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Earlier this year, Seattle-based Gravity Payments CEO Dan Price announced he was setting the minimum wage for his workers at $70k. About 70 of the company's 120 employees would be receiving the raises over a 3 year period and Price cut his salary from $1m to $70k to make the change happen. His reasoning: He read an article that more money for people who make less than $70k leads to increased happiness.
His plan may have backfired:
What few outsiders realised, however, was how much turmoil all the hoopla was causing at the company itself. To begin with, Gravity was simply unprepared for the onslaught of emails, Facebook posts and phone calls. The attention was thrilling, but it was also exhausting and distracting. And with so many eyes focused on the firm, some hoping to witness failure, the pressure has been intense.
More troubling, a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase - despite repeated assurances to the contrary - also left. While dozens of new clients, inspired by Price's announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has had to hire a dozen additional employees - now at a significantly higher cost - and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.
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 piqued that Price's action made them look stingy in front of their own employees.
To make matters worse, Price's brother and company co-founder Lucas filed a lawsuit less than 2 weeks after the raise increase announcement, accusing his brother of violating his rights as a minority shareholder.
(Score: 5, Insightful) by Bot on Tuesday August 04 2015, @03:09PM
Suck money out of people in every conceivable way, and nobody bats an eye
raise the minimum wage and everybody loses their mind.
The system, the beast if you like, it is real.
Account abandoned.
(Score: 5, Insightful) by Ethanol-fueled on Tuesday August 04 2015, @05:05PM
Raising the minimum wage is a good idea but also a stupid idea, for the reasons outlined in the article. Even more ridiculous is raising the minimum wage for some industries (fast-food) but not others.
I've said over and over again that I don't mind raising wages, as long as we keep the middle-class intact and not use a minimum wage increase as a way to make it more palatable to gut the middle-class even further, forcing the middle-class into the lower-class, all while providing the illusion of concessions and justice ("See? We threw you a bone, we care about people!").
But back to why raising just the minimum wage is a stupid idea: Well, for one, many people whose wages were raised thanks to the increase actually request to work less hours as a result, [breitbart.com] so they can still make the less than X dollars needed to qualify for Welfare benefits. And as from the example given in the summary, a person could bust their ass and take on responsibility to end up earning just as much as some newbie who just walked in the door, which leads to resentment and higher turnover.
As for the guy in the article who raised the minimum wage to 70K -- he should have just allocated a percentage to everybody or otherwise implemented a more fair system, and then kept his fucking mouth shut about it -- virtue is its own reward -- and maybe had the staff sign non-disclosure paperwork if necessary.
Whatever the magical solution is, it cannot be just to raise the minimum wage. Maybe a change in tax structure coupled with mandatory year-after-year cost of living increases or something.
(Score: 4, Informative) by Nobuddy on Tuesday August 04 2015, @06:46PM
Brietbart? Why not an article on National Enquirer or the Sun. Stories of Elvis and Bat Boy are slightly more credible than anything that comes out of that right wing lie factory.
(Score: 1) by lonehighway on Tuesday August 04 2015, @06:58PM
This is another right-wing myth that just won't die. People who make this argument have never looked at just how dirt-poor you have to be to qualify for a few dollars of income support. Working a few more hours with slightly higher pay will easily boost your income over what you can get on welfare and with the bonus of not having to deal with the endless bureaucracy and stigma of being on assistance.
(Score: 4, Informative) by Daiv on Tuesday August 04 2015, @08:47PM
Yes, and in the same article they said many restaurants closed down because of the raise in minimum wage!
Oh wait, YOU inserted the word "many", changing the story. The article says "Some workers", "some workers", and "some workers". In fact, all three are referring to the same "some workers." The original article specifically says "several workers" at ONE place, Full Life Care, a home nursing nonprofit.
And below that "Some long-time Seattle restaurants have closed altogether, though none of the owners publicly blamed the minimum wage law."
Don't try to use those tired, spun excuses as something to point to. There are plenty of other, valid things to point to.
It's a shame because I like some of the other things you said in your post.
(Score: 0) by Anonymous Coward on Wednesday August 05 2015, @01:39AM
I've said over and over again that I don't mind raising wages, as long as we keep the middle-class intact....
The average middle class wage in 1950's was $48,000. I think that's still the middle class wage. Middle-class earnings have been flat for 50 to 60 years. I think it's safe to say that the middle class has already been destroyed!