Back in April Dan Price, the CEO of a Seattle-based credit card processing company called Gravity, made headlines when he decided to pay all of his employees $70K a year. It seems Price took to heart a study that found if your income is $70K a year you’ll have all you need to be happy. Anything less causes stress, while anything more is just icing on the cake and doesn’t make you happier. So Dan Price, realizing lot of his own employees earned considerably less, reduced his own 1 million dollar yearly salary and gave everyone else in the company a raise to $70K.
So how is Gravity doing? Gravity is expanding at a rapid pace. That’s good, right? Well, yes and no according to last week’s story in the New York Times. Some clients, who viewed his announcement as a political statement, and others, who anticipated an increase in fees, withdrew their business. But, these few were replaced by dozens of new clients who were inspired by Price’s announcement. However, all these new clients required hiring new employees at the higher salary to manage accounts that won’t start paying off for over a year. But perhaps the worst blow of all came early on when less than two weeks after the announcement Price’s older brother and Gravity co-founder, Lucas Price, filed a lawsuit that potentially threatened the company’s very existence.
It’s a fascinating story, especially the reaction from the employees over the equalization of everyone’s pay. You can check out the entire story.” A Company Copes With Backlash Against the Raise That Roared” here.
Although Price has said he wasn’t thinking about the current clamor over low wages or the growing gap between rich and poor, only about the 120 people who worked for him. He’s certainly made a point and sparked discussion in a country where CEO’s make much more than anywhere else. And while this may not have been a point Price was trying to make, it is extremely valid . “U.S. CEOs earn from 400 to 500 times the median salary for workers. For CEOs in the U.K., the ratio is 22; in France, it’s 15; and in Germany it’s 12.”
Nick Hanauer, a Seattle venture capitalist and an early promoter of Seattle’s $15 minimum wage law had this to say: “These individual acts can create a new kind of perception of what’s possible and what’s righteous. After all two years ago, no one would ever have guessed higher minimum wage laws would be catching fire in cities around the country. Who can tell what that last thing is that catalyzes big change?”