$70,000 minimum wage. Yeah…that’s the ticket!

I remember the day the news hit that a CEO of Seattle-based company, Gravity Payments, decided to pay everyone who worked for him at least $70,000/year. The thought process was that his people were not making enough money to make ends meet. A quick thought came to mind. It wasn’t a nice thought! It was : “how long until this man is out of business?” The thought process was simple.

Your people who were already making $70,000, who started at lower levels, worked their tails off and EARNED the higher pay would not be happy. New hires would make $70,ooo even though others making the same amount had been there for years. It didn’t matter how long you had been there, how hard you had worked, how many hours you had put in. Here’s $70,000.

Your people who did not have the skill set to earn the $70,000 would no longer have the incentive to learn or work to get that skill set. Those same people who otherwise would make $30,000 were now eating up $40,000 of capital that could have been used better elsewhere.

Your people who may have worked harder to make that $70,000 no longer had the incentive to work harder to make that $70,000.

So what happens?

He lost some of his best employees. He lost some of the customers of his best employees and has now fallen on hard times. It does not take a Sigmund Freud to figure out why. People love to aspire. People love to reach higher. People want to work harder…all in knowing their is something bigger out there for them. When they see that is no longer the case and you are no longer  looked at based on your greatness or lack of greatness and that your pay will be equal to someone that you deem not as qualified as you, you will react. That reaction is usually to move on.

$15 minimum wage anyone?

Case dismissed!