Atlanta company raises all pay to $50k: quirky or smart?

ATLANTA – Most smart employers want to pay enough to get the workers they need, but not more.

Yet Rented.com, a company with technology that fuels Airbnb, has raised the minimum pay for all employees to $50,000 and the company's chief executive says the firm will save money in the long run by paying more.

Wait, what?

True, said CEO Andrew McConnell, although he took some convincing.

The idea came to him along with an executive he hired from Portland, Ore., who wanted the company to mimic Gravity Payments, a Seattle company that made news in 2015 by lifting the pay of everyone on the payroll to at least $70,000.

The new executive's suggestion drew a jaundiced response.

"I said, I'd like to be morally good, but I also have to run a business and look at the economics," said McConnell.

Many people — especially techies and executives — make more than $50,000 a year, but many office personnel and maintenance workers do not. And of course, the pay is typically lower in retail, warehouses and many health care jobs.

Raising the floor to $50,000 still lifts Rented.com above most companies. The per capita personal income in metro Atlanta is $47,348, according to the most recent data from the St. Louis Federal Reserve Bank. Seattle's is 36 percent higher — $64,553.

The median household income in Atlanta — which would include two-paycheck families — is about $62,000.

McConnell said he read about Gravity Payments and started thinking more deeply about pay: How could higher pay make the jobs different? "So I started running the numbers," he said. "We found that doing this could actually save us money."

If the pay is higher, the job needs to be more valuable to the company. That means giving the employee greater responsibility and finding ways to automate more menial tasks.

It's the right thing to do, but it is not philanthropy, he said. "It's benevolent self-interest."

Naturally, profit margins are taking a hit. "I think it's penny foolish and pound wise," McConnell said. "We are playing a much longer game than playing for one quarter or for a year. If this moves us to be more productive, then it is an investment well worth making."

If it's sensible, why isn't it a trend? After Gravity Payments made its big splash, there were few mimics.

In fact, paychecks have increased less than they should have, said Jed Kolko, chief economist of Indeed, the internet jobs site. "We have seen some acceleration of wage growth in the data, although not as much as you would expect from such a low unemployment rate."