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One Company’s New Minimum Wage: $70,000 a Year

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  • Apr 17th, 2015 2:33 pm
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Deal Fanatic
Sep 5, 2002
6630 posts
963 upvotes

One Company’s New Minimum Wage: $70,000 a Year

http://www.nytimes.com/2015/04/14/busin ... -year.html


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.

“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.”

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.

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9 replies
Deal Addict
User avatar
Feb 24, 2015
1032 posts
227 upvotes
Fort Mac, AB/Lambton…
Cool idea. He's probably made a bunch of money already and doesn't really care to make that much more. Realistically, though, he's being stupidly generous. At least when he started the thing, he was the one taking all the risk and, therefore, deserves a high rate of pay. Not everyone is greedy. He's probably a part of the 0.1% of the population who don't just want to keep more and more money.
Member
Mar 25, 2006
372 posts
57 upvotes
Victoria
Sounds good on the surface......I'm also guessing he has no investors!
Sr. Member
User avatar
Oct 27, 2006
835 posts
69 upvotes
Toronto
Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ~$75,000. Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.
Newbie
Jan 29, 2007
68 posts
8 upvotes
What happens when the lowest-paid clerk gets terminated, the company goes under or for whatever reason has to seek new employment with the same skill set?

One would hope if they're making 35k they'd save 15-20k and enjoy an extra 15k per year (before tax generalizations)... but they won't realistically.

It's a lovely idea, but paying people far more than they're worth relatively is a recipe for disaster.

DUCA upped their minimum wage to 16.60... far better idea. Equalizing pay structure like this makes someone who deserved to be making 80 and who stays relatively close to that because this inflation cannot be applied unilaterally will cause immense resentment.
Jr. Member
Oct 7, 2013
162 posts
62 upvotes
Westmount
wonder what happens to those who already made over 70K in the company? I doubt they get a significant raise
Deal Fanatic
User avatar
Oct 9, 2008
5684 posts
2249 upvotes
Thornhill
The devil is in the details...

"Kahneman also said he really can’t comment on Price’s grand experiment which calls for everyone in the 120 person credit card payment company to earn a minimum of $70,000 by December, 2017. However, he doubted the CEO’s gesture will catch on in a big way."

https://gma.yahoo.com/thinking-behind-g ... ealth.html

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Some simple financial gleaming, at proposed minimum salary of $70k/employee, there are as of the article - 120 employees at the company (I'm assuming fulltime). With assumption of all 120 employees earnings just the minimum proposed salary @ $70k annual overhead just in salary would be at MINIMUM $8,400,000.

Information from the link below shows that this company's 2013 revenue was $13.1M in total. The conservative salary overhead of the company alone would be 44% of the company's total 2013 revenue, not including all other overhead...

http://www.inc.com/profile/gravity-payments

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Though anything is possible if the company continues their growth until 2017, but in reality I think this is just free publicity for the company.
Member
Jun 17, 2009
491 posts
34 upvotes
Vancouver
Sign me up!

How would those already making $70k feel?

For those clerks making $35k to jump to the same salary of $70k, does that mean those making $70k also get $35k increase to $105k?
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Deal Expert
Aug 22, 2011
37045 posts
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Center of Universe
pchi wrote: Sign me up!

How would those already making $70k feel?

For those clerks making $35k to jump to the same salary of $70k, does that mean those making $70k also get $35k increase to $105k?
The minimum starting salary will be $70K.
Deal Guru
User avatar
Dec 7, 2009
13885 posts
1360 upvotes
pchi wrote: Sign me up!

How would those already making $70k feel?
Happy I'm sure that others are also doing well in the company. Do you value yourself by how much you get paid and what purchasing power that gives you, or how much you're being paid in relation to your coworkers?

Your $70k isn't worth less just because the mailroom guy is also getting $70k. Just be happy for other people.
In a perfect system, corporations would fear the government and the government would fear the people. - David Wong

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