Gravity Payments CEO Dan Price made huge headlines with his PR bonanza three months ago, when he announced a new $70,000 minimum wage for all employees at his Seattle based Credit card processing firm.  Thousands of resumes poured in, and Price made the talk show rounds.  Even Harvard professors came and did a case study. But according to an update in the New York Times, Price hasn’t fared so well with a policy, to quote economist Thomas Sowell in a different context, “involved replacing what worked with what sounded good”.

Price cut his own $1 Million dollar salary, and argued his new model would yield results among his staff of 120.  And while he got many job applicants and even a few new accounts, some accounts withdrew their business, thinking the issue was more PR stunt than useful, and others feared price increases.

But worse, two of his best employees quit, due to a view of equality mattered more than contribution.  Price’s own co-founder brother Lucas sued the company over alleged depriving minority-shareholder benefits, although a local report says the lawsuit wasn’t directly related to the pay policy change.

“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,”  financial manager Maisey McCaster told the times, and she approached Mr. Price about her concerns.  Price responded McCaster was being selfish and self-centered.  “That really hurt me. I was talking about not only me, but about everyone in my position.”  She quit soon after.

High paid employees worried about the fairness involved in paying low performers.  Low paid employees worried about expectations of them and whether they were earning their keep.  Stephanie Brooks, a 23-year-old administrative assistant hired right before the wage increase told the Times, “I didn’t earn it”.

The overall pace of new clients added seems to be making up for the ones Price lost, but the lead time on those new accounts is from 12 to 18 months, and Price has had to add several new employees — at higher salaries — to handle the new load.

The Washington Times quotes Price as saying “I’m renting out my house right now to try to make ends meet myself.”