Mixed assessment for the boss who introduced a minimum wage of 70,000 dollars

Is the social experience of Gravity Payments, a start-up specialized in means of payment, turning sour?

The company, which chose in April to establish a minimum annual salary of $ 70,000 within it, in any case, crosses a difficult pass, according to the New York Times.

The decision of the young boss caused a flood of reactions during his announcement and fueled the debate over the growing gap between rich and poor in the United States. The salary of the 21 employees was to be gradually raised, over a period of three years, to $ 70,000 a year minimum, while Dan Price, to finance these increases, lowered his salary to the same amount, whereas he previously perceived a million bucks. It’s reading an article showing that a salary of $ 70,000 a year could make a huge difference in terms of well-being that Dan Price has chosen this minimum threshold for these employees.

A few months later, can the company still afford such a salary policy? The advertising generated by this iconoclastic announcement has allowed Gravity Payment to glean new customers. Dan Price says the New York Times has signed with 350 new customers in June, against 200 on average before April. But these new accounts will not return hard cash before 12 to 18 months says the boss. In the meantime, some old customers have turned their backs on the company, put off by the shattering announcement of his boss. Some have interpreted it as a misdirected publicity stunt, while others have worried about a possible rate hike or repercussions on their own salary grid. The sales manager of Gravity Payments says, however, that in the weeks following the announcement, most of these recalcitrant customers were convinced they would not leave.

“It penalizes the best performers for the benefit of the less motivated team members”

A former employee of Gravity Payments

The company also lost some of its employees, disconcerted by this new salary policy. For example, Maisey McMaster, 26 years old and former financial expert at Gravity Payments. The young woman, initially enthusiastic about setting a minimum wage of $ 70,000, finally regretted that the least qualified employees are the most advantaged, while the most qualified have little to gain. A smaller increase in the possibility of additional salary increases with more experience would have been preferred. Grant Moran, a 29-year-old web developer, agrees. “Now, people who just point are paid as much as me. This penalizes the best performers for the benefit of the less motivated team members, “he said. He also did not appreciate “all this advertising done around his salary”.

The financial equilibrium of Gravity Payments is further undermined by a lawsuit filed by Dan Price’s brother, Lucas, less than two weeks after the announcement in April. He asks for the repurchase of the 30% which he still holds in the company, for an unspecified sum, as well as the payment of damages and interests. He feels that his interests have been neglected. But the company’s finances, of which the $ 2.2 million profit is currently largely used to raise wages, do not allow it to meet Lucas’ demand at this time, and to pay extra court costs. Especially since the advertising generated by this wage increase forced the company to hire a dozen additional employees just to manage the consequences – hiring at a high price. Not sure, for now, that Gravity Payments has won so much at his boss’s shattering announcement.