Hopefully he adds some money management training to go along with this.

Someone who is used to living on $48k/year (their current average) suddenly making $70k/year is a huge change. And unfortunately, most people will adjust their standard of living to whatever their making instead of banking the difference.

As a result, I can easily see your concern about "increased fear of job-loss" because of what they're making.. and how hard it is to be "poor" again. It's the definition of golden handcuffs.

To be clear, I'm not implying that the current market rate wage is a fair one. It's entirely possible that, had real median wage kept its pace with economic and productivity growth, the market rate would be much higher.

But the $75k equals happiness is largely predicated on it being significantly higher than median wage.

If all other companies followed suit and pay the same amount, we'd have to move the yardstick much higher than $75k.

It is interesting to consider what this does to the psyche of the 45k/yr employee.

Do they become less likely to risk leaving this role? Do they value less the opportunity to test out a different career, even if the potential salary is higher? Do they become more devoted to the wellness of the Company? How does this impact their drive? Results? Retention?

It would be fascinating to see their HR metrics 10 yrs from now.(assuming Gravity Payments doesn't put itself out of business)

If an employee is living paycheck to paycheck on an above market salary it is a set up to lose everything. This is definitely an intentional management technique.

It's worse than that. About half of people spend more than they make at least a few months each year. While they may still be net positive for the year, there are times they are likely paycheck to paycheck in there. And about half have no plan for building savings either, so they're unlikely to change the situation.

Ref: http://www.huffingtonpost.com/2012/05/17/americans-spending-...?

Further, I forgot about another aspect.. many tax deductions start phasing out at $50k and are completely gone by $80k (iirc), so at $70k they're not only in a higher tax bracket, they also have less deductions so their overall tax burden will go up.

He's doing it over three years. How much more gradually do you want from a startup?

He's phasing it in over 3 years. How much more gradually can he do that?

Getting a big salary change in this climate can trigger the ole Imposter's. I hope they have someone involved with the group to educate them about being very realistic toward a life change even when it's positive as this.

[Source: My career is advancing]

You mean only if your employees can convince themselves and others that they're worth $70,000.

I think the fact that he's marketing this as a minimum wage thing to promote happiness will side-step most of the issues regarding job-loss fear.

It's not like these people were all hired at an above-market rate because they were trying to prove they were above-average employees.

Spoken like a true republican.

quite the contrary, I'm a union-supporting liberal.

Then I'm at a loss as to why you'd be against a fair wage.

Paying more than what the job is actually creating in value isn't a fair wage. It's the type of thing that is likely to put a company out of business. Then instead of having a 70k job they didn't earn they are unemployed.

It's funny to me how many people on HN are criticizing this decision and making semi-insulting comments about how people aren't creating enough value for the company to deserve the pay increase.

First, paying the CEO less and employees more isn't going to put the company out of business because it's all just payroll.

Second, the people actually making the decision know far better than you how much value their employees are adding to the company and whether it's worth cutting into profit to pay them more.

When you've bootstrapped your own company, hired hundreds of employees, and are making millions of dollars in profit, you can pay your employees whatever you want. Until then, stop shitting on this guy's plan to do something cool for people.

But the employees are creating more value than they are being paid. The company is a going concern and are still making a profit even while paying everyone at least $70k.

OTOH, take a startup that's paying everyone over $120k and is running in the red on VC money. Those employees aren't (yet) creating enough value to cover their salary.

It's just that it's become so ingrained that companies must maximize profit for their owners at the expense of the employees that we've lost sight of whether it's right or not. (I posit it's not.)

Indeed. I think it's pretty ridiculous how critical people here are of these raises. It's as if Dan is doing something unnatural when he's not maximising his own profits.

A reason we have seen through history is that company owners often use as an argument that it can't possibly work for all kinds of reasons. If someone pays more (or cuts working time) and remains successful it creates an example of viability, and also changes the market - even if only slightly in the case of a single small company like this - and at least some people worry it will affect them to.

If the employees aren't creating enough value, then where is all the profit coming from? Did the CEO catch a leprechaun?

It's never a particularly compelling argument to start from the position that you can't understand that other people hold opinions different from yours.

republicans (with a lower case r) ought to be both economically as well as socially liberal. I don't think being a republican means you have to oppose unions in all its form.

We owe a lot to unions and I'm sure they still have a role to play in today's environment.

Profit sharing is for socialists!