Thursday, April 16, 2015

Income disparity in the news

Dan Price’s decision to raise his employees’ salaries and reduce his own is a noble one. I hope it proves influential.

It would be a wonderful surprise to see, say, a college football coach take a salary cut and ask that adjunct instructors receive decent pay.

A related post
Income disparity in higher education

comments: 7

The Arthurian said...

Of course you know policies can be designed to discourage income disparity, or to encourage it. (Policy design is more effective than hope.)

Michael Leddy said...

I doubt, really, that a college coach will do anything along these lines, and I agree that policy is more effective than hope. But I think this Dan Price’s decision and other individual decisions can be important in getting institutions to rethink their ways of doing things.

Anonymous said...

Dan Price's story is not ending the way the income inequality advocates had hoped. Read further in coming days, for the story must take a twist. 120 employees times $70,000 equals a payroll of $8,400,000. Given revenues not too much higher than that, after operating expenses, I'd say Gravity will be commoditized by the competitors shortly. Therefore Price's cut from $1,000,000 to $70,000 will not cover the differential in payroll. Something will have to "give." As a start up and with Price and his brother as the shareholders, all they need to is wait a moment or two and the sell Gravity to a larger online payment company, and then roll in their millions. If they sell, does anyone think the next owner will keep this pay structure? It is a PR home run, but I wager the next year will tell another tale. Not all stories end with the second chapter.

Anonymous said...

It is worth noting, from the perspective of Price, that Warren Buffett's official salary at Berkshire Hathaway is $100,000, less than college presidents and many senior professors. Therefore I pose a question of language and framing terms.

Why is the issue "income" inequality, when in fact the real issue is "wealth" inequality?

Measured from the view of wealth inequality, Price has garnered PR in the millions for a company I wager he will soon sell.

Michael Leddy said...

You may be right.

I prefer to say “income disparity,” the size of the gap between high and low. That’s what an institution can determine in setting salaries.

Anonymous said...

Government at all levels is an Institution. Measuring and taxing Wealth would be a simple as measuring and taxing Income.

Michael Leddy said...

Well, okay. I was thinking about businesses. I certainly favor a graduated income tax. But to go back to the news story: what most strikes is the generous and noble gesture of giving something up in the interest of one’s employees. If it brings publicity, others might be moved to do the same. None of which that everything else should remain as it is.

If the Gravity story ends badly, I’ll have one more reason to be disappointed.