Would you quit your job for $25,000?
The economics of paying workers to leave their jobs
$25,000 is nothing to sneeze at. It's enough to cover most Americans' living expenses for at least a few months. You could even start a business or put a down payment on a home.
Now one employer — Riot Games, the maker of the popular video game League of Legends — will pay its employees 10 percent of their salary, up to $25,000, to quit their jobs, even if they have worked there for only one day.
Other employers are offering a similar deal, including Zappos, which will give employees $2,000 if they want to leave, and Amazon, which is offering $3,000 to workers in its warehouses, and up to $5,000 for more experienced employees.
Are they crazy? No. These companies are doing something smart. They're using basic economic incentives to make sure that they only employ people who are enthusiastic about their work. This is an economic filter to foster job excellence.
In the grander scheme of things, a 10 percent cut isn't a huge amount of money. In the U.S., a game programmer with less than three years experience earns on average $72,198 a year. Programmers with more than six years experience take home on average $124,833. It is really only a couple months' pay.
For individuals who want to keep their job, $25,000 is tiny compared to the hundreds of thousands of dollars they could earn over the years, and the enjoyment they get from doing a job they love.
But it is enough of an incentive to ease out the people who aren't enthusiastic about their job, and therefore will not even try to excel at it. For example, individuals who want to quit and start their own business. Or those who feel like they just don't fit in with the firm's culture. This kind of incentive can save months or even years of difficulty and under-performance, and allow a firm to look for a more enthusiastic replacement sooner. Everyone benefits.
Amazon's $3,000 cash offer shows that that this system can be applied down the pay scale. It might only pay a single month's bills, but for workers who really aren't happy, it's enough for them to quit and look for a new job.
While I doubt we'll see Wal-Mart, McDonald's, or Burger King offer this kind of incentive for workers anytime soon, maybe they should. A disgruntled employee, in the words of Eminem, "working at the Burger King, spitting on your onion rings" can often end up costing a corporation a lot more than $2,000 or $3,000.