How a CEO's Move to Pay All at Least $70K Backfired

Dan Price's egalitarian salary plan created a tempest
By Polly Davis Doig,  Newser Staff
Posted Aug 2, 2015 1:11 PM CDT
How a CEO's Move to Pay All at Least $70K Backfired
Austin Roos, a support team supervisor, works at his desk Wednesday, April 15, 2015, at Gravity Payments, a credit card payment processor based in Seattle.   (AP Photo/Ted S. Warren)

It seemed like a great idea at the time: Pay every employee in your company at least $70,000. But as the New York Times reports, when Dan Price announced his grandiose plan, a whole host of problems quickly descended on his Gravity Payments credit card processing company. Two longtime employees, angry that newbies would make as much as veterans, quit; clients, fearing increased fees to pay for those salaries, fled; others flocked to sign up, overwhelming Price's resources and forcing him to hire a dozen new employees at his newly hefty salary level; accusations of socialist and communist leanings flew, from the likes of Rush Limbaugh; and Price's own brother sued him.

"Now the people who were just clocking in and out were making the same as me," says one of the employees who quit, despite getting a $9,000-a-year bump. "It shackles high performers to less motivated team members." And the bigger paycheck is stressing out even new workers. "Am I doing my job well enough to deserve this?" wonders one. But Price's decision has also seen a few ripples of good, notes the Times: Employees, feeling greater financial independence, have been able to afford new tires and start families, while one new Gravity client passed on his monthly savings to his own employees. Price doesn't know if the wave Gravity is riding will peter out, but seems nevertheless committed to fighting income inequality. "The cause has expanded," says Price. "Whether I like it or not, the stakes are higher." (Read more salary stories.)

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