What Happens When a Company Sets a $70,000 Salary Minimum

Three months ago, Dan Price, the CEO of a credit card processing firm called Gravity, announced he would be cutting his salary and raising the salaries of the 120 people who worked for him to $70,000.

The Times recently followed up with Price to see how things are going, and, well, it’s been mixed. Many of his employees were thrilled with the news, but he’s also lost two valuable employees:

Two of Mr. Price’s most valued employees quit, 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. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees.

Grant Moran, the company’s 29-year-old web developer and one of the two employees who left the company put it this way: “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.” He also feels that the publicity around the announcement has made his wages public, which makes him feel uncomfortable. Moran had been earning a salary of $41,000 before the announcement.

Price also lost “a few customers” who felt troubled by Price’s decision and accused him of “communist or socialist sympathies.” But the announcement also gave Gravity plenty of publicity and won the company lots of new business. Even so, some of Gravity’s current clients say they feel uncomfortable:

Brian Canlis, a co-owner of his family-named restaurant, is also a client. He said he was fond of Mr. Price, but was more discomfited by his actions. Mr. Canlis is already worried about how to deal with Seattle’s new minimum wage, which rose to $11 an hour in April and is scheduled to reach $15 an hour for small businesses within five years.

The pay raise at Gravity, Mr. Canlis told Mr. Price, “makes it harder for the rest of us.”

It’s unclear to me exactly why one company’s decision to pay their employees more would make it harder for other businesses, and none of the people in the article explain why. As one of Price’s earliest clients says, “He takes care of his business, and I’ll take care of my business.”

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