Gravity Payments CEO lowers his income to raise his workers salary.

[marylander1940]

One Company’s New Minimum Wage: $70,000 a Year

 

The idea began percolating, said Dan Price, the founder of Gravity Payments, after he read an article on happiness. It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.

 

His idea bubbled into reality on Monday afternoon, when Mr. Price surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000.

 

“Is anyone else freaking out right now?” Mr. Price asked after the clapping and whooping died down into a few moments of stunned silence. “I’m kind of freaking out.”

 

If it’s a publicity stunt, it’s a costly one. Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

 

http://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html?_r=0

 

The CEO of a credit-card payments company in Seattle said executive pay is "out of whack," so he's cutting his own pay and creating a minimum salary for his workers. Now, he will be earning $70,000 like many of them, and he's OK with it.

 

Dan Price, 30, announced this week that any employee at his company, Gravity Payments, making less than $70,000 annually will receive a $5,000-per-year raise or be paid a minimum of $50,000, whichever is greater. The aim: By December 2017, everyone will earn $70,000 or more.

 

To facilitate this change, Price said his salary will decrease to $70,000 from about $1 million until or unless the company's profits are greater than last year's approximately $2.2 million.

 

http://abcnews.go.com/Business/gravity-payments-ceo-live-70000-worker-wage-thinks/story?id=30316052

[+ sync]

I would be interested in commentary from some experienced human resources professionals.

[sincitymix]

I would be interested in commentary from some experienced human resources professionals.

 

This is really great. Its really commendable of this guy, not to mention the morale at his company must be through the roof, and a line out the door with applicants who want to work there. hell, i want to work there now! lol

I have seen the ceo of my former company give himself a 3 million dollar pay raise and a 40 million dollar bonus, then turn around and claim we were making to much money, slashed our bonuses, slashed our pay, and said no one in the company knows the value of a dollar, otherwise we wouldn't be wasting it on needless expenditures.

Truly most if not all Ceos are out of touch with the common worker, who is the one who makes them the money.

[+ quoththeraven]

I think this is a great idea. Income inequality is a big deal and getting worse. (Let's not talk about the gutting of the middle-class.) During my stint as a benefits consultant and later as a benefits (aka ERISA) attorney, I was privy to partial or complete wage information on various companies. The owners of one small, primarily local or regional business made $200,000 a year, whereas the least well-paid of their full-time employees made in the neighborhood of $18-20,000 a year. The cost of living in the area was low, so even the low wage might have been liveable, but $200,000 plus lots of vacation time to spend in leisure activities (skiing, IIRC) was well in excess of what was necessary to live the good life.

 

I realize that the owners bore the risks associated with establishing and maintaining the business and deserve to be rewarded for that, but so do the people doing the actual work and running the business day-to-day, which the owners left up to others. As I recall, the guy primarily responsible for making sure the business ran smoothly -- in effect, the COO, even though that wasn't his title -- made around $60-70,000 a year.

 

I once heard the former head of the NJ Department of Labor say that in his experience, Japanese companies had the best track record with respect to employees. (This also coincided with my experience, although I had US and German-based clients that were also great to their employees.) I wonder how much bearing the much smaller gap between executive pay and the average worker's pay in Japan compared to other developed economies has to do with that.

 

As a sidenote, it is not unheard of for top salespeople or top producers in other ways (I'm thinking of a client that was in the field of investment management and modeling that paid very generously for technical expertise) to make more than the CEO or owners.

[sincitymix]

I think this is a great idea. Income inequality is a big deal and getting worse. (Let's not talk about the gutting of the middle-class.) During my stint as a benefits consultant and later as a benefits (aka ERISA) attorney, I was privy to partial or complete wage information on various companies. The owners of one small, primarily local or regional business made $200,000 a year, whereas the least well-paid of their full-time employees made in the neighborhood of $18-20,000 a year. The cost of living in the area was low, so even the low wage might have been liveable, but $200,000 plus lots of vacation time to spend in leisure activities (skiing, IIRC) was well in excess of what was necessary to live the good life.

 

I realize that the owners bore the risks associated with establishing and maintaining the business and deserve to be rewarded for that, but so do the people doing the actual work and running the business day-to-day, which the owners left up to others. As I recall, the guy primarily responsible for making sure the business ran smoothly -- in effect, the COO, even though that wasn't his title -- made around $60-70,000 a year.

 

I once heard the former head of the NJ Department of Labor say that in his experience, Japanese companies had the best track record with respect to employees. (This also coincided with my experience, although I had US and German-based clients that were also great to their employees.) I wonder how much bearing the much smaller gap between executive pay and the average worker's pay in Japan compared to other developed economies has to do with that.

 

As a sidenote, it is not unheard of for top salespeople or top producers in other ways (I'm thinking of a client that was in the field of investment management and modeling that paid very generously for technical expertise) to make more than the CEO or owners.

 

http://www.businessweek.com/globalbiz/content/feb2009/gb20090210_949408.htm

[+ FreshFluff]

As a sidenote, it is not unheard of for top salespeople or top producers in other ways (I'm thinking of a client that was in the field of investment management and modeling that paid very generously for technical expertise) to make more than the CEO or owners.

 

Are you referring to quants (physics and math PhDs) at hedge funds? In most industries, the market makes sure that exceptional human capital is well compensated. Otherwise, the capital jumps ship and goes elsewhere.

[+ quoththeraven]

Are you referring to quants (physics and math PhDs) at hedge funds? In most industries, the market makes sure that exceptional human capital is well compensated. Otherwise, the capital jumps ship and goes elsewhere.

 

It was more mainstream than a hedge fund, and they were probably econ or math PhDs, but yes, essentially. I worked on an incentive plan for them. Ironically, one of the people in the covered group turned it down because it was tied to a non-compete agreement. At this point, I don't remember if the non-compete was actually the point. I think the employer wanted both (reward for performance and a non-compete).