After one company implemented a minimum wage of $70,000 a year, some employees quit because they thought the across-the-board raises were unfair, the New York Times reported.
Dan Price, the CEO of Gravity Payments, a Seattle-based credit card processing firm, implemented a policy of awarding salaries of $70,000 to every employee who works at the company, regardless of qualifications or experience. Price, whose estimated net worth is about $3 million, said he would take a pay cut in order to afford the inflated salaries.
Despite the increase in attention to the firm and excitement from some employees, two of Price’s most valuable employees quit because they felt it was unfair to double the pay of new hires, while higher tenured employees got small or no raises.
Maisey McMaster was one of these employees. She joined the company five years ago and worked her way up to a financial manager position.
"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. As financial manager, she helped calculate whether the firm could afford the $70,000 salary minimum and talked to Price over her concern for the policy.
"He treated me as if I was being selfish and only thinking about myself," she told the Times. "That really hurt me. I was talking about not only me, but about everyone in my position."
McMaster decided to quit.
Another employee, Grant Moran, a web developer left after the announcement. "I had a lot of mixed emotions," Moran said. "Now the people who were just clocking in and out were making the same as me. It shackles high performers to less motivated team members."
Other employees felt daily pressure to live up to the high wage. An administrative assistant, Stephanie Brooks, was hired two months before the wage increase and said she "didn’t earn it."
Along with employees, some Gravity clients have withdrawn their business since the pay increases. Brian Canlis, a client of Gravity, who is already fretting over Seattle’s new minimum wage increase, said Gravity’s new pay raise "makes it harder for the rest of us."
Other business leaders say they couldn’t afford to do what Price is doing. "I worry how that’s going to impact other businesses," said Steve Duffield, the chief executive of DACO Corporation. "We can’t afford to do that. For most businesses, employees are the biggest expense and they need to manage those costs in order to survive."
While some customers of Gravity have retracted their business, the publicity the company has gotten from implementing this new policy has had an impact on the number of clients. "Three months before the announcement, the firm had been adding 200 clients a month," the article states. "In June, 350 signed up."