a difference to a company’s bottom line.

  8. Lounsbury says:

    Primates we are, primates we remain.

  9. James Joyner says:

    @Tillman:

    He resents being paid more money because it would keep him from working a different job? Rather, it would make him abandon his plans to quit this job eventually?

    It’s the “golden handcuffs concept. i’ve seen it in academe. Essentially, your job isn’t great and you’d like a better job. At a better school in the case of academia or at a different level of competency in the case of the private sector. But having tenure or being paid an above-scale wage makes that mobility harder. Essentially, you’re tied to a job that’s psychologically and professionally worse because they pay more than you’d make upon transition to an otherwise better job.

    @DrDaveT: I was an only child but face this issue as a parent. My oldest is only 2-1/2 years older than my youngest but, in addition to diminished energy and a better perspective on my part there’s the fact that the oldest is always the oldest. When she was 4, my youngest was a 1-1/2-year-old baby. By contrast, she seemed like a big kid and got little tolerance for shenanigans. My youngest just turned 4 and she seems like the little kid she is in comparison to my big 6-1/2-year-old.

  10. JKB says:

    @James Joyner: But having tenure or being paid an above-scale wage makes that mobility harder.

    The guy is actually very perceptive. Wanting to improve his skills, then change jobs, but wait, it will require a pay cut. People who go for lower pay just aren’t trusted in the hiring process. That is barring certain disjunctures in work life, such as say moving from welder to college graduate seeking first “career” job or after retirement.

    The thing about losing your job in your 50s is employers don’t trust that you’ll stick around for a job that pays less than what you made even if it is in a different field. It says a lot that in America the “class” structure is defined by earnings, not breeding.

  11. JKB says:

    @Tyrell: Some teachers that I have talked to do not want this applied to them – they would have to clock in and out.

    Nor can any employers hoping to control overtime costs permit them to grade papers or develop lesson plans at home with the employee reporting their own discretion.

    But along the lines of this company’s backlash, moving to treat non-exempt employees as the government mandates can create a lot of resentment in the non-exempt employees. They must be managed, prevented from working overtime without prior approval, ensure they leave their desks for lunch and breaks, etc. Also, they must act as clock watchers as well, such as a secretary gathering her things to leave at the end of her 8 cannot answer the phone, help someone make copies, whatever, without risking reprimand for working OT.

    In other words, they aren’t treated as the “professionals” who are exempt and can stay over to finish a job even without claiming overtime, or pop in after hours for a quick task. Or work from home. The exempt employees only get OT if it is prior approved.

  12. michael reynolds says:

    People are fwcking idiots.

    Look, I am in a line of work where everything I write is instantly judged on Twitter, Facebook, Goodreads, etc… I’m in a line of work where a “starred review” is often seen as the goal and the 5 starred reviews is Moby Dick. My type of work is wreathed in bullsh!t having to do with status issues, with literary value, with shelf placement, advertising, panel appearances, tours, prizes, and on and on and on. No end of status measurements.

    Add to all that the fact that writers are typically supposed to mouth an endless stream of platitudes about our ‘gift’ our ‘art’ our love of learning, our presumed obsession with reading and childhood literacy. Suffice to say that kidlit is a very bullsh!t-intensive world.

    So as I began my career as a writer I had to decide what I actually cared about. I decided it was a fool’s game to measure my life by the more-or-less random bleatings of critics (although I love a nice review or a star). And it made me sick to think of passing myself off as some kind of do-gooder, still less a suffering artist. And it seemed ungrateful, passive and ultimately pointless to obsess over where exactly I was in some hierarchy of relative success.

    So I narrowed it all down to a single metric: money. Money is real. You can use it in all sorts of useful ways. No, really, try it some time, the stuff is great.

    My point is this: an absurdly large percentage of the human race has absolutely no fwcking clue what the hell they’re after. People live their lives without any notion of a goal, without any concept of how to measure progress toward that goal. They don’t own an Occam’s Brand razor, they don’t even own an Occam’s Brand spatula.

    “I just want to be happy.” And what would that happiness consist of? How do you propose to reach this mystical state of being? How will you know when you’re there? Average person has no idea. This applies as well in social movements like Black Lives Matter or Occupy or for that matter the Tea Party or Libertarianism. If your goal is “I just want to be happy” or “I want justice,” or “I want a better world,” then you are an idiot mouthing nonsense. Goals are specific. Goals are tangible. Goals are obtainable within the limits of reality.

    In order to get what you want you have to know what you want. And this story is a textbook example of people either not knowing what the hell they want, or having decided that what they want is utterly divorced from anything real.

    The man is giving you more money. Money is a tool you can use to get just about anything else you like, unless of course you’re so lost to reason and reality that you’ve pinned your happiness on your relative status within some company office. And who the fwck would be that stupid?

    Take the money, you morons. Take it and shut the hell up.

  13. $$$$$$$$$ says:

    Take the money, you morons. Take it and shut the hell up.

    https://www.youtube.com/watch?v=c7AL44keDZw
    AMEN!

  14. RAOUL says:

    In other news, the Oreo cookie CEO, whose 21 mill salary exceeds that of the 600 employees at the Chicago plant, announced the relocation of the plant to Mexico.

  15. James Joyner says:

    @michael reynolds: I agree with most of this: I like money quite a bit and have been fortunate to make more of it than some of my life choices would have predicted. But I also realized early on that I wanted to spend my work life doing something I cared about and not work 20 hour days chasing a few more bucks. Most people I know don’t seem to understand those inherent tradeoffs.

    I do think most of those complaining here are other than those who suddenly got a big boost in their income. While I’m sure a handful of them are unhappy, most are glad to have the money and lifestyle improvement that comes with it. But since, as Mark Cuban put it, money is how we keep score, it’s thrown the game out of whack for everyone else.

  16. wr says:

    @Tillman: “I’ve been unpacking this question too long. Can’t decide if it’s stupid or somehow profound.”

    I won’t give you an answer, but simply a second question to help guide you to your own: Does anyone ever suggest that giving the BOSS too much money will decrease his incentive to hustle? Or does that just apply to the workers?

  17. wr says:

    @Argon: ” Costco employees have better retention rates, knowledge of their products and business, and sales support than those at the other stores. ”

    And unlike Walmart, shopping at Costco is a pleasant experience. I’ve never come across a grumpy or ill-mannered employee at Costco — they all seem to enjoy helping their customers.

  18. Slugger says:

    Count me as someone who is not unhappy about this decision. A private individual has made an interesting choice about his privately held enterprise. Why don’t we all sit back and see what happens. Deviation from the normal way of doing business is probably a mistake 98% of the time. However, ideological fetters that prevent innovation are a mistake 100% of the time.
    In my personal life, I gave up a secure career development track to move across the US and start a business in an overserved community. I did it for lifestyle reasons and partly because I was born with a wild hair up my yinyang. It took a while, but it was very successful emotionally and financially. If everybody tells you that you’re wrong, you are probably wrong and should suck it up, but if you make it despite the naysayers, it is glorious. BTW, the world is full of naysayers who never accomplish anything.

  19. wr says:

    @James Joyner: “But having tenure or being paid an above-scale wage makes that mobility harder.”

    Essentially it comes down to “these people shouldn’t be well paid because that’s going to make it harder for me to overcome my own greed.” It’s somewhere on the spectrum between narcissism and full-blown sociopathy.

  20. Just 'nutha ig'rant cracker says:

    @James Joyner: The backlash of this guy’s experience seems to me contained in the part of the research on happiness that he apparently didn’t read. At each income level, some people expressed discontent at the fact that others had more money than they did. In fact, this was the source of discontent at levels of income in excess of $70k. The largest percentage of people who were content happened at $70k, but that doesn’t resolve into that sum being some kind of golden mean for salary. I expect–although I do not recall the research studying this–that some of the people who had discontent at higher salaries was bound up in the idea that some people didn’t “deserve” the money (and lifestyle) they got (it’s kind of similar to the things that I have read in various places implying that low-wage workers don’t “deserve” incomes that will meet their families’ basic needs).

    Kudos to Tillman who observed that the guy’s biggest problem may have been in publicizing his decision. As is usual, he beat me to that observation.

  21. Just 'nutha ig'rant cracker says:

    One other thought: When I was young, I worked in a very cushy–income wise–union labor job (I made more money than a friend of mine who was an associate at a large Seattle law firm, for example). When the company was sold, I moved on, instead of staying, at a salary decrease of more than 60%. In fact, I have never made the same kind of money anywhere even in constant dollars, let alone inflation adjusted ones (although my time in Korea came close in aggregate value basis). I never regretted the decision. I am probably the exception rather than the rule.

    The satisfaction of doing what I wanted to do outweighed the income gap for me. Michael Reynolds has been very lucky in that he has been able to do something that he liked doing and get a pile of money for it. Bravo! But it isn’t the only way to keep score (as I’m sure both he and Mark Cuban are aware).

  22. James Joyner says:

    @wr:

    “But having tenure or being paid an above-scale wage makes that mobility harder.”

    Essentially it comes down to “these people shouldn’t be well paid because that’s going to make it harder for me to overcome my own greed.” It’s somewhere on the spectrum between narcissism and full-blown sociopathy.

    I’ve never heard it in reference to others’ salary but to one’s own. That is: while I very much want this pay increase or permanent employment guarantee, I realize that it’s shackling me to a job I don’t love. It’s like the girl who works her way through college as a stripper and finds that she’ll take a pay cut leaving stripping.

  23. JKB says:

    So basically, a guy with only 10 years in a financial business has decided to just up and make what on their face seem to be irresponsible decisions as relates to the continuation of the viability of that business. So those who depend on those financial services are moving to more stable companies. Employees are looking at the risks this instability poses to them. Some seem to be reacting quite quickly and without much time to see the impact, but in the banking business it doesn’t take all that much of a radical move to spook the cattle.

  24. Lit3Bolt says:

    You have to give American propaganda some credit: they did their job well. 25 years after the end of the Cold War, and there’s still a strain of anti-egalitarianism and deep suspicion of anything resembling a socialist agenda in American thinking.

    I disagree it’s a natural mentality, in that while it may be natural in a biological sense, we should as civilized beings strive for better. Unfortunately, this primitive style of thinking is actively promoted by American business leaders and politicians. “Hey! Look at those black people getting welfare! Why are they taking money out of YOUR pocket? They’re getting something for nothing!” Thus the unfairness instincts in our primate brains are tickled, even though in economic terms, punishing perceived unfairness at personal cost is irrational. In the end, you only punish yourself (looking at you, Kansas).

    The disgruntled workers are not thinking of the money their gaining; they’re thinking of the status they’ve lost, and upset that their precious business-world hierarchy has been upset. So while there may be legit reasons to be upset at Gravity from a business perspective (if paying everyone 70,000 in your business puts your business at risk for bankruptcy, it’s a bad idea), it’s funny to see “the market” taking such an ideological stance against Gravity (and if it leads to Gravity’s failure, so much the better…).

    Only in America could paying all your workers a livable wage be described as “unfair.” Ignorance is strength…

  25. Matt says:

    The story is peppered with comments by self entitled jerks who are afraid their employees might get a decent wage somewhere else.

    “What’s their incentive to hustle if you pay them so much?”

    Oh I don’t know maybe the fact that you care enough about them to actually pay them a decent wage??

  26. Matt says:

    @Tillman: Yeah Moran is litterly complaining that it’ll be harder for him to ditch his current job to move on to another because of the increased salary he’s being paid. What a greedy asshole.

  27. Gustopher says:

    @Tyrell:

    It is that “be careful what you wish for” thing. See msnmoney.com

    Your copy-and-paste is showing. Also, you have a collection of entirely disjoint ideas that you haven’t tied into a coherent argument.

  28. michael reynolds says:

    @Just ‘nutha ig’rant cracker:

    But it isn’t the only way to keep score (as I’m sure both he and Mark Cuban are aware).

    Absolutely. It’s not the only way, it’s one way. And anyway, for me it’s not about keeping score as if we’re all in some giant race. There’s no race. That’s a stupid way to look at the world. Guess what the end of the ‘race’ is? That’s right, you in a care facility sh!tting yourself and not recognizing your own children, that’s the end of the race for everyone so what the hell is the hurry? Why are we racing?

    The essential question is ‘what do I want?’ followed by ‘can I realistically get it?’ And finally, ‘will I know when I’ve got it?’ I have specific goals. Will my kids be okay financially if I croak? Yes, that’s done with life insurance. Will I be okay if I can’t work? We’re not there yet, I’m working on it. I have a number in mind, and if I get there I’ll give the rest of it away. I know what I want, I have a realistic way to get there, and I’ll know when I’m there.

    If you want to be happy it seems to me that Job #1 is to avoid all the stuff that will doom you to unhappiness. Money is great; needing to have more of it than everyone else is a sure road to misery. Status is great, I suppose, but all it will take is one photo of you falling off a bar stool drunk, and poof, there goes your status. Status is fragile. You’re walking a tightrope when you’re chasing status, and the floor is very patiently awaiting your eventual impact.

    Money on the other hand will buy me the same exact steak whether I am loved or hated, respected or despised. I’ve had my ass kissed many times by lots of people, I’ve had people beg me to Sharpie my name on their arm, I’ve had people squeal with delight or dissolve in tears on meeting me, and let me tell you from personal experience: I far prefer cash.

  29. anjin-san says:

    @James Joyner:

    It’s like the girl who works her way through college as a stripper and finds that she’ll take a pay cut leaving stripping.

    Why is having choices a bad thing? And why does anyone expect to live in a pixie dust world where their choices only have upsides, never downsides?

  30. James Joyner says:

    @anjin-san:

    Why is having choices a bad thing? And why does anyone expect to live in a pixie dust world where their choices only have upsides, never downsides?

    I dunno, but most people do. Most college professors I know are relatively happy people but may of them bitch that they’re underpaid relative to other professions with comparable or even lesser levels of education. Or, heaven forbid, academic administrators. Yet most of us would never trade places with those people given the working conditions.

  31. michael reynolds says:

    @James Joyner:

    may of them bitch that they’re underpaid relative

    Exactly. Relative. A bad word for more than one reason.

  32. Gustopher says:

    @michael reynolds:

    The man is giving you more money. Money is a tool you can use to get just about anything else you like, unless of course you’re so lost to reason and reality that you’ve pinned your happiness on your relative status within some company office. And who the fwck would be that stupid?

    Pretty much everyone who has a job?

    I think your time in kid-lit has made you forget the world of working with others a bit, and the anger and humiliation of discovering the idiot three desks over makes as much as or more than you do, even though he’s an idiot. It’s the discovery that someone is either cheating you (since you deserve more than that idiot), or that someone actually thinks that idiot is give-or-take as good as you.

    The smart, rational reaction to your employer giving you more money is to be glad, even if the idiot three desks over also gets more money.

    The people who can’t get to that pretty quickly — the people who now just resent the idiot three desks over — are probably pretty horrible, toxic people and the office will probably run better without them. They’re the people who make office work and office politics painful. This company is better off without them.

  33. Argon says:

    @Slugger:

    Deviation from the normal way of doing business is probably a mistake 98% of the time. However, ideological fetters that prevent innovation are a mistake 100% of the time.

    My company went with the crowd and outsourced its IT. Guess how that turned out. We’ve in-sourced again after losing much of our former IT brain trust. Whoever said that nobody got fired by going with IBM should talk to our ex-CIO.

    Now we’ve got ‘open-plan’ offices with hot seating. Meet the new boss, same as the old trend-following boss.

  34. michael reynolds says:

    @Gustopher:

    Dude, I spent 3 years working in offices in DC and San Francisco, and I spent 10 years waiting tables where each night I knew how much I’d made relative to everyone else. If I had a $100 night it did not bother me in the slightest that someone else made $120. Insecure people judge themselves relative to other people, and of course once you’ve decided to make your sense of worth dependent on factors you can in no way control, you’ve bought lifetime unhappiness.

    It boils down to this: Do you like ice cream? Can you get ice cream? You can? Then be happy.

  35. michael reynolds says:

    By the way, these are people who a month ago, to a man or woman, were thinking, “Gosh, I wish I made more money.”

    Their boss says, “Okay, here’s more money.”

    To which they respond, “Waaaah!”

    How screwed up are you that getting what you wanted makes you unhappy? People. Not bright, as a rule.

  36. anjin-san says:

    @James Joyner:

    Yet most of us would never trade places with those people given the working conditions.

    I recently took a job at an office 10 minutes from my house (a very nice drive too). I could probably make 20-30k more doing the same work in silicon valley. Well, I don’t want to get up at 5:00 every morning and battle nightmare traffic.

    So I made a choice. Having choices is a good thing.

    To make up the difference, I spend a lot of Sundays doing what I am doing right now, grinding out some freelance work with the Giants game on in the background. It would be nice to be out at Pt. Reyes or up in Healdburg right now, but if I was spending 10 hours a week commuting, I would probably be too fried to enjoy it anyway. It’s a tradeoff, and I picked the option that works best for me. The trick is to pick one and not complain about the downside.

  37. Tyrell says:

    @JKB: I did find out that most teachers are exempt from this ruling, as I expected.

  38. James Joyner says:

    @michael reynolds: @michael reynolds: The relative deprivation concept appeared in the 1940s. The basis of the study was the military. In the Army infantry, promotions were slow. In the Army Air Corps, promotions were rapid. Guess who was happiest. Right: the grunts. There, everyone was progressing at the same rate and those who were getting ahead were perceived as rock stars. In the Air Force, everyone who wasn’t promoted knew some dumbass who got promoted and deserved it less. We’re social creatures, not rational ones.

    @anjin-san: Agree completely. It’s not human nature, though.

  39. JohnMcC says:

    When I first saw that story in the Times I was reminded that it is pretty much exactly the same story as one of Jesus’ parables, the Parable of the Workers in the Vinyard. It’s Matthew 20. Man hires workers for a day picking grapes then sends more workers in at 9AM, more at 12N and still more at 3PM. Pays them all the same at the end of the day. Gets the same responses that we see here. Lectures them: “Take your pay and go. I want to give the one who was hired last the same as you. Don’t I have the right to do what I want with my money? Or are you envious because I am generous? (So in the Kingdom of Heaven) The last will be first and the first will be last.

    You don’t often see such a perfect fit between scripture and newspaper.

  40. Tillman says:

    @Matt: What makes it so weird to me is he cited improving his web development skills as a reason to not want more money as a web developer now, when the main reason to improve a work skill is to earn more money. (Unless I’ve missed something about working for a living?) And if web development was more than just a work skill, nothing the company did in paying him more money to stick around would keep him from improving it. Unless he’s such a purist about coding that he feels a starving life to pursue the perfect web development, ah, thing is preferable to a comfortable one of tedious keyboard clacking.

    @michael reynolds:

    If you want to be happy it seems to me that Job #1 is to avoid all the stuff that will doom you to unhappiness. Money is great; needing to have more of it than everyone else is a sure road to misery. Status is great, I suppose, but all it will take is one photo of you falling off a bar stool drunk, and poof, there goes your status. Status is fragile. You’re walking a tightrope when you’re chasing status, and the floor is very patiently awaiting your eventual impact.

    The way my grandfather put it was, “Buy land.”

  41. Lenoxus says:

    Not all the complaints are illegitimate. The higher-expectations-from-customers problem makes a lot of sense (though a bigger way to fix that on a national scale would be to transition away from a tipping-based incentive system — I think waiters would be a lot happier if they didn’t have that hanging over their heads, and instead simply got paid for doing their job, like everyone else). Mu’s point about the incentive for middle-management to switch to mechanization could be an issue too. My first reaction to this:

    Mr. Moran also fretted that the extra money could over time become too enticing to give up, keeping him from his primary goal of further developing his web skills and moving to a digital company.

    was the same as others here — how exactly are you being stopped from making that transition? But then again, I do think that if someone trying to lose weight was constantly given free donuts, they would have the right to complain. Or if you want a more extreme comparison, picture someone trying to quit smoking being given free cigarettes.

    Still, a difference in those situations is that the person trying to make a major life change is best off going cold turkey, whereas you do need money just to survive, and unlike concocting a weight-loss plan out of all the free donuts, having more money can be helpful for any transition. (Speaking as a web developer myself, the profession isn’t entirely “free” to enter — it helps to have a degree, plus there are various knowledge sources and applications you may wish to pay for.)

    Meanwhile, the complaint that raising salaries is somehow “socialist” or anti-capitalist despite being a private business decision reminds me vaguely of the complaint which is mocked in some circles as “freeze peach” — that platforms and forums for discussion should not censor any content or kick out any spokespersons, or else they are violating the First Amendment. In both cases, it seems the fact that a company and not the government is responsible should dissolve the complaint. But let’s examine the parallel more closely.

    In both cases, one may argue that while of course people “in charge” of a company/forum have the right to do as they like, the decisions in question are violating the spirit of the important underlying principles. In the case of the free-speech argument: regardless of the free-association rights to which they are indeed entitled, forums should aspire to make all viewpoints welcome, no matter how noxious, and no matter how idealistic that might seem. Okay, while I don’t exactly agree, that’s a reasonable idea.

    And in the case of the anti-socialists: companies… should aspire to create hierarchies of people motivated by the spirit of jealous competition, and most importantly, people at the bottom should get as little as possible because a smaller amount of money is the “natural” value of their labor — because some people are just inherently proles. Hmm. Not so sure I can get behind this.

    In medieval Europe, poverty could be treated as a punishable offense, “sloth”. It’s disturbing to think a significant number of people actually think in explicitly anti-equality terms today. More often we get the rationalization that inequality is merely the result of the not-to-be-questioned invisible hand. Per this rationalization, if the invisible hand started raising the wages of entry-level employees, or lowering that of CEOs, it would be just fine. But per the more Randian perspective, it would be a Bad Thing — even capitalist freedom should be subservient to the eternal necessity that there be haves and have-nots.

    Maslow’s need of hierarchies…

  42. Monala says:

    @Lit3Bolt: One of the funniest things about those calling this move socia1ist is that Jesus told just such a story in the Bible, about a boss who decides to pay all his employees the same salary, no matter how long they’d worked for him. And the longer tenured workers in the parable grumbled just like some of these folks. Jesus’ point was a rebuke to religious people who resented people they considered “sinners” getting just as much grace from God ad they had. The parable ends with the boss saying, “it’s my money. I can be as generous as I want.”

  43. ktward says:

    I recommend reading the entire NYT piece. (Nothing against Mr. Joyner, but this OP seems to miss the crux of it.)

    There’s a real sea change happening. CEOs should start paying attention. If they aren’t already.

    There have been other ripples. Mario Zahariev, who runs Pop’s Pizza & Pasta, switched to I Gravity after seeing Mr. Price on the news. When he learned his monthly processing fees would drop to $900 from $1,700, Mr. Zahariev decided, “I was not going to keep the difference for myself.” He used the savings to raise the salaries of his eight employees.

    Pop’s Pizza aside, Mr. Price’s plan is not easily replicated, said Nick Hanauer, a Seattle venture capitalist and an early promoter of the city’s $15 minimum wage law. Still, he noted, “These individual acts can create a new kind of perception of what’s possible and what’s righteous.” After all, he said, two years ago, no one would ever have guessed higher minimum wage laws would be catching fire in cities around the country. “Who can tell what that last thing is that catalyzes big change?”

  44. Monala says:

    @JohnMcC: you beat me to it!

  45. DrDaveT says:

    @Gustopher:

    It’s the discovery that someone is either cheating you (since you deserve more than that idiot), or that someone actually thinks that idiot is give-or-take as good as you.

    Or, worse yet, that management simply doesn’t care who is creating value and who is an idiot, so long as it all averages out and the customers aren’t complaining. That one is pure workplace poison — it’s worse to be treated as a faceless cog than it is to be misunderstood and underappreciated.

    (My current employer is utterly clueless on this one…)

  46. Frank says:

    I agree with all the points regarding status and salary differences being overrated.
    Still, one thing bugged me (not sure if it’s representative of how it really went down) and that is story of the one female employee:

    “He treated me as if I was being selfish and only thinking about myself,” she said. “That really hurt me. I was talking about not only me, but about everyone in my position.”

    If it’s an accurate assessment I can imagine it increasing g resentment. It’s one thing being irrational, it’s another thing if your boss gets high and mighty about it and shames you (even if he has a point). That would definitely contribute to not feeling at home.

    Regarding the developer who doesn’t want a pay raise so it’s easier for him to leave… Not sure why he wouldn’t just take the pay raise and put the difference in a savings account? That would eliminate some of the incentive to stay as you’d notice little change except on your bank statement.

    (btw, still getting malware ads on Android on your frontpage)

  47. anjin-san says:

    @ James, you might want to install Wordfence on your site…

  48. Matt says:

    @anjin-san: I concur.

  49. grumpy realist says:

    @DrDaveT: There’s a wonderful card I got from Despair.com which is of a collection of gears all interlocked, labeled “WORK–just because you’re essential doesn’t mean you’re important.”

    Describes my present work career extremely well.

  50. Just 'nutha ig'rant cracker says:

    @James Joyner: On the other hand, the girl that I knew who was working as a stripper (actually she danced in a booth where the customer was on the other side of a glass partition) noted that her immediate career goal was “to take a $30,000 cut in pay working in the profession [she] studied for.” She chose her school job based on money, knowing that since she hated the job and the customers (her boss was apparently a decent guy who had an honored position in the “benevolent association” that he wanted to preserve) it would be easy to decide to quit. Again, it all depends on how one keeps score.

  51. Just 'nutha ig'rant cracker says:

    @Gustopher: And this is different because… nope can’t see why it is.

  52. Just 'nutha ig'rant cracker says:

    @michael reynolds:

    That’s right, you in a care facility sh!tting yourself and not recognizing your own children,

    Been there, done that! Both of my parents died at advanced ages in care facilities where they were suffering from Alzheimer’s at their passing. Mostly, I was relieved that their trials were over. And, that the places they were in had good staffs and responsible administrators.

  53. Just 'nutha ig'rant cracker says:

    @michael reynolds: You don’t understand–I only wanted me to make more money. 🙁

  54. Just 'nutha ig'rant cracker says:

    @grumpy realist: One of my friends who was working as a paralegal had a screensaver crawl that read “The beatings will continue until morale improves.”

    For some reason, the managing partner didn’t see the humor in it. Hmmmm…

  55. James Joyner says:

    @anjin-san: Thanks for the tip. I’ll send my IT guy a note. First I’ve heard of the plugin but looks useful. I’m pretty sure it’s an ad network causing the problem but hard to replicate and isolate.

  56. Dave says:

    @anjin-san: Yes indeed.

  57. Ed says:

    I like the idea of having more people with disposible income because it is better for the economy in general, but this was poorly executed and too much driven by very public ideology. Pay for performance works well and “peanut butter” raises are demotivating to high performance employees. Better to quietly give everybody good raises by percentage over time and don’t grandstand. But his motivation was clearly draw attention to himself, so the motivation seems less than straightforward.

  58. Modulo Myself says:

    The missing part of this story is the class/education angle. The employees at the bottom of the pay scale are the ones doing basic clerk-related activities. They’re older and the average person who is 26 at a company and does web design will view them as completely useless. This is my experience, at least. This average web designer will easily accept an overpaid idiot running a keyword search program, because it flatters their position. They probably will not accept an overpaid idiot who is in charge of doing billing.

  59. Barry says:

    James: “Dan Price announced that he’d pay a middle class salary to all his employees. His clients, customers, and even the employees themselves are unhappy.”

    This is incorrect. Some clients are unhappy – and all of the stated reasons are 100% BS. They’ve been picking up more clients, and their main problem now is dealing with the influx of business (and a brother who’s a d*ck).

    Also, ‘clients’ and ‘customers’ are the same thing here.

    Some – meaning 2 employees are known to be unhappy, but there will always be some who are unhappy if they were given free ponies.

    Please, what is your point here?

  60. Barry says:

    @James Joyner: “t’s the “golden handcuffs concept. i’ve seen it in academe. Essentially, your job isn’t great and you’d like a better job. At a better school in the case of academia or at a different level of competency in the case of the private sector. But having tenure or being paid an above-scale wage makes that mobility harder. Essentially, you’re tied to a job that’s psychologically and professionally worse because they pay more than you’d make upon transition to an otherwise better job.”

    This is just ridiculous. And BTW, there’s no evidence that he was a highly-valued anything.

    And he’s not into golden handcuffs. He could continue to live at the same level for a year, bank and extra $15k, and then go into business. If he’s the sort of guy who can’t do that, he’d better not start a business.

    ” Essentially, you’re tied to a job that’s psychologically and professionally worse because they pay more than you’d make upon transition to an otherwise better job.”

    We should all have such problems.

  61. Tillman says:

    @Ed:

    Better to quietly give everybody good raises by percentage over time and don’t grandstand. But his motivation was clearly draw attention to himself, so the motivation seems less than straightforward.

    I’m not as certain the motivation was narcissistic. Like Romney needing a concession speech, I think he was honestly surprised by the reaction. He was reading the tea leaves in the zeitgeist wrong and overestimating how much income inequality mattered to the average, non-informed worker. If his changes to the pay scale were meant to shake up the culture as he claims, it’s unsurprising it would look imprudent to the rest of us operating under that culture’s norms. To his way of thinking, he would be cutting his effort off at the knees if he did things quietly.

  62. Barry says:

    @Slugger: ” A private individual has made an interesting choice about his privately held enterprise. ”

    I’m amazed at how many people who’d otherwise say ‘Free Market! It’s his company!’ seem to have so many problems with this.

  63. Barry says:

    @JKB: “So basically, a guy with only 10 years in a financial business has decided to just up and make what on their face seem to be irresponsible decisions as relates to the continuation of the viability of that business. So those who depend on those financial services are moving to more stable companies. Employees are looking at the risks this instability poses to them. Some seem to be reacting quite quickly and without much time to see the impact, but in the banking business it doesn’t take all that much of a radical move to spook the cattle.”

    Every single statement is false, but aside from that…………………

  64. Barry says:

    @Matt: “What’s their incentive to hustle if you pay them so much?”

    The joke is that if they actually understood why Ford paid that $5/day salary back in the day, they’d have an answer.

    This show just how clueless they are.

  65. Barry says:

    @James Joyner: “I dunno, but most people do. Most college professors I know are relatively happy people but may of them bitch that they’re underpaid relative to other professions with comparable or even lesser levels of education. Or, heaven forbid, academic administrators. Yet most of us would never trade places with those people given the working conditions.”

    The correct term is not ‘golden handcuffs’, but ‘trade-offs’.

  66. wr says:

    @Ed: “Pay for performance works well and “peanut butter” raises are demotivating to high performance employees. Better to quietly give everybody good raises by percentage over time and don’t grandstand. But his motivation was clearly draw attention to himself, so the motivation seems less than straightforward.”

    Funny how it’s narcissistic and self-serving for an employer to take a big pay cut to pay his employees well above average… but if the same employer announced he was outsourcing his work to India so he could pay a dollar an hour and double his own pay, we’d just hear what a great capitalist he was.

  67. Ed says:

    @wr: Yeah, maybe I was too quick to assume he was looking to draw attention to himself, rather than trying to make a public statement for the general good. My comments were about how things look from the inside of the company. As a retired high tech engineer, I have seen lots of issues with compensation policy over four decades, and it is impossible to make everybody happy. Overall, it is great that he made the statement and that we are talking about it. It will be interesting to see how this plays out.

  68. grumpy realist says:

    @Ed: I think at least some of this has a whiff of the “certain people would be happy to live under a bridge and live off sparrows toasted on curtain rods provided that other people they consider inferior would be even worse off.”

  69. bill says:

    no mention that he had to rent out his home to make ends meet? or was that a myth found in a few other reports?
    as nice as it seems, this isn’t some factory full of blue collar workers – and they still seem to feel uncomfortable being essentially overpaid. those who just “punch the clock” will probably be at the mercy of this company as they don’t care about exerting themselves all that much and will not be lured elsewhere. i wonder how this story will shape up in a year, put it in my calendar.

  70. DrDaveT says:

    @Monala:

    One of the funniest things about those calling this move socia1ist is that Jesus told just such a story in the Bible

    I hate to break it to you, but Jesus was a socialist, if not a flat-out communist. “You want to follow me? Go and sell everything you have and give it to the poor.” Pretty blunt.

  71. Barry says:

    @bill: “… and they still seem to feel uncomfortable being essentially overpaid. ”

    ‘They’ meaning who? Those two people quoted?

  72. Barry says:

    @Dave Schuler: “Unless you’re the lead dog the view never changes. It’s just a question of whose butt you’re looking at.”

    Well, no.

  73. Barry says:

    @Ed: “s a retired high tech engineer, I have seen lots of issues with compensation policy over four decades, and it is impossible to make everybody happy. ”

    The tone of the NYT article (and of the right-wingers here) are that if the policy change is ‘liberal’, then any dissent shows that it’s bad.

    If this guy had outsourced everything possible to India, and told everybody to (a) train their replacements and (b) sign a non-disparage agreement to get one month’s severance, there’d be no NYT article, and no right-wingers would have a problem and no amount of complaining from soon to be ex-employees would count.