The CEO of company in Seattle who introduced a $70,000 minimum salary for all of his staff in 2015—and personally took a 90% pay cut—says the gamble has paid off in so many ways.
CEO Who Raised staff minimum wage to $70k sees Business triple
The CEO who took a massive $1 million (€844,800) pay cut so he could pay his staff more money says business has tripled since, reported Lad Bible today.
Dan Price, who runs Seattle-based Gravity Payments, cut his own wages by 90% so his employees could enjoy a $70,000 (€59,000) minimum salary. He says that since making the decision in 2015 he’s seen his company flourish, with business trebling, staff turnover dropping by half and his employees living better lives.
Posting on Twitter, Price wrote: "When I started a $70k minimum wage for my company in 2015 Rush Limbaugh [a US political commentator] said: ‘I hope this company is a case study in MBA programs on how socialism does not work, because it’s gonna fail’.
"Since then our company tripled and we’re a successful case study at Harvard Business School."
Wide ranging benefits to a higher minimum wage
Price’s Twitter post then went on to document all the ways that not only has his business improved, but also the lives of his employees, saying that the amount that are home owners had increased 10 times; 70% had been able to pay off debts; the number of employees who had kids also increased 10 times; and staff are 76% ‘engaged at work’ – double the national average.
Speaking to the BBC earlier this year, Price said: "There was a little bit of concern amongst pontificators out there that people would squander any gains that they would have. And we’ve really seen the opposite."
He added: "Before the $70,000 minimum wage, we were having between zero and two babies born per year amongst the team. And since the announcement – and it’s been only about four and a half years – we’ve had more than 40 babies."
While employee Rosita Barlow, director of sales at Gravity, told the BBC: "When money is not at the forefront of your mind when you’re doing your job, it allows you to be more passionate about what motivates you."
Adding: "You’re not thinking I have to go to work because I have to make money. Now it’s become focused on ‘How do I do good work?’"
Realising he was part of the problem, Price took action
It all started in 2015 when business owner Dan Price spoke with his friend Valerie about her money troubles.
Despite earning $40,000 (€33,764) a year, in Seattle where they reside it just wasn’t enough for her to cover rent and bills. At 31, Price was at the other end of the scale – his company, Gravity Payments, earned him $1.1 million (€928,500) a year.
Realising that he was part of the problem, Price decided to take action and, after going through the numbers, figured out that each of his 120 staff members should be paid at least $70,000 if they’re to live comfortably in the city.
To ensure a fair pay scale across the board, Price sacrificed a significant chunk of his salary, mortgaging his two houses and giving up any stocks and savings.
He maintained his promise, immediately doubling the salaries of a third of those who worked at the company and increasing others to ensure parity across the board.
The businessman received some flak for his decision, including some of Gravity’s own customers who saw it as a political statement. He was even called a ‘communist’ by right-wing radio personality, Rush Limbaugh.
However, Price has no regrets and the company is reaping the benefits.
So what do employees think of their boss, who is still on minimum wage five years later?
A group of employees became sick of watching their boss turn up at work in a 12-year-old Audi and secretly clubbed together to buy him a Tesla. A film the company posted on YouTube follows one of the group, Alyssa O’Neal, as she schemes with her colleagues to surprise him with the car.
"I feel like this is the ultimate way to say thank you for all the sacrifices he’s made and any of the negative stuff he’s had to deal with," she says.
Price then walks out of the office into the car park, sees the car, and starts crying.
Five years later, Price is still on Gravity’s minimum salary. He says he’s more fulfilled than he ever was when he was earning millions though it’s not all easy. "There’s tests every day," he says.
"I’m the same age as Mark Zuckerberg and I have dark moments where I think, ‘I want to be just as rich as Mark Zuckerberg and I want to compete with him to be on the Forbes list. And I want to be on the cover of Time magazine, making lots of money.’ All these greedy things are tempting."
"It’s not like it’s easy to just turn down. But my life is so much better."
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