The pay gap between C-Suite management and their employees has always been large, but it definitely seems to be expanding lately.
Which is probably why the actions of Dan Price seem both crazy and really refreshing.
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In 2015, Price made international news by cutting his own salary while simultaneously raising his employees’ wages.
His company, Seattle-based Gravity Payments, provides payment processing solutions to small- and mid-sized businesses.
Business was going well, but while Price’s CEO salary was $1 million dollars per year, his employees were making as little as $30,000 per year.
After reading about the science of happiness, Price decided to slice his own salary to $70,000 and raise his employees’ to match.
Other managers in the business also took pay cuts, with the savings funnelled to the other 120 employees.
People thought he was crazy and said that his business was doomed, but four years later Gravity Payments is stronger than ever.
So strong, that they purchased ChargeItPro, a small Boise, Idaho-based competitor.
As the former ChargeItPro employees moved into their new Gravity Payments office, Price flew in for the ribbon-cutting ceremony.
But he had another surprise for his newest employees.
Effective immediately, all of the new employees would receive a raise to $40,000.
In addition, annual raises over the next five years will bring them all to the $70,000 wage.
This is a huge windfall for the employees, the majority of whom were making less than $30,000 per year.
The staggered increases will help the new office grow without risking jobs.
Price told the Idaho Statesman that this first round of raises basically used all of the former ChargeItPro’s annual profits.
“But it just seemed like a more pressing thing for us to pay as close to a livable wage as possible,” he said.
If the results of his first experiment in higher wages are anything to go by, there’s nothing to worry about.
The number of payments processed by employees per year has more than doubled in four years and only shows signs of increasing.
Meanwhile, the lives of those Seattle employees have changed in incredible ways. According to Price, a third of them have become debt-free, two-thirds have made a significant dent in paying their debts, and the number of employees with retirement saving accounts has tripled.
h/t: CNN , Idaho Statesman
