Company That Raised Minimum Wage To $70K Per Year Now Reaping What They Sowed
Robert Gehl
August 2, 2015
Back in April, Dan Price was a hero of the mainstream media.
He made headlines when he decided to raise the “minimum wage” for the 120 employees at his Seattle company to $70,000 per year.
The move also came with a pay cut for Price, CEO of Gravity Payments, a credit card processing company.
The New York Times gushed and social media went batty.
There were skeptics, like Rush Limbaugh and others who said it would end up a total failure, but of course, their concerns were brushed aside.
So how’s Mr. Price’s company doing 90 days later? Not too good.
Some companies stopped using Gravity payments because they didn’t like what they saw as a political statement. Other customers saw a price increase on the horizon.
But even more telling, employees were unhappy.
Two of Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also angered that Price’s action made them look stingy in front of their own employees.
Maisey McMaster, 26, was one of the employees who left Gravity Payments. She worked her way up to the company’s position of financial manager and helped figure out how to raise the company’s minimum wage.
But shortly after the big announcement, she realized what a mistake it was.
“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” she said. To her, a fairer proposal would have been to give smaller increases with the opportunity to earn a future raise with more experience.
A couple of days after the announcement, she decided to talk to Mr. Price.
“He treated me as if I was being selfish and only thinking about myself,” she said. “That really hurt me. I was talking about not only me, but about everyone in my position.”
Already approaching burnout from the relentless pace, she decided to quit.
Lesson learned? Probably not.
