Dan Price, CEO of credit-card processing firm Gravity Payments in Seattle, made headlines after he raised the salaries of all his employees to $70,000 a year. Now, he is paying the piper.
Price told the New York Times that he is having a difficult time making ends meet after he slashed his own million-dollar salary to $70,000 per year. Price also faces a lawsuit via his brother, who owns 30 percent of the company. But, perhaps the most insightful observation is how it has impacted his company. The Washington Times,
“Now Mr. Price says the decision has cost him a few customers and two of his “most valued” employees, who quit after newer, less skilled employees ended up with bigger salary hikes than those who had been working longer for the company.
“‘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,’ said Maisey McMaster, 26, Gravity’s financial manager, the Times reported.
“Ms. McMaster, who has now quit the company, said that when she approached Mr. Price with her concerns about the wage changes, he treated her as if she was being selfish.
“‘That really hurt me,’ she said, the Times reported. ‘I was taking about not only me, but everyone.’
“Grant Moran, 29, also quit after the pay changes were enacted.
‘Now the people who were just clocking in and out were making the same as me,’ he told The Times. ‘It shackles high performers to less motivated team members.’”
Ladies and gentlemen, the unintended consequences of absurdly high minimum wages.
Maybe a capitalist was born out of his failure….
We can only hope so!
I always thought that the whole idea that workers should be paid as little as the market will bare is the biggest indictment of capitalism. Good for this man for searching for a better way.
What does worker pay have to do with naked markets?
Just insert “bear” and address the point like a normal person.
I always thought the best part of capitalism is a person is compensated according to his worth. If you get paid the least the market will “bear”, you’re not worth very much. Sorry for the truth bomb, but that’s the way the capitalist world works.
You’re no fun. 🙂
Eastside Sanity says
Classic! A Liberal & his money are soon parted. Only in Seattle! Bwaaaaaaa!
But wait….Sky high minimum wages AREN’T a good thing? They actually have negative consequences? I know where this chump went wrong. He didn’t have an “Income equality committee” to hide behind.
Higher wages equal higher prices. All that happens is the unemployed get further behind the 8 ball. Those making the wage will suddenly realize the hike in prices will quickly overtake their income rise and less customers mean less employees so its a viscious cycle with ever increasing prices and fewer workers until noone can afford anything.
End result is a reversal of the old company store. It happened in Russia when communism fell and Germany when the Berlin Wall fell. Suddenly the rich had everything and the poor had little to nothing so riots broke out.
We are seeing in our retail business in Seattle, comments from new employees that request part time work because their wage is too high if they work full time, and they loose their state benefits such as food stamps and 40 hrs. a week daycare for their kids. What I find interesting, is that if they work part time they still get 40 hrs. a week daycare, so these employees are telling us that they have so much free time to go to the beach and hang out with their friends. They don’t understand why we are astonished at this.
Greg Swensen says
The tactic is used to defeat Capitalism and capture the majority of the votes along the way. Isn’t that what Obama and liberals really want? Its called Crony Capitalism. Reward your friends while throwing logic by the wayside. Hardwork is not rewarded but laziness is. Thats what Earmarks is all about. Its the ME Society.
Alburt Insteen says
Socialism has never worked. Admittedly neither has outright Captialism. American Market Capitalism of the 1950s-60s worked.