Posted on 04/15/2015 9:20:39 AM PDT by SeekAndFind
In a jaw-dropping move Monday afternoon, Dan Price, the 30-year-old founder of Gravity Payments, a credit card processing company in Seattle, Washington, announced to his 120-person staff that over the next three years, every single employee — even the lowest paid clerk — will be paid a minimum annual salary of $70,000. And he wasn't joking.
"My jaw just dropped," Phillip Akhavan, 29, who earns $43,000 working on the company's merchant relations team, said in an interview with The New York Times. "This is going to make a difference to everyone around me."
The announcement stunned the staff and triggered a wave of clapping and whooping that surprised even Price, said the Times.
"Is anyone else freaking out right now?" he asked, after the celebration had lapsed into a few moments of silence. "I'm kind of freaking out."
With the average salary at Gravity standing at $48,000, the new minimum wage is expected to increase the paychecks of about 70 employees and ultimately double the salaries of about 30 of them, according to company spokesman Ryan Pirkle.
The Christian Post reached out to Price at Gravity Payments for comment Tuesday but he was unavailable.
One of his staffers, a customer operations associate, identified as Kevin, told CP that his colleagues were still glowing from the announcement.
"I was there at the meeting. … Honestly, I could not believe what I heard, and I think that's what a lot of people felt. I kinda felt that we needed to get that repeated," he said.
And, when Price repeated the news, it finally sunk in.
"It was pretty clear, there was no confusion afterwards," said Kevin.
Price, who started his company in 2004 when he was just 19, explained that he got the idea after reading a study on happiness which shows that emotional well-being rises with incomes up to an amount of $75,000 annually.
"Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being," notes the article.
Beyond the article, Jamie June of Gravity Payments' marketing department, told CP that Price is just "an incredible" person.
"Dan is just an incredible man in general. He has a really amazing moral compass. And so that's not only with his employees but the customers," she said.
June said she wasn't aware of him being affiliated with any kind of religious institution, "but I cannot speak for him."
In discussing his decision with the Times, Price said the disparity between his market rate compensation and that of his workers is "absurd." The average chief executive earns nearly 300 times that of the average worker in America. And this disparity is one of the largest gaps in the world, and well higher than the 20-to-1 ratio gap recommended by Gilded Age magnates like J. Pierpont Morgan and the 20th century management visionary Peter Drucker, according to the Times.
"The market rate for me as a CEO compared to a regular person is ridiculous, it's absurd," Price, who drives a 12-year-old Audi, told the Times. He said his main extravagances are snowboarding and picking up the bar bill.
"As much as I'm a capitalist, there is nothing in the market that is making me do it," he said, referring to paying his staff the annual $70,000 minimum wage.
To pay for the increased staff wages, Price will cut his almost $1 million salary to $70,000 and combine that with about 75 to 80 percent of his company's $2.2 million expected in profits this year. Last year, according to the Idaho Statesman, the company was forecasted to complete $6 billion in transactions and end the year with about $15 million in revenue.
Nah, man, you’re supposed to screw your workers...it’s the American Way.
It sure is honey. You'll be looking for a new job very soon.
I agree.
There was thread on Gravity yesterday. I posted a lot. I think this is a smart move for some companies (not all).
At Netflix, if they determine that an employee has done an adequate job — they fire that employee. Because adequate isn’t good enough. You have to be excellent, or you are out.
Now, you cannot do that if you hire and reward employees the way everyone else does. You have to make it a highly desirable place — you want people pounding on the doors begging for a job. Then, you hire superior people. And you keep them BECAUSE no one else will match their salary. You save on hiring, and training and accumulated job knowledge.
And you make it clear — absolutely no slacking. Everyone works hard. All the time. No excuses. If you come to a meeting unprepared, there is a problem.
A high minimum salary becomes a basis on which you hire only superior people and fire anyone who underperforms. It can be smart.
Also, some people perceive Gravity paying the same exact salary ($70,000) to everyone no matter what. That isn’t it at all. Junior positions start at $70,000 and then things go up. Excellence is rewarded.
So what is the motivation to work hard, to excel if the clerk is making as much as an upper level manager?
Because the welfare state has worked so well. (See 18-trillion dollar federal deficit)
It doesn’t matter what you pay - its what you get in return for what you pay that matters. But this will put a lot of pressure on the performance management system - you cannot afford deadwood with a premium pay position. My guess is also they will ‘outsource’ a lot of functions as well.
He is a little bit Japanese.
Nothing I can see wrong with a private company deciding to implement a minimum wage. The market will decide if it is a good idea. It’s forced minimum wage imposed on every business and municpality that I have a problem with.
Greedy exhibitionist! Do your business for free! Help everyone!
I doubt it. He cut his 1 million dollar salary to give about 30 employees a 30K increase in salary. Basically it is a zero sum after all said and done. The only way he could do this is if his already has a couple million stashed away already. He is young so he will be fine by retirement. I think it is rather a great idea. Why not? It is capitalism at its finest. A company doing what it wants without government involvement. I wonder if other companies will follow. I wonder if some CEOs really need 45 million a year to live on. That is there right to make that money but how much does one need to survive extremely well for life?
Salaries are like yachts and a certain part of the male body. These studs are always wanting to look like they have the biggest one.
Bankrupt in a few years. When the company starts struggling will he ask for the money back to keep it going? lol
If he kept him salary at a million and still increased everyones pay to 70 grand, I would agree but the company is saving 930K a year just on his salary. They have 70 employees and half were under 70 grand. So 30 workers got a raise of between 30 and 40 grand a year. I can’t see where you think that will cause bankruptcy.
Ben and Jerry’s did try that but couldn’t support it for long. It seems a real CEO is needed and the only way to get one is with a competitive offer.
I don’t get why he needs reserve. You must not have read the story.
Currently he makes a million a year.
He is going down to 70K a year
30 workers make between 48-69K who will not get a raise to 70K
How on Earth will that make the company go under.
Let’s use numbers.
Let’s say we go with the lowest paid today makes 48,000 and let’s just make all 30 get the lowest paid 48,000.
70K-48K equals 22K
22KX30K equals 660K
His salary minus new salary equals 930K
Total left every year will be at least 270K in reserves year after year.
Bankruptcy? How???????????
Cutting his own salary is a good business decision. Less net consumption by business owners allows more savings and reinvestment back into the company, which helps it grow. Raising employees’ salaries above market is not a good decision unless he has trouble retaining good employees. It raises costs which lowers profits which makes it harder to stay in business.
Notice all the praise comes before he actually does anything. When half are fired and it goes bankrupt, it was his intentions that mattered
Let’s see what his company looks like in a year.
We call them 'Golden Handcuffs.'
Promote a person without marketable skills into a high-paying position, and you end up with a compliant employee who has no choice but to do your bidding. I've seen it first-hand, and it ain't pretty.
you actually used the “p” word
tsk tsk
You’re counting salaries only. There will be overhead, taxes, Obamacare, etc, .... He will also find out he will be missing out on a lot from cutting his own salary as well and most likely regret it. I think its a nice gesture so I’m not slamming him as I thinknhe’s being genuine about it. I think there will be some unforeseen problems thats all...BTW I have owned and operated several successful companies in the past so I’m speaking from a reference of experience. And no they were not lawncare businesses...lol
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.