The steep price of providing a decent wage

If there’s something that some people won’t stand, it’s the idea that someone else is getting something that they’re not getting — or, occasionally, that other people are getting anything at all.

The New York Times this afternoon has the nearly unbelievable story of what happened when an owner of a credit card processing company slashed his own pay and set a $70,000 minimum salary for employees at his firm.

“Income inequality has been racing in the wrong direction,” Dan Price said. “I want to fight for the idea that if someone is intelligent, hard-working and does a good job, then they are entitled to live a middle-class lifestyle.”

Well, that’s just crazy talk.

  1. Listen Dan Price at the Aspen Ideas Festival (MPR News Presents)

    July 21, 2015

He lost a lot of business because people thought he was making a political statement, the Times says.

Several customers who accused him of communist or socialist sympathies that would drive up their own employees’ wages.

But it’s the pushback from his firm’s own employees that’s stunning.

The new pay scale also helped push Grant Moran, 29, Gravity’s web developer, to leave. “I had a lot of mixed emotions,” he said. His own salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but the policy was nevertheless disconcerting. “Now the people who were just clocking in and out were making the same as me,” he complained. “It shackles high performers to less motivated team members.”

Mr. Moran also fretted that the extra money could over time become too enticing to give up, keeping him from his primary goal of further developing his web skills and moving to a digital company.

Where I come from, we call these “The Golden Handcuffs.”

“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,” another employee said.

Some employees stayed, but now they’re more unhappy with the money.

Am I doing my job well enough to deserve this?” said Stephanie Brooks, 23, who joined Gravity as an administrative assistant two months before the wage increase. “I didn’t earn it.”

It’s not all bad.

José Garcia, 30, who supervises an equipment team, was able to afford to move into the city and replace the worn tires on his car. Ms. Ortiz, who was briefly homeless as a child, can now visit her family in Burlington, Vt. Cody Boorman, 22, who handles operations out of his eastern Washington home, said he and his wife finally felt financially secure enough to start a family.

As for some clients, some of them did end up raising the pay of their workers, too.

There have been other ripples. Mario Zahariev, who runs Pop’s Pizza & Pasta, switched to Gravity after seeing Mr. Price on the news. When he learned his monthly processing fees would drop to $900 from $1,700, Mr. Zahariev decided, “I was not going to keep the difference for myself.” He used the savings to raise the salaries of his eight employees.

  • MrE85

    File Under No Good Deed….

  • Brian
    • jon

      Socialism: Conservative American for “Things I don’t like.”
      Socialism: Progressive American for “Europe is awesome.”

      The original definition has been lost to the ages.

  • Paul

    I wonder if the one who opined “Now the people who were just clocking in and out were making the same as me,” he complained. “It shackles high performers to less motivated team members.” ever thought that making $41,000 for a job in the city was on the low end of the pay scale.

  • Jason Mock

    Many people aren’t satisfied with receiving a particular wage. They want to make MORE than the person next to them that they feel does less. I would be willing to bet you’d find greater job satisfaction in the fast food employee making $12 / hour that knows their co-workers make $8 / hour, than in a place where everyone makes $40K / year, regardless of performance. People don’t want a lot of money. They want MORE money.

  • CHS

    I’ve never heard the term ‘Golden Handcuffs’ but it’s unbelievably fitting. I wonder how many people wind up stuck in jobs they can’t afford to leave because they feel like they can’t give up the money.

    • John O.

      Or, in our household’s case, the health benefits.

      • Jack

        HIPAA was the first step in removing the impediment to changing jobs for health insurance reasons. I see ACA as the next step.

        Wouldn’t be surprised if we don’t end up with a health insurance system that is no longer tied to employment. In my opinion, that can’t come soon enough. Universal health care works well in many other industrialized/first world countries.

        • I’ve been saying for years that universal healthcare would be a boon to employment and small businesses in general. Imagine not having to stay in your job “just for the health insurance.” I have worked with people who do that. They’d rather retire or move on to the next phase in their life, but are stuck in a job they hate because of the health insurance.

          People like that could quit and do whatever they want; retire, open a small business, write the great American novel, etc… (freeing up a job for someone else).

  • Khatti

    No one has ever accused Americans of being rational about working for a living.

  • lindblomeagles

    It’s too bad these employees felt the way they did because across the United States, particularly in African American communities where unemployment is still hovering near 10%, there are several employees and out-of-work people that would love to work for an owner like this. Our mistrust of individuals, and our jealousy of others, is really going to sink us long term.

  • Kurt O

    CEOs receiving little or no salary to look noble is a joke. They still have stock options, incentive programs and on and on.

  • Matt K

    What a deep spiritual sickness we suffer in this country when its not enough to pay your own employees low-wages, but you get angry when someone else pays theirs well? The article even says that the firm’s customer fees have dropped this year but customers still are jumping. Insanity. Reminds me of something Jesus said…