I think your reasoning is too atomic. Think about the call center worker who was stressed out. How well will he respond to out of script situations when he's stressed? When he's in top shape, fully emotionally invested in his work? What about his colleagues? In out of script situations he likely needs the selfless assistance of other employees. How well will this interaction go if the persons are co-operating in a friendly manner, fully invested in the customers problem, whereas if they are both stressed and unable in any high level thinking?
I would guess customer satisfaction is greater if the call center interaction in exceptuonal situation is handled by a better performing team.
This same analogue applies to most functions in a company who's output depends on the co-operation of it's employees and is not trivially automated.
This is not cargo cult reasoning. Self guided teams are recognized to be a highly effective form of organizing a workforce. If you make everybody motivated and emotionally able to reach out as well as respond, you effectively create a situation where the team self organizes dynamically around incoming problems.
Like I stated, this depends on the nature of a company. A lone logger has somewhat of a constant output. You can't increase the output of loggers suddenly by paying them more.
“This is how investments are usually supposed to work” is absolutely cargo cult reasoning and doesn’t make any sense.
Cool list of reasons to pay people more - I guarantee you that every HR department in the universe has thought of them, as well as a countervailing list of reasons not to.
If you see that everyone with money on the line is doing something different from what you propose, your response should not be “wow those people are dumb”, but “my model is probably not accurate because I’ve only been thinking about this for the duration of a low-effort HN post”.
"If you see that everyone with money on the line is doing something different from what you propose,"
But that's precisely what I don't see. There are lots of examples of small high performing teams with way above 'market rate' salaries. I know several in my smallish home town (Helsinki area, 1.5M population). Some of these are in consulting, others in gaming. Sure, they are all in programming, but still their compensations are way higher than the local market would dictate for the "positions".
For non-programming examples, there are manufacturing companies who pay an excellent rate for their employees if you compare with the global market (... china ...) but their quality and output is so good it makes total financial sense due to smart automation.
You can't pay your employees more than you earn, and you need to get a certain interest on the invested capital. But other than that... I don't really understand why there would be any hard constraints on how much you can pay your employees if the numbers add up.
Once again, you've inverted the causal relationship. The people who get paid more tend to be able to command higher fees because their economic output is higher. You can't take a random person, pay them 10% more, and expect to get 10+% more productivity out of them, ceteris paribus.
It's not about "hard constraints"; it's about economic optimization, which involves getting the highest possible return on your capital. If paying everyone $70k were a reliable way to do that, everyone would be doing it.
You’re ignoring how teams actually work in this analysis. You’re not giving one guy a raise, you’re giving everyone a raise. And they all know it. So your call center workers can quit their second jobs, and get to solutions much faster because they can think more clearly. Your admin people now want to do professional level work out of appreciation. Your sales team has enough money to live that they can focus on big clients rather than taking a bunch of tent accounts to get commissions every month. So the entire company starts to perform better, and because everyone is in a better mood they work together more too. This is all missed by a strictly Taylorist analysis treating each employee individually and assuming their output are independent. Humans are social and they need to sleep to operate well. Paying them more makes them more social and lets them rest more instead of working for someone else. By paying a living wage you’re effectively buying the highest productivity you can get from your team which happens to be a lot.
"If paying everyone $70k were a reliable way to do that, everyone would be doing it."
Um, would they? That, indeed is the interesting question as capital has accumulated, worker wealth growth has stopped and notoriously - productivity really does not grow as it should when we have all these nifty new IT tools to expedite various boring things.
I could be as bold and say that there is a hint of extractive economical thinking in keeping some people in low pay grades. Generally, what you see in extractive economies historically is that the overall wealth is lower than would be if the system was more inclusive, but on the same time there is a bunch of people who are doing the extracting and are satisfied that their coffers are full and are not really concerned about systems level effects.
I understand the logical thinking here - a person suddenly does not become a genious if you pay him more. But if more pay gives him more mental resources during the day as he does not need to be stressed and worried about basic substinence level things - you are actually increasing his performance by paying him more.
> You are using cargo-cult reversed-causality reasoning. Just because you put money into something doesn’t mean you should expect to get more money back out. If I dig a big hole in the ground and throw wads of cash into it, I don’t expect market returns.
You should just read the article again. It does actually mention the changes that were observed after the 70k minimum.
Talent retention and employee satisfaction goes a long way productivity-wise.
