This CEO gave his lowest-paid employees huge raises and it made some people angry

[TM99]

35. This guy is acting emotionally and not rationally.

I am sorry someone has to say it.

There is nothing wrong with him saying "I am now paying our lowest wage earners $70,000." That sounds great, but it is optics only, and short sighted in the end.

He is also saying other things that are not great, like "I am now paying $70,000 for something that everywhere else is worth $40,000," "I am going to arbitrarily without warning make dramatic changes to the financial compensation plan of all employees," and "Whatever we are selling, I have decided that a media stunt is better." Any employee smart enough to see these as well will be leaving because the company itself is in trouble.

His biggest mistake is trying to set a wage floor. There is a very good reason why the federal minimum wage is done in small increments over a period of time and not in a single large pay scale offset. Make the changes at a slower pace and small enough to get lost in the margin between the wage floor and median income and it is mostly invisible. It just becomes part of the cost of living, and everyone gets their fair share in time. But do it all at once like this guy did and it is no longer invisible. People do notice. And they get upset.

Why? Well, yesterday the education, experience, and responsibilities I have in my job are worth $80,000. Now, the fresh college graduate with no experience and less education is making the same as me. My salary is instantly devalued. If this happened on a grand scale, this devaluation would be accompanied by a real rise in prices everywhere. My $80,000 salary would now buy me less, much less in very real terms.

OK, so back to this company. The longest term employees are now going to leave. That leaves junior level employees without the same level of experience in charge of the entire operation. There is now a leadership and executive management vacuum. That is not good for any company.

I think this CEO could have done it much differently had he thought about the consequences of his actions beyond the narcissistic appeal of the brief media buzz. He could have calculated a gentle downward sliding scale for a fixed percentage increase and then given it to everyone. The remainder could then have been setup in a profit sharing scheme for all employees. Doing it this way he could have created the same positive effect for his employees without alienating the higher earners. It would also have sounded more rationale to customers that are now rightly concerned with his current actions. He also would have had a better chance of getting something like this approved by the entire board. As it stands, he is now going to be sued by his brother which threatens only the employees. He may lose his company, sure, but he is still worth millions. They are not.

There is real income inequality in this country. This type of silly stunt will make it harder to make the real changes necessary to fix some of it. Hell, even Sanders recognizes that the minimum wage of $15.00 an hour must be done incrementally between now and 2020. I am just not impressed by this man's actions at all.