Credit card processor company new minimum wage - $70K/year

I don't think he's doing anything wrong, and I'm not commenting on his intelligence. It's his business to do what he wants.... I'm just saying, the people working there are going to be outcompeted for jobs.

I can't imagine it takes higher education to be customer service..... but if you're paying 75k, you still want the best out of those who apply. and degreed professionals, that have teaching, leo experience on their resume's look a lot better than a person who has worked at McDonalds, BK, Wendy's, and at the mall for no more than a year at a time.

 

Depends on the job, but regardless, why shouldn't the boss/owner make more money than the people he hires? He's the one with the idea for the business, he's the one who takes out the loan from the bank to start it, he's the one who has to comply with all regulatory agencies, he's the one who will be legally responsible for that business, and he is the one who is ultimately responsible should the business fail for whatever reason. The employees have none of this risk and exposure... they can simply go get another job.

People who take risks should be have the chance of being rewarded for that risk. It's why even Bill Clinton knew that investors should be encouraged to invest in the economy by giving them a lower tax rate on their investment dollars.

 

It is the only way raising the minimum wage can work. If we are honestly talking about improving the economy and getting people who work for a living above the relative poverty line, a place where nobody who works for a living should be. That money has to come from the top wage/salary earners. Otherwise it will have to come from consumers. Which means a higher cost of living, and a higher poverty level. It's basic math.

Question is, are the richest in the country going to take a pay cut to save the country. Absolutely not. It took over 40 years of crony capitalism to get it to this level, and billions and billions of dollars was spent buying off sock puppet politicians and establishing the two party scam to get it this way.

 

Excellent. As a recent college graduate with 4 kids, and multiple degrees in European studies with only experiences as a barista at Starbucks and as a waitress at a local diner, I can't want to get my 70k job



Oh happy day This will definitely help me pay off my 250K student loans. They said I was idiot for pursuing my passion (European studies), boy were they wrong!!!

 

In a rational economy, competition will drive him out of business by hiring unskilled/low skilled credit card processors at market rates and taking away his clients. Then he and his vastly overpaid employees will enjoy a new wage, $0.

Also, in doing this, he has instantly destroyed any value the company had, as once the wages are increased to these levels there will be no going back, so no sane person would ever buy such a foolishly encumbered company. Hope he doesn't ever need financing or a loan either, as no sane banker or financier would ever invest in such a company. The rational fair market wage for 40 hours of low skilled, easy, climate-controlled, desk-sitting service industry labor is about $35-45k currently IMO. Deviating much over that is extremely poor business judgment, and in all likelihood, the results will be catastrophic for the company.

Investors and owners receive most of the returns because they take all of the risk. Employees do not. Deviating from the "risk/reward" formula is a recipe for financial disaster or at least mediocrity.

 

No matter what happens, this will be a case study for economics classes for decades to come

 

In case you're wondering, this is roughly $36 an hour.

 

when diploma holders are replaced by degree holders for those 75k jobs.... what good does that do for the working poor if they are unemployed.

all bumping pay from 10$ an hour to 35$ an hour does is create competition for that entry level job where degree'd professionals will be competeing with single moms and minorities that don't have the same education levels. Who do you think will win that competition?

 

My favorite bit in the whole story was this piece of BS:


Under a financial overhaul passed by Congress in 2010, the Securities and Exchange Commission was supposed to require all publicly held companies to disclose the ratio of C.E.O. pay to the median pay of all other employees, but it has so far failed to put it in effect. Corporate executives have vigorously opposed the idea, complaining it would be cumbersome and costly to implement.


Right, because it's so cumbersome and costly to add a cell to a spreadsheet program that takes total payroll, divides it by the number of employees, and compares it to the CEO's salary....

 

Don't blame the company's CEO.. .blame the board and the investors; If you own stock, you should go to the shareholders meeting and bring it up The board and investors can implement the changes. Retirement funds "own" a lot companies in a sense that they hold a large percentage of the companies stock (i.e., value).



But somehow, I think a lot of investors just want a good return... regardless of the CEO's pay...

 

Say, who controlled the presidency and Congress in 2010 anyway? (oh, right....Obama and the dems)

 

It is cumbersome and costly, and the ratio is of limited/no use to prospective investors in the company. Here's a very solid, balanced, nonpartisan analysis of the issue; you probably won't read it or comment on it because you were so hasty to call complaints about it "BS," and inaccurately (to a comical degree) estimate that it entails only a spreadsheet cell change, but others may not be as knee-jerk doctrinaire, and may appreciate the whole story:

http://www.bna.com/dodd-frank-section//

Disclosure of executive compensation is already required under longstanding 34 Act rules, but the blurb in the OP article wasn't going to tell us that, was it?

http://www.sec.gov/answers/execomp.htm

The purpose of those disclosures is to prevent fraud against prospective investors, not to pursue partisan politics talking points. They are EXTREMELY expensive to comply with already, require thousands of hours of $500 and up an hour lawyer and accountant time, and every new requirement, especially vague, hard to calculate ones like this new one, adds to the expense that employees, investors and consumers shoulder. In addition, all added costs affect domestic competition by keeping rising companies from going public and competing, and world competitiveness by incenting outsourcing of more and more corporate operations.

One group benefits in a very rich way though, the lawyer branch of the gov-edu-union-contractor-grantee-lawyer-MSM Complex. They dance a jig, we all pay for new disclosures at $500 an hour rates that are irrelevant to the investment decision and to preventing fraud. Guess who contributes TONS of money to the Democratic Party that created the hideous albatross of a law, Dodd Frank? One guess.

Also as an aside, note that the article doesn't even identify the Dodd Frank law by name, opting for a vague "financial overhaul" descriptor. Why? It's because most knowledgeable people, even on the left, are now realizing how hideously bad Dodd Frank is, how it doesn't address the real problems in our financial industry, and how expensive and unwieldy it is. The only people who "like" it are the lawyers who will get rich off it and the union label rabble rousers who use any complaints about it to craft ignorant propaganda appeals targeted at ignorant bobbleheads such as in the OP article.

If due to social reasons or whatever, an investor doesn't want to invest in companies with high CEO/line employee pay ratios, it's a simple matter to look at the company, its size, its ratio of unskilled part-time workers, its employee turnover, and come to estimated conclusions about the CEO/employee ratio from there. The rest of us who don't care shouldn't have to pay for it.

 

This has absolutely nothing to do with minimum wage. A company is reevaluating it's paying practices, and to accommodate all employees the money is coming directly from the top and out of the profit margin. It appears the hope is with better pay the better the employees will perform, and in doing so the profits will increase as well. At least that is what I am seeing here unless the employees are becoming full partners in the company, like some other business models are doing. Employee owners generally speaking, have less turnover, increased employee loyalty, and higher employee morale.

This is the only way that raising the minimum wage can be done without increasing prices and raising the poverty level because of the higher cost of living.

 

Well, to be more exact, it's $34.31/hr based on a 40 hour workweek and two weeks paid vacation per year. But I knew that.

From what I understand, it's a bit more complicated than that. And CEO compensation is a whale of a lot more than a weekly paycheck for whatever salary is paid.

Maybe. I'm sure all of those art and history majors would be falling all over themselves for those jobs. I'm also fairly sure their degrees won't much enter into any hiring decision (unless it's for a job that requires a knowledge or art or history).

 

I know math is hard, but $70,000 is a bit more than $33/hour.

 

I know this isn't a min wage issue.... .a company is choosing to bump the pay up for a job that doesn't require a lot of skill. That's completely the CEO's peragotive. I'm just saying, a 75k a year job is going to be very appealing to teachers, to cops, to firemen, to EMS. And when degree'd individuals say "damn, why am I teaching for 50k, when I can make 75$k answering phones? When the phone operators only made 30k a year, a teacher wasn't applying for that job.... but when you start paying them 75k.... you can bet your ass teachers will start competing (with non-degreed people) for those jobs.


so tell me... if you are the head of HR and you had 10 candidates interviewing for a position


1. 5 Degreed professional
2. 5 High school diplomas.

and need to narrow the field down some.... which 5 do you eliminate?

Experience in this kind of job is meaningless as all it takes is 2 weeks of training and a script and you're good.


I agree with everything you said.... the higher pay will reduce turnover, increase loyalty, and have higher morale.... I just think what you aren't thinking about is with the increased wages.... is you attract candidates that normally wouldn't be applying for such jobs.... candidates that highschool diplomas can't compete with.

This guy absolutely is going to attract the best candidates.... the existing entry level employees are not the best candidates though.


And after I quit teaching to take a 25k raise to answer phones, that HS Diploma guy I was more attractive than, can't go fill my old job and ends up unemployed.


What's better, 10$/hour, or zero dollars an hour because you got replaced by a person with more education.

 

Good for anyone who wants to pay $33 an hour. I'll be more impressed if he puts that in writing via binding contract with each employee and salaries can never go down. Nor can he bring in labor saving equipment or outsource.

 

Hope?

Hope is not a good business plan.

 

You knew that and knowingly falsified your OP? Gee. To what purpose?

 

You are attempting to apply the 'if it was me' scenario. All sound economic theories, but not necessarily what is going on here. This guy started the company when he was young, probably friends with most of the people he employees. He could just as well be thinking about keeping the employees he has around because of their dedication and because it is a family type operation. Maybe, just maybe it isn't the greed for profits that feeds his motivation, but a desire to see his friends do well, and he is willing to share the success the company their work creates. You remember like in the old days when the most successful company had the highest paid employees; elevator operators, and janitors too, so they were productive members of the societies they lived in, not just more government dependents like the new modern model defecates. Just saying.

 

Better yet, which one do you hire? Old business joke - HR selects the best five candidates and sends them to the exec who needed someone. Interviews very short in all cases. Exec comes out and HR asked the exec which one fit his needs. "Hire the one with the big boobs." See how easy that is?

 

Your link provides some good points, but seems to be overstating the problems and costs. Indeed, many of his complaints seem likely to be addressed in the (not-yet-written) regulations. So he's criticizing a blank slate, not a proposed regulation.

His first, minor complaint is that the ratio is reversed. Fair enough; but that's a trivial problem.

His second complaint is that CEO compensation is far more variable than employee compensation. Okay; so what? There's nothing stopping a company from explaining this, or also providing a five-year average or something that smooths out the year-to-year spikes. Neither approach is cumbersome or expensive.

His third complaint is that determining the median compensation of a 50,000-employee company would be labor-intensive, because you'd have to figure out the value of their stock awards on Dec. 31 of each year and factor that in.

He has a point, but suggesting this is a labor-intensive operation is a real stretch. For one thing, for actual stock awards, you could decide to only care about the value of the stock awards on the day they're awarded.

In the case of options, you'd have to track the option price and the exercise price. That's more complicated, but not by a huge amount.

Especially because companies already track these! Payroll systems are computerized. These numbers (salary, bonus, stock awards) are almost certainly already in their payroll databases. Running a calculation that figures out an employee's total compensation (salary + bonus + stock awards) is more complicated than writing a spreadsheet cell formula, but not by a massive amount.

His fourth complaint is that global companies who have very low-wage workers in low-wage countries will see an unfavorable ratio. Again, my initial reaction is "so what"? But a simple regulatory fix would be to apply the ratio only to U.S.-based employees.

His fifth complaint is that calculating the value of pension plans (defined-benefit plans) is complicated. Again, he's right. But again, companies ALREADY DO THIS. "Complicated" does not necessarily mean "expensive" when the data is computerized and the calculation is already being performed.

Never mind that defined-benefit plans only apply to a small and shrinking share of the workforce.
http://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html

The number of employees with defined-benefit plans fell from 38% in 1980 to 20% in 2008. So this is a problem for only a relative handful of companies. And like I pointed out, it's not that big of a problem.

And then ... your source drops a bomb that seemingly destroys his own argument.

He notes that the AFL-CIO provides EXACTLY this sort of information on their Executive Paywatch website.
http://www.aflcio.org/Corporate-Watch/Paywatch-2014

If the AFL-CIO can put this together without access to a company's internal payroll systems, how hard can it actually be for a company THAT IS ALREADY TRACKING THESE NUMBERS to do so for itself?

So yes, it's more complicated than my hyperbolic "updating a single spreadsheet cell" jab. But it's still not something I would categorize as "cumbersome and expensive." It might get that way if a company has really poor internal processes, or the information is scattered across a dozen different systems that don't talk to each other. But then that company has way bigger problems than Dodd-Frank.

 

if hiring a employee is not making you a profit and instead is only eating into your profits, why hire them?

- - - Updated - - -

I never said they should not, I just said the employees are not eating into your profits, they are helping you make those profits

the owner should make more and in this case the owner will make lots more... just not crazy amounts more

 

1. If the AFL-CIO is already creating estimates of such, and estimates are all that is necessary to get a reasonable picture, why make -all- public companies do -exact- calculations? You seem to be shooting your own argument in the foot in introducing the AFL-CIO data.
2. As a past Wall Street securities lawyer responsible for these kinds of disclosures and regulatory compliance under the various securities laws, I can assure you that the rules promulgated under this section of Dodd Frank -will be- extremely expensive based on the factors listed in the link. What you don't understand is that when there is a rule as to calculating such data -precisely- it must be calculated as such, checked, double-checked, and "brought down" to the very moment the disclosure is released. Not doing so is a sure course to litigation.

Here's how it works: a) company's stock price goes down due to whatever reason; b) securities lawyers begin sharpening their knives and go through literally every single piece of disclosure a company makes; c) any mistakes, such as will inevitably result from trying to calculate these numbers for many companies, are trumped up as "fraud on the shareholders and public," invoking other aspects of Dodd Frank, SOX, the 34 Act, and other laws; d) referrals are made to regulators, if they do not proceed, they are accused of being "soft on white collar Wall Street crime."

3. You haven't offered any reasoning as to why this form of disclosure is justified, especially in light that companies must already disclose executive compensation. I assure you, you do not want to be a large company with international operations and subject to this, or simply get ready to pay another $500,000 or so a year to accountants and people like me.

 

This has disaster written all over it. I'll be surprised if the company stays open another 3 years.