Seventy k, the new minimum

[EgonSpengler]

Maybe it's just me, but I make less than $70k (won't say by how much), and extra money isn't really a huge incentive for me. Sure, if it was a $30k raise, I'd jump on it, but I'd prefer an increase in benefits and working conditions over extra pay.

I'm very interested in Netflix's "experiment", running alongside this one. They're allowing their employees unlimited paid parental leave for the first year after the child's birth. They say it's part of "treating employees like adults" and "being more interested in their output than their input" (e.g. the work they produce, rather than the time they spend on the clock). Sounds awesome to me. However, it's been noted that Netflix's new benefits policy is extraordinarily classist, as it only applies to salaried employees in their streaming services arm, and not to the employees of their DVD distribution centers and customer service call centers.

 

[Zelig]

Well it's only really software-related positions where it's possible to leverage smarts into an order of magnitude of extra output. There are physical limitations to your output in warehouses and call centers.

Obligatory Steve Jobs quote:

"The difference between the best worker on computer hardware and the average may be 2 to 1, if you’re lucky. With automobiles, maybe 2 to 1. But in software, it’s at least 25 to 1. The difference between the average programmer and a great one is at least that."

 

[Kozmos]

That may be true, but one of most surefire ways to ensure that you get crappy employees is bad pay.

Bad pay is part of it, but abysmal working conditions and mobbing drive productivity way way down.

 

[El_Machinae]

There're lessons to be learned here. The average person doesn't give a flying flip about Matthew 20:1–16.

It might have been better to protect the profits, for a rainy day. And then either scale up people's wages based on a percentage or by a fixed amount. So, 'everyone gets $15k' might have worked. Or 'everyone gets 8%' might have too.

You'll get jealousy either way. Without the constant oppression, "you're lucky to be even getting a wage", people's expectations rise too much.

 

[Snorrius]

Smart guy!

This is right up there on the social experiments I'd like to see done.

What an idiot. He should have read history of Soviet Union to learn how equalizing of salaries can lead to lowering of productivity and eventual collapse of the whole enterprise.

 

[El_Machinae]

I still like it. Needed to be tried, cost us nothing. A snapshot of how "people are dicks" can ruin easy ideas.

 

[Snorrius]

I still like it. Needed to be tried, cost us nothing. A snapshot of how "people are dicks" can ruin easy ideas.

On the second thought, he may be not an idiot. He said he is going to increase salaries to 70k but it does not mean he will actually do that.

 

[Flying Pig]

There're lessons to be learned here. The average person doesn't give a flying flip about Matthew 20:1–16.

It might have been better to protect the profits, for a rainy day. And then either scale up people's wages based on a percentage or by a fixed amount. So, 'everyone gets $15k' might have worked. Or 'everyone gets 8%' might have too.

You'll get jealousy either way. Without the constant oppression, "you're lucky to be even getting a wage", people's expectations rise too much.

There are other ways to improve morale. On one extreme you have the military system, where pay is largely irrelevant to most people - a fair chunk, if not a majority, of soldiers go through quite a few pay grades living in the barracks and spending most of their time on camp, so essentially their only flexible expense is beer. Yet there's no shortage of privates who want to be NCOs, or lance-corporals who want to be section commanders, or junior NCOs who want to be sergeants, or sergeants who want to be sergeant-majors, and so on - even though the CSM isn't all that much better paid than the sergeant. The reason for this is that rising through the ranks brings authority, respect, the chance to do specialised jobs that interest you, and so on. I wonder whether a civilian company couldn't do something similar, where the rewards of good performance are given out in something other than wages. The problem isn't so much that good performers want more money, the problem is that they want to feel rewarded.

 

[Zelig]

You're starting the the very tenuous assumption that performance and wages are strongly correlated in the first place.

 

[Flying Pig]

Not quite, I'm starting from the observation that morale often goes down if the wage differential goes down, even if everyone's salary goes up. The reason for this is that people on high salaries feel that they deserve them, and as a corollary feel that those on lower salaries do not deserve the salaries that they themselves are on. Decrease the differential and they feel that they're not being rewarded in proportion to their level of better-ness. What I'm arguing is that you could decrease the wage differential but introduce other ways of giving rewards - so you pay those previously earning £20,000 £25000, and those previously earning £40,000 £45,000, (now 1.8 times as 'valued' rather than twice) but say that all those high earners can now have a more relaxed dress code and more comfortable chairs.

 

[SS-18 ICBM]

According to classical hero, Walmart employees should be cashing in over 200 g's a year.

Definitely, if running Wal-Mart did not require any capital or investment whatsoever.

 

[Hygro]

Definitely, if running Wal-Mart did not require any capital or investment whatsoever.

If capital owners had to bid for labor the way laborers have to bid for access to capital, which is entirely reasonable and a decision we have made outside economics, laborers would be making a lot closer to that 200k. There's a very wide space between their current wages and capital owners saturating marginal profitability.

 

[El_Machinae]

Wouldn't you just look at net profits plus net wages?

I recall calculating that every McDonald's employee earned $1500 more per year than their wage.

 

[Labtec600]

I still like it. Needed to be tried, cost us nothing. A snapshot of how "people are dicks" can ruin easy ideas.

Explain.

You're starting the the very tenuous assumption that performance and wages are strongly correlated in the first place.

You're kidding right? You do not think a better performing employee is given higher raises and bonuses?

 

[brennan]

In my experience the ability to brown nose and wear your shiniest shoes when the bosses boss is coming in makes more of a difference. Of course it depends on the people involved, but i've known many a useless idiot to know exactly how to use their talent for climbing the greasy pole to far outperform the monetisation potential of their colleagues' mere ability to do the job twice as well

 

[Zelig]

You're kidding right? You do not think a better performing employee is given higher raises and bonuses?

As a high performer who gets pretty consistent raises and steady bonuses, not really. You have to be "good enough", but beyond that it's mostly luck.

 

[Hygro]

Wouldn't you just look at net profits plus net wages?

I recall calculating that every McDonald's employee earned $1500 more per year than their wage.

Walmart's profit was $120 billion last year. So with 2.1 million employees that's over $57,000 per employee above wages. Annual minimum wage is over $15 k so the rounded down sum is $72,000.

So at a minimum, the employees are making just over 1/5th their conservatively estimated value. They are generating far more in revenue, however, and I'm happy to bet there's a good chunk of "costs" that are paying for things that wouldn't be costs if all the other firms were bidding for labor at the expense of capital as well.

 

[Flying Pig]

Walmart's profit was $120 billion last year. So with 2.1 million employees that's over $57,000 per employee above wages. Annual minimum wage is over $15 k so the rounded down sum is $72,000.

So at a minimum, the employees are making just over 1/5th their conservatively estimated value. They are generating far more in revenue, however, and I'm happy to bet there's a good chunk of "costs" that are paying for things that wouldn't be costs if all the other firms were bidding for labor at the expense of capital as well.

You're assuming that every employee 'makes' about the same amount of money. If you opened the supermarket on Monday morning with everyone present except the manager, though, it might all turn to chaos very quickly, and a huge amount of money might be lost. I'm not sure, then, how you measure the 'value added' of someone like that, but I'm fairly sure it's not just (total profit/number of employees)

 

[Mise]

He's not talking about the individual employees, he's talking about Labour's share of the profit vs Capital's share in aggregate. He's saying that "too much" of the total value add flows back to Capital rather than to Labour.

 

[Hygro]

You're assuming that every employee 'makes' about the same amount of money. If you opened the supermarket on Monday morning with everyone present except the manager, though, it might all turn to chaos very quickly, and a huge amount of money might be lost. I'm not sure, then, how you measure the 'value added' of someone like that, but I'm fairly sure it's not just (total profit/number of employees)

Dude it's Walmart.