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NYT: Company sets $70K minimum wage, deals with backlash


Elessar78

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http://www.nytimes.com/2015/08/02/business/a-company-copes-with-backlash-against-the-raise-that-roared.html?_r=0

 

here are times when Dan Price feels as if he stumbled into the middle of the street with a flag and found himself at the head of a parade.

Three months ago, Mr. Price, 31, announced he was setting a new minimum salary of $70,000 at his Seattle credit card processing firm,Gravity Payments, and slashing his own million-dollar pay package to do it. He wasn’t thinking about the current political clamor over low wages or the growing gap between rich and poor, he said. He was just thinking of the 120 people who worked for him and, let’s be honest, a bit of free publicity. The idea struck him when a friend shared her worries about paying both her rent and student loans on a $40,000 salary. He realized a lot of his own employees earned that or less.

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Good for him.  And as crazy as it sounds, living in a place like NYC, DC, SF, Seattle, etc...70k is like ok, but still not great.  Especially when you consider rent / mortgage, daycare, student loans, bills, food, gas, savings, a tiny sliver of fun, etc...and 70k goes quickly.  There is a big difference making 70k in DC and 70k in others cities (Raleigh, Milwaukee, Richmond, Charleston, Dallas, Kansas City, Portland, etc...).  

 

Just guessing, but I'd say 70k in DC/Seattle/Chicago/LA is approx 50k in those other cities.

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My house here is twice the size, and less than half the price that my house was in Boston.

Around the cost of my 1 and a half bedroom, 1 and a half bath condo in DC nearly 15 years ago.

 

I have no problem with sharing the wealth. Forcing companies to do it is a little tricky though.

 

I'll have to read the article tonight when I have more time, thanks for the heads up Larry.

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What I found interesting was the backlash from all sides and there were positives and negatives to both.

 

Some clients left because they felt that service would suffer because of unmotivated employees, then you had employees who got the 70K bump not feeling like they deserved the raise. Some clients left because they felt that a rise in price was imminent. A lot of new clients came forcing Price to hire more staff at his new minimum wage. Higher level employees who did not get the massive pay bump became bitter. 

 

For me, as a matter of management, I wouldn't have announced the pay bump publicly and phased it in. Plus not every one of the better paid staff knows the salary structure so it would have given him buy-in from those that did. He could've also augmented salary by giving bonuses. 

 

The double in customer acquisition they saw can wreak havoc on your planning, so I don't know how if that was a long-term good thing. Esp. now with the law suit from his co-owner and finding himself low on cash. 

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Good for him. And as crazy as it sounds, living in a place like NYC, DC, SF, Seattle, etc...70k is like ok, but still not great. Especially when you consider rent / mortgage, daycare, student loans, bills, food, gas, savings, a tiny sliver of fun, etc...and 70k goes quickly. There is a big difference making 70k in DC and 70k in others cities (Raleigh, Milwaukee, Richmond, Charleston, Dallas, Kansas City, Portland, etc...).

Just guessing, but I'd say 70k in DC/Seattle/Chicago/LA is approx 50k in those other cities.

70k is more than enough for the DC area. Start with not having kids and go from there.

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I bought a house at 50k. It's all about how you spend and managing your expectations.

What part of NE DC did you end up?

And I agree, managing money is key to being able to exist in DC, or its metro area, but $70k is something that you would need to budget for, especially if it's a single income scenario.

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$50k.

Il say conservatively that's $40k take home but maybe closer to $35. $3,300 per month about. So, we will say you buy a house for $180k (1 bedroom apartment), and put down your 20% so financed at about $150k. Roughly a monthly payment of $1000. Then you have water, gas, electricity at about $200. Internet and TV another $200. Cell phone, $100. Car insurance $100. Maybe a car payment of $400 for a decent econo car. That's $2000 in obligations right there.

Of course if you want health insurance that's another $100-$150. 401k or anything left for when you get done working not included. Gas? Meals?

So it can be done, in the tiniest place you can think of in Chantilly. You just will have to live bearbones.

Yes, living with cable, Internet and cell phone is ABSOLUTELY bare bones. Don't give me this **** about how we don't need these things, or a working car. Come on now.

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I have a 2 bedroom place, put nothing down.

You do not need cable and internet. And I don't pay anywhere near that. I guess two boxes and the premium internet is a necessity too huh.

I actually had more money than when I rented. I also don't have a car payment because I saved up my money so I didnt have to get a loan.

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My favorite was people worrying about a guy who owns his own business being a socialist or communist. Reminds me of the Daily Show "World of Class Warfare" segment where the Fox News guy was talking about Warren Buffett's op ed and said "Is this guy just completely a socialist?" and Stewart comes back and says "Is WARREN BUFFETT a socialist? You really don't know what the **** that word means, do you?"

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I have a 2 bedroom place, put nothing down.

You do not need cable and internet. And I don't pay anywhere near that. I guess two boxes and the premium internet is a necessity too huh.

I actually had more money than when I rented. I also don't have a car payment because I saved up my money so I didnt have to get a loan.

I'm guessing you have someone renting that 2nd bedroom.

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Well then consider me impressed with your Spartan lifestyle.

Not how I'd want to live, but to each his own.

I don't really understand what the big deal is. I dont know who is paying $200 for cable or 200 for water and electric. My cable is &116 and my electric/water runs anywhere from $75 to $135 a month.

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I think it comes to the more money more problems thing. As our income increases so do our expenses. I can't imagine how someone lives on 70k a year, but when I think about it I was living in Hawaii and after car note and rent was paid, I had 700 a month. I made it work and I had a blast. I think that at whatever income level you are at, you figure out how to make it work. 

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