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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: 2) by githaron on Tuesday August 04 2015, @08:59PM
What is hard to understand? If you spent years cultivating your skills and have a lot of responsibilities in order to make your current wage and the new low-skill guy with significantly less responsibilities comes in and immediately starts making the same or almost the same as you, you aren't going to be frustrated? It implies your additional skill and responsibility level are of little value to your company. Without some non-monetary motivator, it discourages people from taking on new responsibilities and building new skills.
If the new "minimum wage" became the norm across the industry, you can bet that the high-skill laborers are going to demand higher wages.
(Score: 3, Interesting) by tibman on Wednesday August 05 2015, @02:40PM
No, i wouldn't be frustrated. I would train the new guy up. If he wasn't fit for the job then i'd request for him to be fired. I don't use pay to compare myself to others. Pay is something i experience outside of work. While at work i use job performance to compare myself to others. I am probably a-typical though. I use to be in the army and you knew someone's pay just by looking at their collar (now center mass). Pay is no secret. Pay also does not equal responsibility or ability. Plenty of experts at the bottom and worthless idiots at the top. When your life depends on the person next to you, you will prefer someone who actually knows what they are doing over someone who is getting paid the most. If you care for your excellent co-workers instead of seeing them as competition then i am certain you will arrive at something similar.
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