Nearly 1/2 of the employees will see their salaries double at this privately owned company, The CEO is only 30 and was taking in a million a year in salary but cut his salary to $70,000 to give the 100+ employees a better pay.....could it be a media stunt due to how many people today are protesting $15 an hour minimum wages??? Could also be a way to draw more attention to his business and get more customers, should be interesting to see how this story plays out over the next few months.... $70,000/52 weeks = thats $1346 a week/40 hour work week, thats about $33.00 an hour, take out about 28% for taxes, coming out to an approx $24.00 an hour, so after taxes thats about $960.00 a week....$50,000 a year after taxes... not bad for a customer representative, I know people with degrees not even making $70,000 a year. Thats a very nice salary for a customer representative take phone calls, especially if you are young with no overhead like mortgage and utility bills you can live extremely comfortable on that amount of money.... Owner of a Credit Card Processor Is Setting a New Minimum Wage: $70,000 a Year Patricia Cohen 1 Hour AgoThe New York Times 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. (Tweet This) "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." Ryan Williams | The New York Times Employees at Gravity Payments in Seattle, April 13, 2015. 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. The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 year. Mr. Price's small, privately owned company is by no means a bellwether, but his unusual proposal does speak to an economic issue that has captured national attention: The disparity between the soaring pay of chief executives and that of their employees. The United States has one of the world's largest pay gaps, with chief executives earning nearly 300 times what the average worker makes, according to some economists' estimates. That is much higher than the 20-to-1 ratio recommended by Gilded Age magnates like J. Pierpont Morgan and the 20th century management visionary Peter Drucker. "The market rate for me as a C.E.O. compared to a regular person is ridiculous, it's absurd," said Mr. Price, who said his main extravagances were snowboarding and picking up the bar bill. He drives a 12-year-old Audi, which he received in a barter for service from the local dealer. Read MoreWith a $10 minimum wage, Wal-Mart would beat all states "As much as I'm a capitalist, there is nothing in the market that is making me do it," he said, referring to paying wages that make it possible for his employees to go after the American dream, buy a house and pay for their children's education. Under a financial overhaul passed by Congress in 2010, the Securities and Exchange Commission was supposed to require all publicly held companies to disclose the ratio of C.E.O. pay to the median pay of all other employees, but it has so far failed to put it in effect. Corporate executives have vigorously opposed the idea, complaining it would be cumbersome and costly to implement. Mr. Price started the company, which processed $6.5 billion in transactions for more than 12,000 businesses last year, in his dorm room at Seattle Pacific University with seed money from his older brother. The idea struck him a few years earlier when he was playing in a rock band at a local coffee shop. The owner started having trouble with the company that was processing credit card payments and felt ground down by the large fees charged. When Mr. Price looked into it for her, he realized he could do it more cheaply and efficiently with better customer service. The entrepreneurial spirit was omnipresent where he grew up in rural southwestern Idaho, where his family lived 30 miles from the closest grocery store and he was home-schooled until the age of 12. When one of Mr. Price's four brothers started a make-your-own baseball card business, 9-year-old Dan went on a local radio station to make a pitch: "Hi. I'm Dan Price. I'd like to tell you about my brother's business, Personality Plus." His father, Ron Price, is a consultant and motivational speaker who has written his own book on business leadership. Dan Price came close to closing up shop himself in 2008 when the recession sent two of his biggest clients into bankruptcy, eliminating 20 percent of his revenue in the space of two weeks. He said the firm managed to struggle through without layoffs or raising prices. His staff, most of them young, stuck with him. Read MorePaying less than $16 per hour not fair: Aetna CEO Mr. Price said he wasn't seeking to score political points with his plan. From his friends, he heard stories of how tough it was to make ends meet even on salaries that were still well-above the federal minimum of $7.25 an hour. "They were walking me through the math of making 40 grand a year," he said, then describing a surprise rent increase or nagging credit card debt. "I hear that every single week," he added. "That just eats at me inside." Mr. Price said he wanted to do something to address the issue of inequality, although his proposal "made me really nervous" because he wanted to do it without raising prices for his customers or cutting back on service. Of all the social issues that he felt he was in a position to do something about as a business leader, "that one seemed like a more worthy issue to go after." Read MoreSeattle phases in $15 minimum wage amid US pay debate He said he planned to keep his own salary low until the company earned back the profit it had before the new wage scale went into effect. Hayley Vogt, a 24-year-old communications coordinator at Gravity who earns $45,000, said, "I'm completely blown away right now." She said she has worried about covering rent increases and a recent emergency room bill. "Everyone is talking about this $15 minimum wage in Seattle and it's nice to work someplace where someone is actually doing something about it and not just talking about it," she said. The happiness research behind Mr. Price's announcement on Monday came from Angus Deaton and Daniel Kahneman, a Nobel Prize-winning psychologist. They found that what they called emotional well-being — defined as "the emotional quality of an individual's everyday experience, the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant" — rises with income, but only to a point. And that point turns out to be about $75,000 a year. Of course, money above that level brings pleasures — there's no denying the delights of a Caribbean cruise or a pair of diamond earrings — but no further gains on the emotional well-being scale. As Mr. Kahneman has explained it, income above the threshold doesn't buy happiness, but a lack of money can deprive you of it. Phillip Akhavan, 29, earns $43,000 working on the company's merchant relations team. "My jaw just dropped," he said. "This is going to make a difference to everyone around me." At that moment, no Princeton researchers were needed to figure out he was feeling very happy.
Or a way to draw attention and get more competitors, who now know they can undercut Price's company on pricing by hiring employees willing to work for 45k, passing the savings to the customers.
perhaps, but I think it is an excellent idea. But my guess is anything that can be contracted out will be to escape the 70k min. For instance, the janitor has to be worrying about how long his job will last. If you look at some of these big corps where the CEO makes 20 million a year, spreading that 20 million up among all employees wouldn't make a can of beans difference. Sounds like this guy is right in that sweet spot. He already has all the money he needs and can make a great difference in the quality of his employees life.
made it to the front page of yahoo today... https://gma.yahoo.com/ceo-live-70-0...ife-013106577--abc-news-personal-finance.html 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. "My salary wasn't $1 million because I need that much to live, but that's what it would cost to replace me as a CEO," Price told ABC News. "I think CEO pay is way out of whack. It ended up impacting me, because I want the company to be sustainable even if something happens to me. Temporarily, I’m going down to the minimum until the company gets back to where it was." Price started the company in 2004 when he was only 19 years old, and when he said the cost of living in Seattle was much lower than it is today. When asked what life will be like for him at a lower pay, he said, "I haven’t even thought about that at all, too much. My life started pretty simple, in a lot of ways. I don’t have a lot of financial obligations or debts." Price grew up in rural southwestern Idaho with four brothers and later studied music at the Christian Seattle Pacific University. When Gravity launched, the company paid $24,000 per year even for senior positions. Price said he was paid less than that for the first five years in business. View gallery Gravity Payments CEO Will Live on $70,000 Worker Wage, Thinks His Life Will Be Luxe Enough (ABC News … Today, the company, which pays an average salary of $48,000, has 120 employees -- and 70 of their paychecks will grow with this plan. Of those, 30 will double their salaries, Price said. "I may have to scale back a little bit, but nothing I’m not willing to do. I’m single. I just have a dog," Price said. He owns a three-bedroom home, where he likes to host guests and is admittedly "a nice place for sure," he said. He's been driving the same car for the last 12 years: an Audi that he bartered for at a local car dealership in return for credit card processing from his company --- "so, basically, for free," he said. Price chose the $70,000 figure based on a 2010 Princeton University study that showed happiness is positively impacted up to $70,000 or $75,000 per year; but increases above that figure did not have a significant positive effect on happiness. He said his friends include the super-rich, who invite him on their private planes and expensive yachts. "I have an incredibly luxurious life, for some reason, but I don’t end up paying for a lot of it," he said. He also has friends who earn $40,000 a year. Hearing of their difficulties and those of others struggling to make ends meet inspired him to make a dent in the country's growing income inequality. Plus, after all, he said, he'll live comfortably at $70,000. "I’m a big believer in less: The more you have, sometimes the more complicated your life gets," he said.
redistribution of wealth? glorified union? Is it all his money that is going to the lower paid employees? How do the other employees who are not getting this huge salary bump feel?
it's a private company. He has no obligation to any shareholders. He has more money than he needs, and more will make little difference to him. However, more means a lot to his employees. So, for this enlightened individual, the question of course is always how to make more, but also how to pay the employees more.
yeah, I'd be really pissed if someone who was making less than me started making exactly what I make. Imagine, I started at 24k and after 4 years worked my way up to 70k, and then the boss just decides everybody gets 70k! It's not fair I tell ya!!