Company's $70,000 Minimum Wage Works Out Just Like Atlas Shrugged Predicted
Some have called Ayn Rand a prophet. But her powers were not mystical. They were rational. She observed human nature with a discernment matched by no philosopher before or since.
In her magnum opus Atlas Shrugged, Rand presented a fictional town called Starnesville, a Midwestern ruin where an important and profitable motor factory once stood. The 21st Century Motor Company was the best in the business, run with efficiency and purpose by the Starnes family patriarch. Unfortunately, when he died, the company passed to heirs who held to a different philosophy.
The Starnes heirs thought the company should be run like a family, that everyone should work according to their ability and be paid according to their need. It was a move celebrated by some and protested by others.
The results were disastrous. Production fell, as did quality of workmanship. Demand for "needs" increased, while claims on "ability" dwindled. In short order, the factory failed.
Rand wrote of her fictional Starnesville in 1957. Today, a Seattle company has followed her script with predictable results. From Business Insider:
When Dan Price, founder and CEO of the Seattle-based credit-card-payment processing firm Gravity Payments, announced he was raising the company’s minimum salary to $70,000 a year, he was met with overwhelming enthusiasm.
“Everyone start[ed] screaming and cheering and just going crazy,” Price told Business Insider shortly after he broke the news in April.
But in the weeks since then, it’s become clear that not everyone is equally pleased. Among the critics? Some of Price’s own employees.
From Fox News:
Dan Price, 31, tells the New York Times that things have gotten so bad he’s been forced to rent out his house.
“I’m working as hard as I ever worked to make it work,” he told the Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”
The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.
Grant Moran, 29, also quit, saying the new pay-scale was disconcerting
“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”
The Times said customers who left were dismayed at what Price did, viewing it as a political statement. Others left fearful Gravity would soon hike fees to pay for salary increases.
Brian Canlis, co-owner of a family restaurant, already worried about how to deal with Seattle’s new minimum wage, told Price the pay raise at Gravity “makes it harder for the rest of us.”
Rand would say she told you so. The solution to any perceived need is not merely to get more. It's to produce more. Even charity relies on someone being productive. And people aren't going to be productive if 1) they'll get paid regardless or, 2) they won't get paid better for producing more.