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posted by janrinok on Tuesday August 04 2015, @02:12PM   Printer-friendly
from the unintended-consequences dept.

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.


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  • (Score: 0) by Anonymous Coward on Tuesday August 04 2015, @06:36PM

    by Anonymous Coward on Tuesday August 04 2015, @06:36PM (#218020)

    Why the hell would he go to school if he ends up making the same amount after he gets out? He just spent $$$$$ on literately nothing. I very much doubt he values education already, so yes it is worthless to him. With that money he could get two cars and a boat probably, if that is what he values more.

  • (Score: 2) by Refugee from beyond on Tuesday August 04 2015, @07:52PM

    by Refugee from beyond (2699) on Tuesday August 04 2015, @07:52PM (#218065)

    Why does it bother you what he is spending his money on? Unless that's something illegal.

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    Instantly better soylentnews: replace background on article and comment titles with #973131.
  • (Score: 0) by Anonymous Coward on Wednesday August 05 2015, @05:25PM

    by Anonymous Coward on Wednesday August 05 2015, @05:25PM (#218655)

    Why the hell would he go to school if he ends up making the same amount after he gets out?

    If "getting a better job" is literally the only reason you can think of to go to learn anything, I pity you.

    • (Score: 0) by Anonymous Coward on Thursday August 06 2015, @05:18PM

      by Anonymous Coward on Thursday August 06 2015, @05:18PM (#219163)

      That is not what I said at all. I see value in education, but I was pointing out that a janitor, who is uneducated to begin with, might not. Giving him money in hopes of him pursuing more lofty ideals will certainly backfire. It's like giving a homeless person a million dollars to get them of the streets.