Back in April, we told you about Dan Price, CEO of Gravity Payments, who said he would pay every single one of his employees $70,000 annually. Every single one, from the lowest skilled workers on up. Now, as expected, Price has fallen on hard times financially, even having to rent out his own home.
Employees who work for Gravity are now leaving 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.”
Can you guess what happened?
When Dan Price, founder and CEO of the Seattle-based credit-card-payment processing firm Gravity Payments, announced he was raising the company’s minimum salary to $70,000 a year, he was met with overwhelming enthusiasm.
“Everyone start[ed] screaming and cheering and just going crazy,” Price told Business Insider shortly after he broke the news in April.
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.
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.
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.
“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.
From Fox News:
Dan Price, 31, tells the New York Times that things have gotten so bad he’s been forced to rent out his house.
“I’m working as hard as I ever worked to make it work,” he told the Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”
The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.
Grant Moran, 29, also quit, saying the new pay-scale was disconcerting
“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”
The Times said customers who left were dismayed at what Price did, viewing it as a political statement. Others left fearful Gravity would soon hike fees to pay for salary increases.
Brian Canlis, co-owner of a family restaurant, already worried about how to deal with Seattle’s new minimum wage, told Price the pay raise at Gravity “makes it harder for the rest of us.”