Meet Dan Price: the CEO we all wish we worked for. In 2015, the 30-something, long-haired co-founder of Gravitas Payments took a $1 million salary cut in order for his employees to earn more. Remortgaging his home and relinquishing all stocks, he ensured all 135 employees at his digital payment start-up could enjoy a minimum yearly salary of $70,000 (£55,000). Five years on and they’ve gone from strength to strength.
It all started when an employee voiced concerns that they weren’t earning enough. She argued that in pricy Seattle, where the cost of living has shot past that of London, even a seemingly substantial $40,000 wage still didn’t go very far. It certainly wasn’t enough to think about home ownership, and even renting was made difficult. At 31, and already a millionaire, Price was at the other end of the scale. It seems the complaint really struck a chord and he decided to do something about it.
Price went away and studied economic theory to discover how much money the average American needs to be happy. Before long a minimum annual wage of $70,000 was introduced, and for a third of his workforce, this meant doubling their wages.
Since the announcement, the headcount has doubled and the amount of money that Gravity Payments processes has tripled. The belief is that with employees no longer preoccupied with the problem of how to make ends meet, they’re more focused on their jobs; happier because they work for a company that recognises their value.
Price says that more employees are buying homes and starting families as a result of greater financial freedom. “Before the $70,000 minimum wage, we were having between zero and two babies born per year amongst the team,” he says. “And since the announcement – and it’s been only about five-and-a-half years – we’ve had more than 40 babies.” (www.theguardian.com/business//2020/mar/04/dan-price)
In one of the US’s most expensive cities for renters, more than 10% of the company have been able to buy their own home. Before, the figure was less than 1%. The amount of money that employees are voluntarily putting into their own pension funds has more than doubled too, and 70% of employees say they’ve paid off debt.
But it hasn’t stopped there. Since then, Mr. Price has become a crusader against pay inequality in the workforce. He pointed out that in 1965, CEOs in the US earned 20 times more than the average worker, but by 2015 it had risen to 300 times that. (In the UK, the bosses of FTSE 100 companies now earn 117 times the salary of their average worker).
Rosita Barlow, director of sales at Gravity, says that since salaries were raised, junior colleagues have been pulling more weight. Industry experts predicted the opposite. “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,” she says.
Senior staff have found their workload reduced too. Under less pressure, they’re finally enjoying taking the holiday leave to which they are entitled. “We saw the effects of giving somebody freedom,” Price says. He thinks it is why Gravity is making more money than ever.
Price had hoped that Gravity’s example would lead to far-reaching changes in US business, but things haven’t gone quite as well on that front.
While some companies like PharmaLogics in Boston and Rented.com in Atlanta raised their minimum salary significantly, widespread, structural change hasn’t followed. He believes that his lobbying helped influence Amazon’s decisions to raise their minimum wage, but elsewhere progress is minimal.
“Boy, was I wrong,” he says. “I really believed that we could turn the tide on runaway income inequality.”
“I can’t really fully declare our story a success, because in the five years since we’ve implemented our living wage program, income inequality, wealth inequality and just the disparity of power between the wealthiest and the most powerful and everybody else has continued to grow in an alarming way.” (https://www.inc.com/company-70k-minimum-wage.html)
As the wealth gap continues to widen across the globe, it goes to show that there’s still people bucking the trend and championing financial parity for those around them.
