Does a high wage employee bring more value to a company than multiple low wage employees?

alek95 · Nov 4, 2022

Hi everyone,

I'm not a business owner but I work for a boss who seems to rather hire bums at $20 per hour than pay the wages for really good guys. We had one of our best employees get poached by another company because my boss didn't seem to appreciate him.

I notice that a small handful of guys basically are the rockstars of the company. They quietly put their heads down and just produce, a LOT. Maybe 25% of employees are like this. Then we have about 60% who just clock in and go through the motions. The bottom 15% of employees provide next to zero value to the company yet the boss seems to not mind

I'd like to branch off on my own in several years (I'm still young). When it comes time to start hiring, wouldn't I rather hire the best, even if I have to pay high wages?

My opinion is that one rockstar machinist at $40/hr provides more value and outproduces two bums that will work for $20/hr

CarbideBob · Nov 4, 2022

Milland · Nov 4, 2022

CarbideBob said:
NO

Well, that's emphatic. So bums it is?

I'd say your work type will help decide - low-level generic job shop work, with clearly defined tasks a chimp could do, then cheap help that's not obstructive (machine wreckers) might be more profitable that a star, but then a star wouldn't stick around for such things.

Want to do medical/aerospace/research type stuff, where a brain and commitment are very helpful? Then pay the stars.

alek95 · Nov 4, 2022

CarbideBob said:
NO

Why?

CarbideBob · Nov 4, 2022

Milland said:
I'd say your work type will help decide .

For my little slop shop it works.
I get that it seems correct to do the high pay from a machine floor view.
Just as a start, paid vacation and time off. Incensed insurance costs. State unemployment tax. Many details.
Every shop is different and no rules are correct for your home.
Bob

Milland · Nov 5, 2022

CarbideBob said:
Just as a start, paid vacation and time off. Incensed insurance costs. State unemployment tax. Many details.

Bob

I get angry about insurance costs too. A good reason to have the one smart guy over multiple JAGs - one set of health expenses.

sfriedberg · Nov 5, 2022

My day job is in software, and there is no question that the worker pool has a small number of very highly productive people, a large proportion of moderately productive people, and a bottom-feeding layer of totally non-productive and even destructive people. That last group is not only not worth their pay, the company would be better off without them even if they worked for free. Proportions are not too much off what alek95 suggests.
If the company is looking for parts loaders, they can go ahead and hire burns. If they are looking for people to carry the company, the disposable lowest-possible-wage approach is not going to attract or retain the needed self-driving, high-skilled, always-learning individuals.

Comatose · Nov 5, 2022

I've never found a meaningful correlation between pay and productivity in a production setting.

Productivity is sort of inherent to a person. Someone who busts ass has probably been busting ass their whole life, whether they were minimum wage at McDonalds at 15 or whatever they are doing now. If you paid them more, you wouldn't get more work out of them.

Similarly, the ones who are going to skate by doing the minimum are gonna do it whether they are making $10 an hour or $50 an hour. Honestly, they're more likely to be the latter, because they probably never had to bust ass to survive growing up, have a few connections and family looking out for them, skated by at a decent school in a decent area and now feel like they're owed something.

Regardless of where you advertise, pay-wise, you're going to get some of the former and some of the latter applying, and you're going to have to sort them out yourself.

Obviously if you are offering truly piss-poor wages without some sort of offsetting draw, you'll get the bottom of the barrel. If you want to poach someone specific, you might have to pay up. But if you're advertising more generally, you'll end up with bums making rockstar wages.

Stirling · Nov 5, 2022

Pareto distribution - Wikipedia

en.m.wikipedia.org

alek95 · Nov 5, 2022

Comatose said:
I've never found a meaningful correlation between pay and productivity in a production setting.

I agree that increasing someone's pay won't make them a better employee, and underpaying a hard worker won't make him work any less hard, but...

Underpaying good employees will cause turnover to increase. People will jump ship for better opportunities. Why would a business owner ever want to lose their top guys?

Scottl · Nov 5, 2022

I think the mix described is typical for a lot of businesses because it reflects the work ethic of the general population.

john.k · Nov 5, 2022

Just recently its been made illegal here to demand wage secrecy of employees.....It never worked anyway ,because one of the women in the office always pillow talked and next day its all round the shop..........in my experience ,if you want a really POd workforce ,bring in a newbie on higher pay..........unless hes a qualified professional in a special position,like a licensed engineer .

standardparts · Nov 5, 2022

alek95 said:
Hi everyone,

I'm not a business owner but I work for a boss who seems to rather hire bums at $20 per hour than pay the wages for really good guys. We had one of our best employees get poached by another company because my boss didn't seem to appreciate him.

I notice that a small handful of guys basically are the rockstars of the company. They quietly put their heads down and just produce, a LOT. Maybe 25% of employees are like this. Then we have about 60% who just clock in and go through the motions. The bottom 15% of employees provide next to zero value to the company yet the boss seems to not mind

I'd like to branch off on my own in several years (I'm still young). When it comes time to start hiring, wouldn't I rather hire the best, even if I have to pay high wages?

My opinion is that one rockstar machinist at $40/hr provides more value and outproduces two bums that will work for $20/hr

"Rockstars" and "bums".
Which if the two classifications describe your skillsets?

standardparts · Nov 5, 2022

Milland said:
Well, that's emphatic. So bums it is?

I'd say your work type will help decide - low-level generic job shop work, with clearly defined tasks a chimp could do, then cheap help that's not obstructive (machine wreckers) might be more profitable that a star, but then a star wouldn't stick around for such things.

Want to do medical/aerospace/research type stuff, where a brain and commitment are very helpful? Then pay the stars.

Even high tech type environments rely on tasks "a chimp could do" to fulfill their mission, although the term chimp, or bum, or even rock star has been replaced by "human capitol" in more advanced organizations.
I guess in the world of gov't subsidized organizations, some can afford to pay PHD level salaries to the guys who make sure the lab supplies are re-stocked and can drill and tap a hole in a piece of bar stock, or sweep the floor, but cripes...so many egos to contend with. So much drama. To each his own I guess.
And yes a brain and commitment are indeed very helpful, but as I now understand all humans are equal and concessions are to be made to accommodate each individual into achieving their dream---again we are "human capitol".
Being old and obsolete and trapped in the past I always preferred the "GE" employee. "Good Enough"---on time, reliable, normal ego, no drama involving drugs, booze, and woman/men, ----simply showed up to get the job done with a simple 'what we got going today?".
. Overall, a team made up of "GE" staff was predictable...and most of the time "process" can be adjusted to match the abilities of "human capitol". If not----automation is an option, which of course then you don't have to worry about 'chimps', 'rock stars', bums, and finding 'good enough'. You only need to push a button, listen to the machines run, count your cash and look in a mirror to find the cause of success or failure.

Bill D · Nov 5, 2022

In public schools most teachers consider roughly 10% are top students, 10% troublemakers who barely pass classes and 80% normal intelligence and abilities.
In most High schools special education is the largest department, of course they do tend to have smaller classes. But Special education is not exactly a required course like math or PE.
Bill D

standardparts · Nov 5, 2022

Bill D said:
In public schools most teachers consider roughly 10% are top students, 10% troublemakers who barely pass classes and 80% normal intelligence and abilities.
In most High schools special education is the largest department, of course they do tend to have smaller classes. But Special education is not exactly a required course like math or PE.
Bill D

Bill D....I doubt anyone has to attend PE or even demonstrate any kind of math skills...at least in many Wisconsin public schools. But...that just means there will be more 'bums' and 'chimps' to weed out from all the 'rock stars' that apply for machinist jobs.

DouglasJRizzo · Nov 5, 2022

alek95 said:
My opinion is that one rockstar machinist at $40/hr provides more value and outproduces two bums that will work for $20/hr

Your opinion is, for the most part, correct.
There may be a few low wage employees that really know how to produce, and most likely they're on their way up the salary ladder.

But the condition you describe is somewhat rampant in our industry, although, thankfully, it is waning.
I've seen local shops do this.
They'd hire real low level help, then spend weeks comiserating with their pals about how you "can't get good help these days." I got one of them them really hacked when I told them, "sure you can, but you have to pay them - a lot."

Some folk think they're saving money this way. They're not, but it usually takes a "come to Jesus" moment for them to realize it. That moment, sadly, is when a six figure job gets scrapped or returned, or a six figure machine tool gets walloped.

Garwood · Nov 5, 2022

You can pay a smooth talking idiot $40/hr. Paying him more doesn't make him less of an idiot.

However, a genuinely skilled person is worth every penny and then some at a premium wage.

Yes, a skilled, good fitting employee at $40/hr is worth much more than a pair of so-so $20/hr guys.

Orange Vise · Nov 5, 2022

alek95 said:
I'd like to branch off on my own in several years (I'm still young). When it comes time to start hiring, wouldn't I rather hire the best, even if I have to pay high wages?

If only it were that simple.

alek95 said:
My opinion is that one rockstar machinist

Not a fan of this term. It gets tossed around on social media way too often and needs to die.

People get paid for their output, not their skill level. Can a skilled employee with double the pay produce twice as much? Maybe, but it's far from guaranteed. And even if they do, that doesn't make them a rockstar. They're just doing their job.

Don't paint yourself into a corner by relying so heavily on people. People understandably need to do what's best for themselves and their families, and sometimes that doesn't align with your goals. This doesn't mean you shouldn't try to hire the best people you can, just that you should expect things to be way more complex than the way you described it in your OP.

john.k · Nov 5, 2022

Owner /boss ' wet dream is getting the rockstars and paying them minimum wage .

Does a high wage employee bring more value to a company than multiple low wage employees?

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