retail news in context, analysis with attitude

Yesterday, MNB took note of a New York Times story about Dan Price, the CEO of credit card processor Gravity Payments, who made news last April when he decided to cut his million-dollar salary to $70,000 a year so he could give raises to a number of his employees that would, in essence, make $70,000 a year the minimum wage at Gravity.

It did not turn out as he would have hoped.

While some praised him, others felt that Price had a political motive in mind, that he was making other employers look bad, and that his decision had more to do with getting attention than making good economic sense.

(The MNB coverage can be read here.)

One MNB user responded:

For those of us who are old enough to have managed through increases in the minimum wage we can assure you that what happened at Gravity Payments where higher earners felt they should get a similar increase is a very real example of human resource dynamics.  When the minimum wage is raised, one of the unintentional consequences is that many (most?) other people feel they deserve the same percentage increase.  Without trying to further debate the merits of increasing the minimum wage, history shows that the increases create artificial upward pressure on all wages.  I have not seen this issue getting focus in the discussions on raising the minimum wage, but I predict you will hear a lot about it once the increases go into effect.  It will be used by management, non-management, government and union workers as a rational for increased wages.  The explanation of why this is a problem from an economic policy point of view is beyond the space available here, but the simple explanation is that increases in costs must be offset with increases in productivity or absorbed by consumers in price increases, neither of which are assured.

From another reader:

Can't believe KC that you are touting this not a socialist move! It most certainly is and his upbringing had nothing to do with it. His brother, who is cut from the same cloth, disagrees and is suing. Let's see how this turns out. Plus, it is obvious this guy has packed away millions (according to his brother) so is he really making a sacrifice? Or just making news. I feel sorry for the people who helped get him where he is...and by his actions, he forces them to leave. Let's see how long this business model lasts. Just like Seattle's minimum wage hike will cost jobs in the end...

Well, it is interesting that you believe the brother and not him.

Me, I have no idea who to believe.

It seems to me that a lot of people are taking real pleasure in Price's problems, but I cannot understand why anyone would not want this to work. I can understand being skeptical, but why would you root against him ... even if everything you know about economics and human nature tells you that it can't.

I accept that it may not work in the long run. But I'm still kind of hoping it will.

We wrote yesterday about a Washington Post report that Stewart Parnell, the former CEO of the now-bankrupt Peanut Corporation of America (PCA), is facing a possible life sentence related to his company's implication in a salmonella outbreak across 46 states that killed nine people and sickened some 700 others.

I commented in part:

I still think that in lieu of a life sentence, they should make this clown eat the contaminated peanut butter. Three times a day, every day. Doesn't sound like cruel and unusual punishment to me ... in fact, it sounds just about right.

I was amused to see that Parnell's attorney told the Associated Press that the life sentence recommendation was "truly absurd," adding, “We hope the judge will see that Stewart Parnell never meant to hurt anyone. He ate the peanut butter himself. He fed it to his children and to his grandchildren.”

Really? Because I'd like to see video proof of them eating products made with the peanut butter products that came from his factory. I'm not at all convinced that it exists, since how could anyone who knowingly made up lab results and shipped out contaminated product feed that poison to his family? And if he did ... well, if I were a member of his family, I'd have some choice words for him. (Three words, to be precise. The first one would start with "w," the second one with "t," and the last one with "f.")

One MNB user responded:

Hey in China they would have executed him!

From another reader:

First of all, I agree something harsh needs to be done to this creep, and I seriously doubt too that he ate and his family ate that bad peanut butter.  But I find it incredibly amazing he did all these things himself?!?!  Did anyone working the plant(s), office(s) say or do anything?  C’mon if you knowingly were a part of this crime or cover up shouldn’t they also be held accountable.  I know we all have to “follow orders” but at what point does your integrity or decency fly out the window?

There are others being prosecuted. But as the top guy, they're reserving the harshest sentence for him. Seems fair to me.

And from another MNB reader:

I frequently see people arguing against government regulation in trade blogs and news sites, stating the ‘market’ will take care of itself.  Bad, irresponsible businesses will shutter when consumers stop buying from them.  But this is one of many examples of why we need regulations and inspectors--because there are too many people whose priorities are selfish. Individual consumers can’t track down these issues alone. And even if they could gain substantive proof without first being harangued with slander and libel suits, how many people would die in the mean time?  Sadly, this is why we need trial lawyers who, just as often, are just as selfish.  We have such a wonderful imperfect system.

And another:

I do believe senior executives need to be held responsible for food safety, as well as oil spills -- and anything that shows disregard for any living thing, flora or fauna.  Obviously it takes a country like Brazil to throw oil company execs into prison after an oil spill off of their coast, vs. USA.    But I do like your eye for an eye recommendation to eat the contaminated items…till death assuming you mean.  Ditto for the trophy hunters.  Hold people accountable for disregard of any living thing; i.e., hunt them down and teach them a lesson they won’t soon forget.

I'm not sure I'm quite ready to have the dentist who shot that protected lion to be hunted down by either other hunters or by lions ... not yet anyway.

On the subject of Blue Bell's expected return to the market, one MNB user wrote:

We Texans are very much looking forward to its return and knowing the Company as well as we do, we believe they will go the extra mile to keep its customers matter how they got here. Once they get the Texas market back, others will follow.
KC's View: