Where are they going to go? Another employer that pays fresh fish (market price)?
It's a pretty simple concept to anyone who's actually a business owner (instead of one that pretends to be one like yourself!)...wages are determined by supply and demand. Right now we have record unemployment which means that there are more jobs out there than there are people to fill them. It's a situation where employees are in a stronger bargaining position because if they are skilled at what they do...then there are other employers out there that would LOVE to hire them away from their present employer! In order to keep those good employees as an employer I'm forced to give more to retain them. If I don't then I will lose good employees.
If you believe that, read this;
This CEO Took A Pay Cut To Give Employees $70,000 A Year. Now He’s Battling Amazon. | HuffPost
Yeah, he's battling Amazon, but not in company success.
I did some reading (your link and others) about this guy. He created a tech company which usually does very well and with little competition. In any case, he nearly lost everything during the recession by his own admission. Also, as a CEO of a small company (less than 120 employees) he was paying himself up to three times what a CEO normally makes for a company that size before he began this crusade; this according to a Bloomberg report.
Afterwards he became a celebrity. He was on talk shows and even scored a half-mil book deal. He now gets much of his business through that popularity than the service itself. However from what I read, here is what I see the problem as:
If we do go into another recession, I doubt this company will survive unless he does cut employees pay. I see the same problem once the limelight is off for a while and he is just another credit card processing company. A true story about the recession:
At the heart of the recession, my employer almost closed up like many transportation companies did at the time. He didn't confess this to me until much later on long after the recession ended. Anyway, he was able to stay afloat by using rainy day funds he saved for many years; something his competitors didn't do. What his competitors did that he didn't do was spend every last dime on pay increases while times were good, nor did he ever layoff one driver. There were many times at the heart of the recession we just came in and had BS sessions. We had four, five and at times six drivers just sitting outside at a nearby dead end street we go to when there is not much to do.
You can't stay in business very long paying your workers to do nothing, but my employer did. Not only did he never layoff a driver, he kept his promise of an 8 hour pay no if's and's or but's about it. He didn't rescind that policy until things started looking grim. It was my idea he only pay us for the hours we work. He refused to accept my offer, but had no choice later on as the recession kept hold.
What this guy (Dan Price) is doing is the same thing our failed competitors did. He's not building any reserve for bad times. He's a young guy and only experienced one recession in his adult life whereas my employer survived several and learned each time.
So I too learned from that experience. I have a rainy day fund just in case. Sure, my tenants could all use things: new windows, new carpeting, central AC, more parking area, but I'm conservative in what I spend so if times do get bad again, I don't have to worry about selling out and losing a lot of money in the process.
"In times of peace--prepare for war."
Author unknown.