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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: 1, Insightful) by Anonymous Coward on Tuesday August 04 2015, @06:49PM
> Someone else getting a raise doesn't cheapen your pay.
Conservatives lurve themselves the hierarchy.¹ One of the most popular ways for conservatives to measure their position in the hierarchy is with dollars. It isn't just the spending value of the dollars, it is the status indicated by the dollars. So, to a person who values their position in the hierarchy, this move does cheapen them. Even if they can't articulate it this way, their gut tells them that if the janitor is making nearly the same amount of money that they are, then they've been demoted to the status of janitor.
ยน Look at the people defending this attitude towards the company's minimum wage hike - Gugnir and Bradley13, both posters with a history of heavily conservative positions.
(Score: 2) by GungnirSniper on Tuesday August 04 2015, @07:54PM
Management types do tend to be more conservative, for whatever reason.
You're right that staff do consider compensation when comparing themselves to others, especially since that's how management looks at them. Each employee is a cost, and have to bring according value for that cost, or they won't be there long.
I had a situation where some second line engineers found out one of the senior customer service reps was making more than they were, and they were rightfully pissed. That rep came in years earlier when we had different starting salaries, thanks to knowing our then-director from working together at a different company. Wouldn't you be upset too if you found out someone with an A+ and maybe Network+ is getting paid the same as you and your CCIE? Wouldn't a doctor be upset if they found out the nurses made the same? I don't think this is a political point so much as a human nature point.
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(Score: 0) by Anonymous Coward on Tuesday August 04 2015, @08:40PM
> I don't think this is a political point so much as a human nature point.
We are all limited by our experiences. It seems like a human nature point to you because that is your nature. You will find it very difficult to understand that not everyone perceives the world the way you do.