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| CEO Dan Price (YouTube) |
Surpassing the forced minimum wage hike of the Seattle,
Washington City Council, Gravity Payments CEO Dan Price went further and
offered a $70,000 minimum salary for his entry level employees. Many celebrated
this measure, in line with the rest of the liberal enclave’s progressive agenda
that forced wage hikes all around will improve the economic conditions of all.
Washington City Council, Gravity Payments CEO Dan Price went further and
offered a $70,000 minimum salary for his entry level employees. Many celebrated
this measure, in line with the rest of the liberal enclave’s progressive agenda
that forced wage hikes all around will improve the economic conditions of all.
Business
Insider reported on one of the employee’s joy:
Insider reported on one of the employee’s joy:
One employee told him the raise would
allow him to fly his mom out from Puerto Rico to visit him in Seattle. Another
said the raise would make it possible for him to raise a family with his wife.
Overnight, Price became something of a folk hero — a small-business owner
taking income inequality into his own hands.
allow him to fly his mom out from Puerto Rico to visit him in Seattle. Another
said the raise would make it possible for him to raise a family with his wife.
Overnight, Price became something of a folk hero — a small-business owner
taking income inequality into his own hands.
“Folk
hero” brings to mind images of Robin Hood or the Highwayman, yet Price’s action
is slightly more honorable, since the business owner is using his own money to
pay his lower-level employees more. Much like the cheering crowds in Los
Angeles who had lobbied the city council to force the wage, the Gravity
Payments staff have more reason to rejoice.
hero” brings to mind images of Robin Hood or the Highwayman, yet Price’s action
is slightly more honorable, since the business owner is using his own money to
pay his lower-level employees more. Much like the cheering crowds in Los
Angeles who had lobbied the city council to force the wage, the Gravity
Payments staff have more reason to rejoice.
But
not all of them.
not all of them.
But
in the weeks since then, it's become clear that not everyone is equally
pleased. Among the critics? Some of Price's own employees.
in the weeks since then, it's become clear that not everyone is equally
pleased. Among the critics? Some of Price's own employees.
The
New York Times reports that two of Gravity Payments' "most
valued" members have
left the company, "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."
New York Times reports that two of Gravity Payments' "most
valued" members have
left the company, "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."
In the pursuit of ending income inequality,
Price’s voluntary wage hike proved to have some grave consequences. Higher paid
hires received no requites wage boost. Feeling slighted by these in-house move,
they chose to quit.
Price’s voluntary wage hike proved to have some grave consequences. Higher paid
hires received no requites wage boost. Feeling slighted by these in-house move,
they chose to quit.
Two long-standing members of the company
admitted that they had supported the substantial salary increases, but concerns
about the cost and the effect on company morale caused them to entertain doubts
about the measure:
admitted that they had supported the substantial salary increases, but concerns
about the cost and the effect on company morale caused them to entertain doubts
about the measure:
Maisey
McMaster — once a big supporter of the plan — is one of the employees that
quit. McMaster, 26, joined the company five years ago, eventually working her
way up to financial manager. She put in long hours that "left little time
for her husband and extended family," The Times says, but she loved the
"special culture" of the place.
McMaster — once a big supporter of the plan — is one of the employees that
quit. McMaster, 26, joined the company five years ago, eventually working her
way up to financial manager. She put in long hours that "left little time
for her husband and extended family," The Times says, but she loved the
"special culture" of the place.
But
while she was initially on board, helping to calculate whether the company
could afford to raise salaries so drastically (the plan is a minimum of $70,000
over the course of three years), McMaster later began to have doubts.
while she was initially on board, helping to calculate whether the company
could afford to raise salaries so drastically (the plan is a minimum of $70,000
over the course of three years), McMaster later began to have doubts.
"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 told The Times. A fairer plan, she told the paper, would give
newer employees smaller increases, along with the chance to earn a more
substantial raise with more experience.
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 told The Times. A fairer plan, she told the paper, would give
newer employees smaller increases, along with the chance to earn a more
substantial raise with more experience.
Gravity's
web developer, Grant Moran, 29, had similar concerns. While his own salary saw
a bump — to $50,000, up from $41,000, in the first stage of the raise — he
worried the new policy didn't reward work ethic. "Now the people who were
just clocking in and out were making the same as me," he tells The Times.
"It shackles high performers to less motivated team members."
web developer, Grant Moran, 29, had similar concerns. While his own salary saw
a bump — to $50,000, up from $41,000, in the first stage of the raise — he
worried the new policy didn't reward work ethic. "Now the people who were
just clocking in and out were making the same as me," he tells The Times.
"It shackles high performers to less motivated team members."
He
also didn't like that his salary was now so public, thanks to the media
attention, and he worried that if he got used to the salary boost, he might
never leave to pursue his ultimate goal of moving to a digital company. Like
McMaster, Moran opted to leave.
also didn't like that his salary was now so public, thanks to the media
attention, and he worried that if he got used to the salary boost, he might
never leave to pursue his ultimate goal of moving to a digital company. Like
McMaster, Moran opted to leave.
Even for the entry-level staffers now receiving double their original salary,
they have entertained different concerns:
But according to the Times, even
employees who are "exhilarated by the raises" have new concerns,
worrying that maybe their performances don't merit the money. (Arguably, this
is evidence the increase is actually a good idea, potentially motivating people
to achieve more.)
employees who are "exhilarated by the raises" have new concerns,
worrying that maybe their performances don't merit the money. (Arguably, this
is evidence the increase is actually a good idea, potentially motivating people
to achieve more.)
A pay
increase which induces individual staff to work harder does offer a commendable
argument for increasing pay. The demands to perform and achieve more do rise in
turn, too, however.
increase which induces individual staff to work harder does offer a commendable
argument for increasing pay. The demands to perform and achieve more do rise in
turn, too, however.
Final Reflection
Seattle’s
public push for higher wages has already met with unpleasant, unintended
results. Restaurants are
closing in larger numbers, more youth are struggling to find work,
employees who had eagerly anticipated the wage hike regret the measure, as
they have lost out on a number of perks. Other employees are refusing hours,
for
fear of losing public benefits, like food stamps and government subsidized
health care.
public push for higher wages has already met with unpleasant, unintended
results. Restaurants are
closing in larger numbers, more youth are struggling to find work,
employees who had eagerly anticipated the wage hike regret the measure, as
they have lost out on a number of perks. Other employees are refusing hours,
for
fear of losing public benefits, like food stamps and government subsidized
health care.
Now,
private firms of their own free will offering higher salaries to individual
employees absent any reason related to work or work ethic face similar unintended
consequences.
private firms of their own free will offering higher salaries to individual
employees absent any reason related to work or work ethic face similar unintended
consequences.
The economics of wage hikes in the name of social
justice, progressive agenda-pushing, and fighting income inequality, whether in
the public or the private sector, run against the inevitable and ultimately
overpowering laws of supply and demand. Employees offer a service for which
they seek a certain level of pay. Employees have to respond to the needs of the
marketplace in determining wages, as do individual employees seeking the best
salary.
justice, progressive agenda-pushing, and fighting income inequality, whether in
the public or the private sector, run against the inevitable and ultimately
overpowering laws of supply and demand. Employees offer a service for which
they seek a certain level of pay. Employees have to respond to the needs of the
marketplace in determining wages, as do individual employees seeking the best
salary.
Outside
intervention, based on ardent sentiment or ideal ideologies, only disrupt this
market system, and end up creating the very opposite of the conditions sought
by employee and employer.
intervention, based on ardent sentiment or ideal ideologies, only disrupt this
market system, and end up creating the very opposite of the conditions sought
by employee and employer.