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20th Century Motor Company in 2015

Posted by Muaadeeb 8 years, 8 months ago to Business
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The Seattle CEO who reaped a publicity bonanza when he boosted the salaries of his employees to a minimum of $70,000 a year says he has fallen on hard times.



Read the article. How could this be?
SOURCE URL: http://www.foxnews.com/us/2015/08/01/seattle-ceo-who-set-firm-minimum-wage-to-70g-rents-house-to-make-ends-meet/?intcmp=hpbt4


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  • 11
    Posted by Zenphamy 8 years, 8 months ago
    Foolish little boy.
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    • Posted by ewv 8 years, 8 months ago
      From the NYT article http://www.nytimes.com/2015/08/02/bus...

      "He started courting customers there more than 11 years ago, while still attending Seattle Pacific University, a small Christian college..."

      "If there was a 19th-century thinker Mr. Price drew inspiration from, it would be not Karl Marx, but Russell Conwell, the Baptist minister and Temple University founder, whose famed 'Acres of Diamonds' speech fused Christianity and capitalism. 'To make money honestly is to preach the Gospel,' Mr. Conwell exhorted his listeners. To get rich 'is our Christian and godly duty.'”

      "Every day he and his four brothers and one sister rose as early as 5 a.m. to recite a proverb, a psalm, a Gospel chapter and an excerpt from the Old and New Testaments. Home-schooled until he was 12 and taught to accept the Bible as the literal truth,..."

      "Mr. Price is no longer so religious, but the values and faith he grew up on are 'in my DNA,' he said. 'It’s just something that’s part of me.'”
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  • Posted by $ Thoritsu 8 years, 8 months ago
    "I'm so much smarter than all you guys" works infrequently. Spectacular when it does. Expected when it doesn't.

    Just love how the valuable employees left when they didn't get paid adequately! Those capitalists! Wonder what Hillary/Warren/Sanders would say about them. These greedy few made this company fail...at least three weeks earlier than it would on its own.

    Overpaying is not the way to correct the plight of the poor.
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    • Posted by IndianaGary 8 years, 8 months ago
      We aren't too far removed from a 10-289-like executive order preventing productive people from leaving their employer. It's great that they got out while the getting was good.
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  • Posted by woodlema 8 years, 8 months ago
    3 months he is almost broke, having to rent rooms in his house to make the payments.

    Several of his most productive quit and moved on.

    Seems now EVERYONE will be getting a ZERO salary.

    Yup there ya go, that is what happens when you have income equality with NO regard for the efforts involved.
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    • Posted by $ Thoritsu 8 years, 8 months ago
      As Margret Thatcher said...the problem with socialism is you eventually run out of other people's money.

      I am particularly happy this happened to a semi-valueless company. How does anyone think they are adding value in this market? He could've got away with this in the heyday of an Apple. Microsoft or Cisco. Not with some me-too credit card processing firm.
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  • Posted by Temlakos 8 years, 8 months ago
    Of course he fell on hard time. Because when he leveled all the pay scales, he removed the last incentive to do good work. And he literally could not see that.

    He reminds me of Eric Starnes, the one who just wanted people to love him. That's still foolish, but less evil, than Gerald Starnes Jr. (the embezzler) and Ivy Starnes (the schoolmarm-ish Mistress of Distribution).
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  • Posted by Herb7734 8 years, 8 months ago
    I noted that he waited until he was a millionaire before he became Daddy Warbucks. Everyone in this forum (I would think) understands the foolishness of this move and how in the long run it won't work. Remember the old story -- if you gave a million dollars to everyone and came back in a year, the rich would once again be rich and the poor would once again be poor. But what would happen if you told them that no one was allowed to make more than anyone else? The money would suddenly be worthless.
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    • Posted by $ Thoritsu 8 years, 8 months ago
      I like the million dollar story. We should make a reality TV show out of this. Two groups. 1) seeks the neediest person the other 2) seeks the (best leader, most productive, best student, smartest...). Give each winner $1M and see what happens!
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  • Posted by salta 8 years, 8 months ago
    Maybe its the type of business, my guess is he has never had to struggle. So he does not understand that reward for effort is what motivates other people.
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  • Posted by $ Thoritsu 8 years, 8 months ago
    My company had a few bad years a few years ago. They elected to hold raises for anyone on incentive compensation. The purpose was to continue to offer raises to the deserving few even during a downturn for retention. I can't think of a single IC person that left for this reason, and we did a decent job at retention, and the corporate staff got cut ~50% when revenue dropped to ~50%. Overheads were controlled, and the downturn averted. We are now growing again. In my view healthier than ever.

    This is not an endorsement in any way of this thread's foolish socialist example. I note it only to describe an example of corporate leadership where very objective views were required to really survive, rather than have the leadership die a parasite's death.
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  • Posted by $ jdg 8 years, 8 months ago
    He lowered his own salary from $2M to 70K as well, so at least he practices what he preaches. (That's why he's renting out rooms in his house. If his company is doing badly, I haven't seen any stories about that yet.)

    What I'd predict is that everyone who got a raise stays, and everyone who got a pay cut looks for another job. Funny how that works.

    As far as the effect on productivity by the people who stay -- it probably falls unless he finds some way to penalize the people who slack off (and it won't always show).
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  • Posted by dansail 8 years, 8 months ago
    I am hoping that this particular news story somehow gets shouted from the mountaintops. I read all about it in Atlas Shrugged and never thought anyone would be that moronic enough to make a move like at Gravity Payment. While it was a move from literature (academic) to reality (practice), it proved Ayn Rand's point to a tee. The 20th Century Motor Company collapsed and Gravity will most likely follow suit. Is there a pool going around as to WHEN they file for Chapter 11?
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  • Posted by Hiraghm 8 years, 8 months ago
    A few months back, my employer (rhymes with "Ball Park") implemented a $9/hr starting pay increase.
    To compensate, they cut annual raises for current employees almost in half. At my location, current employees are being squeezed to do more without gaining overtime. Morale is dropping like an express elevator.
    In December, the new starting wage will go up to $10/hr. This means that a new employee on the night shift will make 45 cents an hour more than an employee that's been there 4 years. This is not popular among current employees.
    The good employees are slowly finding their way to other jobs, and their replacements are (in some cases, literally) incompetent.
    People are starting to only do the bare minimum they have to not to get fired. Where once they willingly pulled together to help each other when the work load was unbalanced, now they're resentful.
    Sound familiar?
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  • Posted by term2 8 years, 7 months ago
    I dont get the math- If there are 120 employees and they were making an average of 20,000 (unlikely) at the start, he would have to cough up $6m in extra payroll at a minimum. His salary was only $1m. If I was a customer OR employee I would label this guy as a real kook who has lost it. The company cant be far behind.
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  • Posted by walkabout 8 years, 7 months ago
    While the outcome was foreordained, it is a little amazing it only took 90 days. I guess that gives hope to those (of us) who would consider "stopping the motor or the world" that it might not linger on for years, if not decades.
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  • Posted by CircuitGuy 8 years, 8 months ago
    I can't tell if it's him or the media doing the grandstanding, but they seem to be making a bigger deal out of this than it is. Most business owners have at least once poured money into payroll and taken no salary or distributions for the month or quarter; there's nothing new there.

    If I were him and wanted to try this, I'd do it without the cameras running and without it feeling like a political statement. Just talk to the people privately and say you're doing a very serious and important job and we're raising the pay to reflect that, but you need to bring your A-game for the company to afford this.

    No matter what you do, it's easy to talk about and very hard to execute effectively. I admire anyone who tries it.
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    • Posted by conscious1978 8 years, 8 months ago
      CG, seriously, you admire his wage policy and rationale?
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      • Posted by CircuitGuy 8 years, 8 months ago
        Not him personally. I get the notion he's doing it for grandstanding. But I do admire people who try something new in business, whether it's to be super low-cost like Wal-Mart or to focus on being high-end and worrying less about costs.
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        • Posted by conscious1978 8 years, 8 months ago
          But, I didn't ask if you admired him.

          Do you admire his wage policy and his stated rationale?
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          • Posted by khalling 8 years, 8 months ago
            yes, you are on galtsgulchonline actually having this discussion
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            • Posted by johnpe1 8 years, 8 months ago
              admirers of Karl Marx please line up at the sign of the hammer and sickle. -- j
              .
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              • Posted by ewv 8 years, 8 months ago
                From the NYT article http://www.nytimes.com/2015/08/02/bus... cited earlier.

                "If there was a 19th-century thinker Mr. Price drew inspiration from, it would be not Karl Marx, but Russell Conwell, the Baptist minister and Temple University founder, whose famed 'Acres of Diamonds' speech fused Christianity and capitalism. 'To make money honestly is to preach the Gospel,' Mr. Conwell exhorted his listeners. To get rich 'is our Christian and godly duty.'”

                "Every day he and his four brothers and one sister rose as early as 5 a.m. to recite a proverb, a psalm, a Gospel chapter and an excerpt from the Old and New Testaments. Home-schooled until he was 12 and taught to accept the Bible as the literal truth,..."

                "Mr. Price is no longer so religious, but the values and faith he grew up on are 'in my DNA,' he said. 'It’s just something that’s part of me.'”
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                • Posted by johnpe1 8 years, 8 months ago
                  and if I admire Russell Conwell but practice "From each according to
                  ability, to each according to need," then the hammer and
                  sickle like would be appropriate! -- j
                  .
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                  • Posted by ewv 8 years, 8 months ago
                    "Is there any difference between the encyclical's philosophy and communism? I am perfectly willing, on this matter, to take the word of an eminent Catholic authority. Under the headline: 'Encyclical Termed Rebuff to Marxism,' The New York Times of March 31, 1967, reports: 'The Rev. John Courtney Murray, the prominent Jesuit theologian, described Pope Paul's newest encyclical yesterday as the church's definitive answer to Marxism.'. . .The Marxists have proposed one way, and in pursuing their program they rely on man alone,' Father Murray said. `Now Pope Paul VI has issued a detailed plan to accomplish the same goal on the basis of true humanism humanism that recognizes man's religious nature.' ' "

                    "Amen."

                    "So much for those American 'conservatives' who claim that religion is the base of capitalism—and who believe that they can have capitalism and eat it, too, as the moral cannibalism of the altruist ethics demands."

                    Ayn Rand, "Requiem for Man" in Capitalism the Unknown Ideal.
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                    • Posted by johnpe1 8 years, 8 months ago
                      OK ... I typed "like" when I meant "line" ... and what I meant is that
                      however I arrive at the behavior "like Marxism" then I belong in
                      the hammer and sickle line. . A is A;;; a moocher is a moocher,
                      no matter what name he calls himself. -- j
                      .
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                      • Posted by ewv 8 years, 8 months ago
                        And whatever we call it, it didn't start with Marx and Marx isn't where he got it from. (I didn't pay any attention to the 'like' vs. 'line', it was clear enough.)
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          • Posted by CircuitGuy 8 years, 8 months ago
            "Do you admire his wage policy and his stated rationale?"
            It doesn't share his rationale. The NYT article said a friend told him she struggles to live on a $40k salary, and he realized some of his employees earned less than that. The article doesn't say how he got from there to a $70k floor.
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            • Posted by conscious1978 8 years, 8 months ago
              You've been familiar with the news coverage of this story since April. Please, don't just dodge the question.
              http://www.galtsgulchonline.com/posts...

              You've known his stated rationale (nationally televised) was to do something about the "income inequality gap".

              If you would prefer not to answer my previously asked question, then just say so. Again, do you admire his wage policy and his stated rationale?
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              • Posted by CircuitGuy 8 years, 8 months ago
                "don't just dodge the question"
                I don't answer questions that have built into it the suggestion I'm intellectually dishonest.
                You can read what's already out there though: http://www.galtsgulchonline.com/posts...
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                • Posted by conscious1978 8 years, 8 months ago
                  You said, "I admire anyone who tries it." I simply asked you the same question, twice, in an attempt to clarify what you meant by your comment.

                  There wasn't any implication of intellectual dishonesty in the question. It was straightforward, unlike your responses; hence my appeal. An answer somewhere on the spectrum between "yes" and "no", with personal qualifiers, would be a direct response.

                  Is it correct to assume that you do not want to directly express whether you admire his wage policy and stated rationale for that decision?
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                  • -1
                    Posted by CircuitGuy 8 years, 8 months ago
                    Short answer is I support anyone who takes a risk with his own capital and tries something.
                    Long answer is here: http://www.galtsgulchonline.com/posts...
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                    • Posted by Zenphamy 8 years, 8 months ago
                      Even though it's a stupid risk based on a fallacy? How can you express admiration for that?
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                      • Posted by conscious1978 8 years, 8 months ago
                        One of the often puzzling characteristics of Pragmatism is the way it allows people to narrowly compartmentalize things with which they agree and disagree. We've seen numerous examples.

                        I think it explains how you can rationalize support for anyone who risks their own money and "admire whatever works."

                        http://aynrandlexicon.com/lexicon/pra...
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                        • Posted by CircuitGuy 8 years, 8 months ago
                          "I think it explains how you can rationalize support for anyone who risks their own money and "admire whatever works."
                          I could not undersetand everything from the Lexicon entry, but if this means I can't do anything legal I think will work with my business, then I completely disagree with Rand on this point. It doesn't matter if my business model disagrees with some esteemed theory of business. All that matters is it works: willing customers, willing vendors, and makes a profit.
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                          • Posted by ewv 8 years, 7 months ago
                            You "can" do anything legal in any realm. That doesn't mean you should. To understand Pragmatism listen to Leonard Peikoff's lecture on it in his History of Western Philosophy course.
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                      • Posted by CircuitGuy 8 years, 8 months ago
                        He skipped a logical step, but maybe he has one. I admire people who try things and take risks. Contrary to the articles, there's nothing singular about this. Maybe he'll turn it into a high-end provider with all top-notch staff, with a cleaning person after hours who goes out of his role to track down someone to handle a customer emergency. Maybe he'll fall flat on his face bc even the best clerk isn't worth two cheaper clerks. It depends on what they're doing.

                        I'm dealing with a similar issue personally, and I'm learning as I go, talking to people about best practices and then making decisions with some element of educated guessing. Time will tell if we fall on our faces. We're funding it with our own cash, so it's our money to blow if we're wrong.
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                    • Posted by conscious1978 8 years, 8 months ago
                      Thank you for the effort you put into your post. It is a good illustration of your thoughts. Amid your comments, I noted this remark:

                      [ “Hearing of their difficulties and those of others struggling to make ends
                      meet inspired him to make a dent in the country's growing income inequality.”

                      This is the part I don't agree with and that probably annoys people. It
                      sounds like he offering alms, which is demeaning. I don't agree with that. ]

                      From your other responses and conclusion, I have a better idea of the pragmatic basis for your support, your admiration and your ability to compartmentalize observed actions without regard for the underlying philosophy.

                      http://www.today.com/video/ceo-reveal...
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                      • Posted by CircuitGuy 8 years, 8 months ago
                        This stuff about following philosophy over real-world observations and reason and about supporting what actually works in business being "rationalization" could come straight from Floyed Ferris.
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                        • Posted by ewv 8 years, 7 months ago
                          Everyone follows some philosophy, even if it's only implicit, eclectically absorbed over the years. Observations by themselves don't tell you how they fit together, what to do next, and what the standards of deciding are.

                          Pragmatism is a parasitic philosophy -- in it's opposition to principle on principle it presupposes philosophical principles it does not acknowledge. Pragmatism doesn't tell you what it means to "work" and what the standards of deciding are. Anything can be rationalized by such an approach.

                          The philosophy of Pragmatism does not mean understanding what works by what established standards and experience and acting accordingly.
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            • Posted by ewv 8 years, 8 months ago
              CG: "The article doesn't say how he got from there to a $70k floor."

              The NYT article says http://www.nytimes.com/2015/08/02/bus...

              "The idea struck him when a friend shared her worries about paying both her rent and student loans on a $40,000 salary...."

              "When Mr. Price chose $70,000 as the eventual salary floor, he was influenced by research showing that this annual income could make an enormous difference in someone’s emotional well-being by easing nagging financial stress."
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              • Posted by CircuitGuy 8 years, 8 months ago
                Yes. I'm saying it's he's skipping a logical step. He doesn't explain why this emotional well-being matters. If it doesn't translate into more revenue, based on the numbers in the Apr article, those jobs can't exist for long.
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              • Posted by Danno 8 years, 8 months ago
                The problem is when a central bank distorts prices such that no analysis can be done. But obvious questions can be asked: 1) was everyone's schooling costs the same? 2) does everyone manage money well? 3) does everyone spend the same way?
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    • Posted by DrZarkov99 8 years, 8 months ago
      When I started my own company, I chose to take no salary because I had enough resources, but the salaries my staff had reflected their relative responsibilities. Giving everyone the same income is just dumb.
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      • Posted by IndianaGary 8 years, 8 months ago
        ...and totally counterproductive. Like this idiot, you would have encouraged the slackers and discouraged the productive. Making a profit (and the ability to meet payroll) with this mindset would have been virtually impossible. Of course, profit must not have been his motive; he was more interested in his workers "feelings".

        This is a prime example of, "From each according to his ability to each according to his need", and the antithesis of the Objectivist Oath.
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    • Posted by $ WilliamShipley 8 years, 8 months ago
      There's no problem with him getting his reward in the value of his company growing. I do that myself with less than market salary.

      It's the statement that all of his employees makes the same that I don't admire. Your best employees who work hard to make the company grow are told that you value the less productive employees more than you do them, because those are the employees getting the big raise.

      Reward increase in productivity, don't reward poor productivity in the hopes it will increase. You get what you pay for.
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      • Posted by CircuitGuy 8 years, 8 months ago
        "It's the statement that all of his employees makes the same that I don't admire"
        Yes. That wouldn't work. He said he was setting a floor, but not saying that everyone would make the same.

        "Your best employees who work hard to make the company grow are told that you value the less productive employees more than you do them"
        Ideally all they should worry about is whether they are getting a good deal, not other people's pay. Their CEO announced it with cameras running and carried on about it to the media, which I think was a mistake. It alienated those workers who didn't get a raise and makes it look like a publicity stunt.
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        • Posted by ewv 8 years, 8 months ago
          From the NYT article http://www.nytimes.com/2015/08/02/bus...

          "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."

          and

          "Maisey McMaster was also one of the believers. Now 26, she joined the company five years ago and worked her way up to financial manager, putting in long hours that left little time for her husband and extended family. 'There’s a special culture,' where people 'work hard and play hard,' she said. 'I love everyone there.'”

          "She helped calculate whether the firm could afford to gradually raise everyone’s salary to $70,000 over a three-year period, and was initially swept up in the excitement. But the more she thought about it, the more the details gnawed at her.

          “'He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,' she said. To her, a fairer proposal would have been to give smaller increases with the opportunity to earn a future raise with more experience."

          "A couple of days after the announcement, she decided to talk to Mr. Price."

          “'He treated me as if I was being selfish and only thinking about myself,' she said. 'That really hurt me. I was talking about not only me, but about everyone in my position.'”

          "Already approaching burnout from the relentless pace, she decided to quit."

          "The new pay scale also helped push Grant Moran, 29, Gravity’s web developer, to leave. “I had a lot of mixed emotions,” he said. His own salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but the policy was nevertheless disconcerting. 'Now the people who were just clocking in and out were making the same as me,' he complained. 'It shackles high performers to less motivated team members.'”

          Someone should send McMaster and Moran copies of Atlas Shrugged -- or better, to everyone in the company.
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