The $70k salary sweet spot

Chew Toy McCoy

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Listened to a recent interview with Dan Price, the Gravity Payments CEO who famously a few years ago raised the company’s minimum wage to $70k a year while also lowering his to the same from $1.1 million. This doubled the current salary of some employees. He did this after an employee angrily accused him of screwing him by only paying him the comparable market wage and after conversations with other hard-working friends who were equally screwed by a comparable market wage.

Conservatives blasted him for this move and said the company was doomed to fail as a result, but in fact business actually grew. The few customers they did lose, unsurprisingly, did so out of spite for inspiring their employees to feel their company should do the same. Among employees home purchases went up, birth rates went up, debt was either greatly reduced or paid off, and a healthier lifestyle and weight loss were common. In backwards conservative world they also decried it as “socialism!!”. They were somewhat right about (one of) the definitions this time but flat wrong about the results and what people should fear about it.

The $70k figure was based on a study that determined people are pretty content around that wage. The lower you are away from that the more stressed you are and the higher away from that you aren’t really more content. I thought cost of living in the region might also be a factor but the company is based in Seattle which doesn’t exactly have a low cost of living. So I think that figure is even more interesting given that.
 
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Listened to a recent interview with Dan Price, the Gravity Payments CEO who famously a few years ago raised the company’s minimum wage to $70k a year while also lowering his to the same from $1.1 million. This doubled the current salary of some employees. He did this after an employee angrily accused him of screwing him by only paying him the comparable market wage and after conversations with other hard-working friends who were equally screwed by a comparable market wage.

Conservatives blasted him for this move and said the company was doomed to fail as a result, but in fact business actually grew. The few customers they did lose, unsurprisingly, did so out of spite for inspiring their employees to feel their company should do the same. Among employees home purchases went up, birth rates went up, debt was either greatly reduced or paid off, and a healthier lifestyle and weight loss were common. In backwards conservative world they also decried it as “socialism!!”. They were somewhat right about (one of) the definitions this time but flat wrong about the results and what people should fear about it.

The $70k figure was based on a study that determined people are pretty content around that wage. The lower you are away from that the more stressed you are and the higher away from that you aren’t really more content. I thought cost of living in the region might also be a factor but the company is based in Seattle which doesn’t exactly have a low cost of living. So I think that figure is even more interesting given that.
This is one classic example why “Common Sense” is bullshit. Took me a while to learn that what seemed to be basic economics was anything but.
 
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Listened to a recent interview with Dan Price, the Gravity Payments CEO who famously a few years ago raised the company’s minimum wage to $70k a year while also lowering his to the same from $1.1 million. This doubled the current salary of some employees. He did this after an employee angrily accused him of screwing him by only paying him the comparable market wage and after conversations with other hard-working friends who were equally screwed by a comparable market wage.

Conservatives blasted him for this move and said the company was doomed to fail as a result, but in fact business actually grew. The few customers they did lose, unsurprisingly, did so out of spite for inspiring their employees to feel their company should do the same. Among employees home purchases went up, birth rates went up, debt was either greatly reduced or paid off, and a healthier lifestyle and weight loss were common. In backwards conservative world they also decried it as “socialism!!”. They were somewhat right about (one of) the definitions this time but flat wrong about the results and what people should fear about it.

The $70k figure was based on a study that determined people are pretty content around that wage. The lower you are away from that the more stressed you are and the higher away from that you aren’t really more content. I thought cost of living in the region might also be a factor but the company is based in Seattle which doesn’t exactly have a low cost of living. So I think that figure is even more interesting given that.
70k a year doesn't do much to boost your retirement savings, esp if you have a family

For a family, I think the 150k is the sweet spot
This. But is it household income or individual? 70K x2 is 140, i.e. close to that sweet spot.
It also depends on the work hours and the expectation of availability. 70K for a 40-hour workweek is pretty good.
 

Chew Toy McCoy

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70k a year doesn't do much to boost your retirement savings, esp if you have a family

For a family, I think the 150k is the sweet spot

That’s single income. I think the days of a single income family are long gone. Now that I think about it a single income of 70k or couple income of 140k is reasonable even in Silicon Valley if you keep your consumerism in check, other studies show the more stuff you own or in debt for doesn’t equate the happiness. Of course only making that much doesn’t mean you can live wherever you want but it also doesn’t mean you’ll be living in squalor or a dangerous neighborhood.

I know that doesn’t leave a lot of wiggle room for kids but 70k is the base for 1 person, and sorry to say, but having kids is a lifestyle choice. It’s not essential to survival, contentment, or happiness and more and more people are realizing that. They’re seeing it as a consideration Or option, not an imperative to go unquestioned. I don’t mean to come off as harsh to people who love kids but that’s just fact.
 

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That may be true, but it’s also essential to the survival of the species…

Not at this point it isn’t. Humans are an out of control cancer on the planet. We’re a global invasive species with no natural predators. Not great to hear but it’s true.
 

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This. But is it household income or individual? 70K x2 is 140, i.e. close to that sweet spot.
It also depends on the work hours and the expectation of availability. 70K for a 40-hour workweek is pretty good.

As far as Dan Price, he is also looking into reducing the workweek to less than 40 hours. Studies have shown productivity actually goes up due to employees having a better work/life balance and being more rested. Add that to an increased salary and they are also more content and motivated.

When he was asked about his opinion on why he believes CEOs want employees to go back to the office after proving work can be done from home, he said he believes it's nearly 100% about control. A lot of CEOs are control freak sociopaths and having people in the office gives them a sense of a more controllable surveillance state.
 

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70k a year doesn't do much to boost your retirement savings, esp if you have a family

For a family, I think the 150k is the sweet spot
I agree. Single and $70k works if you are single, not so well if married and kids unless the spouse is also making $70k. Even then there are significant financial limits on what you can do, but it’s much better than scraping by.

But for corporations, here is the key (which is lost) : We>Me not the other way around. Owners of huge multinational corporations should make sharing the weath with there team the priority, and not just the management side, but the entire organization, and not so worried about making themselves filthy rich. :unsure:
 
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Huntn

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This. But is it household income or individual? 70K x2 is 140, i.e. close to that sweet spot.
It also depends on the work hours and the expectation of availability. 70K for a 40-hour workweek is pretty good.
There is also the cost of living to consider in the region you live and work. I know a guy, now retired as a Dept Head (large multinational corp) made a good salary, but was on call 24/7 as the head of their safety department.
 
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There is also the cost of living to consider in the region you live and work. I know a guy, now retired as a Dept Head (large multinational corp) made a good salary, but was on call 24/7 as the head of their safety department.
Yup this is my point. On paper, I'm 40H per week for a 6fig salary, but in reality it takes 60-70H/wk to meet the requirements and I'm expected to be available essentially 24/7 so a real 40H 70K job that ends at 5PM is a much better deal in terms of lifestyle.
 
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Posted today.
In general this is in line with my small leadership experience, but it only works in a small, highly motivated, selected group of elite workers. Elite defined here as motivated and understand the value of shared growth. It isn't something you can uphold over a certain company size.
 

Huntn

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Yup this is my point. On paper, I'm 40H per week for a 6fig salary, but in reality it takes 60-70H/wk to meet the requirements and I'm expected to be available essentially 24/7 so a real 40H 70K job that ends at 5PM is a much better deal in terms of lifestyle.
I was gone 14 days a month as a pilot but I saw my family more than he did coming home every night.
 
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