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A CEO raised minimum wage to $70,000 a year, and some employees quit because of it

Dan priceGravity PaymentsGravity Payments founder and CEO Dan Price.

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 $US70,000 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.

One employee told him the raise would allow him to fly his mum 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.

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.

The New York Times reports that two of the company’s “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.”

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 $US70,000 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 $US50,000, up from $US41,000, 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.

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.)

For his part, Price — who’s also under fire from other local business owners and his brother, who says Price owes him money — stands by his plan, but doesn’t begrudge his critics. “There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs,” he tells the Times. “I came up with the best solution I could.” And certainly, many of his employees agree.

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