A CEO raised his company's minimum wage to $70,000 a year, and some employees quit

[NotreDame]

http://finance.yahoo.com/news/ceo-raised-minimum-wage-70-212850113.html

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...

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...

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."

Interesting. Of course, the potential issue with giving too much of a raise to lower skilled workers, employees with less experience, is abating if not reducing the incentive to achieve more, while perhaps inducing others to work less for their pay.

 

[Paulos23]

Two employees, out of how many? Granted they where two key people, but accountants and web developers can be found.

I wouldn't leave based on the lowest getting a higher raise then the ones higher up, and high performers don't always get reconsidered in pay anyway so I don't think that is a valid reason to leave.

 

[NotreDame]

Two employees, out of how many? Granted they where two key people, but accountants and web developers can be found.

I wouldn't leave based on the lowest getting a higher raise then the ones higher up, and high performers don't always get reconsidered in pay anyway so I don't think that is a valid reason to leave.

A mere raise was not the issue. Whether "high performers" do or do not "always get reconsidered pay" is not the issue.

 

[Paulos23]

A mere raise was not the issue. Whether "high performers" do or do not "always get reconsidered pay" is not the issue.

I know "high performers" in my company. They don't make the big bucks. They are in the trenches doing the work others will not do and not getting recognized for it. And when they do, it rarely results in a raise. Their claims are based on ideas that I have seen not work in the business environment.

They are just special snowflakes that want more then there fair share from my viewpoint.

 

[stamperben]

They are True Americans™ who know the value of good ol' fashioned greed.

 

[NightHawkeye]

I know "high performers" in my company. They don't make the big bucks. They are in the trenches doing the work others will not do and not getting recognized for it. And when they do, it rarely results in a raise. Their claims are based on ideas that I have seen not work in the business environment.

They are just special snowflakes that want more then there fair share from my viewpoint.

Good. I was afraid the company would lose important people. Glad to hear there's no problem for the company.

It's also good to know that years of college training aren't needed ... anyone can come in and do those jobs without any advanced training.

 

[Paulos23]

Good. I was afraid the company would lose important people. Glad to hear there's no problem for the company.

It's also good to know that years of college training aren't needed ... anyone can come in and do those jobs without any advanced training.

Ya, just people that need a living wadge and getting paid to little for doing most of the work. Standard corporate greed.

Which is why I support this 70K min at that company. It is making employees happy (one is buying a house for the first time based on the raise), increasing production, and bring in new customers. The only one hurt right now are the ones that left and the CEO. I make more then 70K at my work and I would still like to see that as a minimum.

 

[NightHawkeye]

Ya, just people that need a living wadge and getting paid to little for doing most of the work. Standard corporate greed.

Which is why I support this 70K min at that company. It is making employees happy (one is buying a house for the first time based on the raise), increasing production, and bring in new customers. The only one hurt right now are the ones that left and the CEO. I make more then 70K at my work and I would still like to see that as a minimum.

Ahh ... so you only support this when it's someone else's salary which gets cut so that unskilled and unmotivated people can earn as much as you do.

I take it that you'd be among those quitting?

 

[Paulos23]

Ahh ... so you only support this when it's someone else's salary which gets cut so that unskilled and unmotivated people can earn as much as you do.

I take it that you'd be among those quitting?

What? Ummm...no I would not be quitting.

I don't work at that company. And if at my company they had to cut the high earners to get everyone to the 70K min and I was included in that group, I would be fine with that. Mind you, I am not a 6 figure earner. I see very few who do earn 6 figures earning it. Most top execs and managers are overpaid in my opinion.

And what company hires unskilled and unmotivated people? If you have to higher that type of people to do your work, how much are you spending on checking their work and fixing their mistakes? Your claims don't make sense.

 

[NightHawkeye]

What? Ummm...no I would not be quitting.

I don't work at that company. And if at my company they had to cut the high earners to get everyone to the 70K min and I was included in that group, I would be fine with that. Mind you, I am not a 6 figure earner. I see very few who do earn 6 figures earning it. Most top execs and managers are overpaid in my opinion.

And what company hires unskilled and unmotivated people? If you have to higher that type of people to do your work, how much are you spending on checking their work and fixing their mistakes? Your claims don't make sense.

Where's your heart, man? Unskilled and unmotivated people need a $70,000 minimum salary, too. It's not their fault they have no skills. It's not their fault they're unmotivated.

Right?

 

[Paulos23]

Where's your heart, man? Unskilled and unmotivated people need a $70,000 minimum salary, too. It's not their fault they have no skills. It's not their fault they're unmotivated.

Right?

Sounds like you want everyone to be paid a $70,000 salary. Which is a cool idea and would really get our economy going if everyone had that much!

How are you going to fund it?

 

[NightHawkeye]

Sounds like you want everyone to be paid a $70,000 salary. Which is a cool idea and would really get our economy going if everyone had that much!

How are you going to fund it?

Exactly! That is the question.

My best answer is out of your salary. You're the one who supports this.

 

[Paulos23]

On the other hand, why pay people so little? Why are wadges so low in high cost areas? I know of several people that have to leave Seattle because the rent is getting to high, and yet they have to still travel downtown for their jobs.

 

[Paulos23]

Exactly! That is the question.

My best answer is out of your salary. You're the one who supports this.

Glad you agree. But I would tax the business as well since they will be benefiting from everyone getting a living wadge from the government because they would be paying people less in wadges.

 

[NotreDame]

Ya, just people that need a living wadge and getting paid to little for doing most of the work. Standard corporate greed.

Which is why I support this 70K min at that company. It is making employees happy (one is buying a house for the first time based on the raise), increasing production, and bring in new customers. The only one hurt right now are the ones that left and the CEO. I make more then 70K at my work and I would still like to see that as a minimum.

But you aren't addressing the issues presented in the opening post. One such issue is paying a wage to employees which are unskilled, inexperienced, and lacking a post secondary education similar or identical to wages paid for those employees which are highly skilled, experienced, and have college or post graduate education may result in fewer employees within the latter category. For example, if physics professors are paid $50,000 a year and janitors receive a pay raise to $50,000, the physics professors will naturally want to become janitors or look elsewhere for a job where the janitor is not paid an identical wage as the physics professor.

The issues presented in the opening post, to name a few, deal with the notion similar or identical wages without consideration of the labor performed, the skill required, educational attainment, specialized labor, may result in an exodus of skilled, educated employees, perhaps erode the incentive and necessity of acquiring a skill, specialized labor, and attainment of a certain educational level.

A related issue to the one in the preceding paragraph is the notion of compensation adjusted to the years of experience, difficulty of labor performed, etcetera.

 

[TerranceL]

They are True Americans™ who know the value of good ol' fashioned greed.

Yeah nothing says greed like watching people walk into a business and get what you worked 5 years for and getting angry at that.

Hey i'm sure you'd be cool with it, work hard, work weekends, work overtime for years to get where you are in the company, when all of a sudden the boss has an aneurysm and decides that everybody even the guy just hired to answer phones and make photocopies should get paid exactly what you do. Nothing says I don't respect the work you've put in to this company more than that.

 

[rambot]

Did this guy say "And I will not fire a single person who did not do a good job"? I can totally understand why people who HAD been willing to sacrifice their family and private life for some boss WOULD be choked that people who were not willing to do that (or, less face the possibility, were jealous). But yes, hire other people; hopefully boss man will be willing to replace people who are not good at their job. We are, essentially, hearing the complaints of two individuals who have may have their own skewed opinion on their coworkers.

I think it's disappointing that, unless you're willing to sacrifice your family time or health, you are considered to be "unmotivated".

 

[TerranceL]

Did this guy say "And I will not fire a single person who did not do a good job"? I can totally understand why people who HAD been willing to sacrifice their family and private life for some boss WOULD be choked that people who were not willing to do that (or, less face the possibility, were jealous). But yes, hire other people; hopefully boss man will be willing to replace people who are not good at their job. We are, essentially, hearing the complaints of two individuals who have may have their own skewed opinion on their coworkers.

No, we are hearing the complaint of two of the best employees who worked their butts off to get where they were and are now seeing the same level of pay given to people who were just hired or people who don't work as hard as they do.

 

[Paulos23]

But you aren't addressing the issues presented in the opening post. One such issue is paying a wage to employees which are unskilled, inexperienced, and lacking a post secondary education similar or identical to wages paid for those employees which are highly skilled, experienced, and have college or post graduate education may result in fewer employees within the latter category. For example, if physics professors are paid $50,000 a year and janitors receive a pay raise to $50,000, the physics professors will naturally want to become janitors or look elsewhere for a job where the janitor is not paid an identical wage as the physics professor.

I have experienced that. It use to be it took 5 years to become invested in the company and get full benefits. The year that was my 5th year that requirement was removed. I was mad, but it didn't make me quit. Heck, there are employees that have the same skill level as I do and are hired with a higher salary. This happens all the time in the business world, which is why peoples salaries don't get published. You are acting like this is something new.

The issues presented in the opening post, to name a few, deal with the notion similar or identical wages without consideration of the labor performed, the skill required, educational attainment, specialized labor, may result in an exodus of skilled, educated employees, perhaps erode the incentive and necessity of acquiring a skill, specialized labor, and attainment of a certain educational level.

The web designer was benefiting from the increase, he was stupid to quit. As long as an employee is getting paid their worth, does it matter what the other employee's are making? When did it become a competition? When did how much the other guy makes lessen the amount you make? If an employee of mine is so worried that he is not making more then the guy next to him, I would want him to either show in his work why he should be paid more or leave. Otherwise, he would always be resentful and a poor worker and effect others.

A related issue to the one in the preceding paragraph is the notion of compensation adjusted to the years of experience, difficulty of labor performed, etcetera.

And none of that is applied equally across business or fields. I know employees that have 30 years in my company that only get increases for inflation, never increase for years of service. In other companies it is different, but those companies also tend to let senior employee's go. It is a mixed bag out there.

As for difficulty of labor, that is a joke. I have seen the hardest workers get paid the least amount in companies I have worked for, while people who slack get paid more. Reality doesn't jibe with this idea.

I think the managers need to be paid less or same as their workers when they have less duties then the workers.

 

[NotreDame]

I think the managers need to be paid less or same as their workers when they have less duties then the workers.

I have experienced that. It use to be it took 5 years to become invested in the company and get full benefits. The year that was my 5th year that requirement was removed. I was mad, but it didn't make me quit. Heck, there are employees that have the same skill level as I do and are hired with a higher salary. This happens all the time in the business world, which is why peoples salaries don't get published. You are acting like this is something new.

The issue isn't whether the discussion involves some new phenomenon. Neither is the issue whether this occurrence "happens all the time in the business world," which by the way is a completely unsubstantiated claim.

The web designer was benefiting from the increase, he was stupid to quit.

Was he? According to him, people were making the same amount of money but for performing less work.

As long as an employee is getting paid their worth, does it matter what the other employee's are making?

Perhaps. An employee's worth is, in part, based on what? Is it not based on experience, education, productivity, and labor performed? (Not intended to be an exhaustive list). An employee not as experienced, with relatively less education, and lower productivity paid the same as a highly trained, highly skilled, college educated/post college educated, very productive employee is, unsurprisingly, going to lead the latter to question whether they are "getting paid their worth." After all, the former employee is being paid equal to the latter. This is but one of the issues discussed and raised by the employees in the article.

When did it become a competition?

You tell me. The employees in the article never stated "it" was a competition, and neither did they describe the situation as a "competition" or anything like a "competition."

When did how much the other guy makes lessen the amount you make?

Again, you tell me because this is not the issue raised by the employees or the scenario in the article. You may certainly argue your point above is applicable to one or both of the employees specifically mentioned in the article and then perhaps make some philosophical observations of the situation or those two employees.

As for difficulty of labor, that is a joke. I have seen the hardest workers get paid the least amount in companies I have worked for, while people who slack get paid more. Reality doesn't jibe with this idea.

This isn't a very persuasive response since, after all, we are discussing how the situation should be or what should be done. The fact, "Reality doesn't jibe with this idea," does not mean we should just accept the situation, especially since, we as people have created the reality and can change the reality.