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Oops! One Company’s Efforts to Combat “Income Inequality” Backfires

By JLP | August 3, 2015

NOTE: Though I am referencing an article on a conservative website, this is NOT a political post. It’s an ECONOMICS post.

I read this article this morning. In case you’re not familiar, Dan Price, CEO of Gravity Payments announced recently that he was going to set his company’s minimum wage at $70,000 per year. A noble goal, according to some. The media went nuts. Everyone was singing this guy’s praises.

Well, it turns out it wasn’t such a great idea.

Actions meet (unintended) consequences:

What few outsiders realized, however, was how much turmoil all the hoopla was causing at the company itself. To begin with, Gravity was simply unprepared for the onslaught of emails, Facebook posts and phone calls. The attention was thrilling, but it was also exhausting and distracting. And with so many eyes focused on the firm, some hoping to witness failure, the pressure has been intense.

More troubling, 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.

Then potentially the worst blow of all: Less than two weeks after the announcement, Mr. Price’s older brother and Gravity co-founder, Lucas Price, citing longstanding differences, filed a lawsuit that potentially threatened the company’s very existence. With legal bills quickly mounting and most of his own paycheck and last year’s $2.2 million in profits plowed into the salary increases, Dan Price said, “We don’t have a margin of error to pay those legal fees.”

The author of the article sums it up nicely:

It didn’t work for two reasons. First, a business can’t survive when employees can’t generate enough value to give you a big enough return on what you pay them. And if they can’t do that because you paid them too much, that’s not on them. It’s on you. Second, people don’t appreciate what they haven’t really earned. You think they’re going to be grateful and loyal to you because you were so good to them. It doesn’t work that way.

Topics: Economics | No Comments »

Wise Words From Goethe

By JLP | July 24, 2015

I read this in a book and thought I would share it:

Are you in earnest? Seek this very minute,
Whatever you can do, or dream you can, begin it.
Boldness has genius, power, and magic in it.
Only engage and the mind grows heated.
Begin and then the task will be completed.

Happy Friday!

Topics: Quote of the Day | No Comments »

Friday Fun: 3D Drawing

By JLP | July 24, 2015

This is pretty cool:

Topics: Miscellaneous | No Comments »

Ladies: Do You Keep Things From Your Husbands?

By JLP | July 23, 2015

According to Self Magazine, women keep five things from their husbands. Among them:

The other three items on the list are beyond the scope of AFM.

My wife works. I don’t think she has ever had a problem sharing her successes with me. I’m amazed at her success.

We also have our finances 100% combined. I couldn’t see it any other way.

What about you?

Topics: Relationship Finance | 1 Comment »

PSA: Socialism Explained in a Cartoon

By JLP | July 23, 2015

I like this:

Topics: Economics, Politics | No Comments »

Entrepreneur: How to Become a Millionaire By 30

By JLP | July 17, 2015

THIS should be required reading for every high school senior and college kid:

How to Become a Millionaire by 30.

I would much rather our kids read stuff like this than all the garbage about income inequality, which tends to focus on failure instead of success.

Topics: Best Advice | No Comments »

Rich vs. Poor Habits

By JLP | July 17, 2015

I found these stats from Tom Corley comparing the habits of rich people to poor people interesting:

  • 72% of the wealthy know their credit score vs. 5% of the poor
  • 6% of the wealthy play the lottery vs. 77% of the poor
  • 80% of the wealthy are focused on at least one goal vs. 12% of the poor
  • 62% of the wealthy floss their teeth every day vs. 16% of the poor
  • 21% of the wealthy are overweight by 30 pounds or more vs. 66% of the poor
  • 63% of the wealthy spend less than 1 hour per day on recreational Internet use vs. 26% of the poor
  • 83% of the wealthy attend/attended back to school night for their kids vs. 13% of the poor
  • 29% of the wealthy had one or more children who made the honor roll vs. 4% of the poor
  • 63% of wealthy listen to audio books during their commute vs. 5% of the poor
  • 67% of the wealthy watch 1 hour or less of T.V. per day vs 23% of the poor
  • 9% of the wealthy watch reality T.V. shows vs. 78% of the poor
  • 73% of the wealthy were taught the 80/20 rule vs. 5% of the poor (live off 80% save 20%)
  • 79% of the wealthy network 5 hours or more per month vs. 16% of the poor
  • 8% of the wealthy believe wealth comes from random good luck vs. 79% of the poor
  • 79% of the wealthy believe they are responsible for their financial condition vs. 18% of the poor
  • Click on the source link below to read the article in its entirety.

    Source: Will Your Child be Rich or Poor? 15 Poverty Habits Parents Teach Their Children via African Leadership Magazine (found on Flipboard)

    Topics: Kids and Money | 4 Comments »

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