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CEO Who Took $1M Paycut To Give All Employees $70K Minimum Salary In 2015 Explains How It Affected The Company
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People, Social Issues1 year ago

CEO Who Took $1M Paycut To Give All Employees $70K Minimum Salary In 2015 Explains How It Affected The Company

You could say it all started when Dan Price was hiking with his friend Valerie in the Cascade mountains that tower over Seattle. As they walked, Valerie told Dan that her life was in chaos, that her landlord had increased her monthly rent by $200 and she was struggling to pay her bills. Dan got really angry. After all, Valerie — who he had once dated — had served for 11 years in the military, doing two tours in Iraq, and was now working 50 hours a week in two jobs.

“She is somebody for whom service, honor and hard work just defines who she is as a person,” he told BBC. Even though Valerie was earning around $40,000 a year, in Seattle that wasn’t enough to afford a decent home.

Dan, on the other hand, was a millionaire. He set up his company, Gravity Payments, in his teens, and it had about 2,000 customers and was estimated to be worth millions of dollars. He was earning $1.1M a year, but Valerie really made Dan realize that a lot of his staff might be struggling. So he set out to change that.

Image credits: danpriceseattle

While reading on happiness, Dan stumbled upon a paper, saying that additional income can make a significant difference in a person’s emotional well-being up to the point when they earn about $75,000 a year.

So, he increased the salaries for all of his 120 employees raising the minimum salary to $70,000 and slashed his $1 million salary by 90% in order to make it happen.

Many praised the brave decision, but it has had its fair share of doubters and haters as well. Recently, Dan shared a powerful message for all of them.

Image credits: DanPriceSeattle

Image credits: DanPriceSeattle

Image credits: DanPriceSeattle

Image credits: DanPriceSeattle

“People are starving or being laid off or being taken advantage of, so that somebody can have a penthouse at the top of a tower in New York with gold chairs,” Dan said. “We’re glorifying greed all the time as a society, in our culture. And, you know, the Forbes list is the worst example – ‘Bill Gates has passed Jeff Bezos as the richest man.’ Who cares!?”

The belief is that when employees are not preoccupied with the problem of how to make ends meet, they are more focused on their jobs, and happier because they work for a company that recognizes their value. And apparently it’s working.

It makes Dan very happy. “What I got back in return was better than anything I could have ever imagined, and was truly exciting and shocking in some ways,” he told the afore-criticized Forbes. “What I got back in return is, we went from instead of having zero first-time homeowners per year, now we have many first-time homeowners here at Gravity, and that is so exciting to me.”

Secondly, the rate for things like retirement, for people at Gravity, has also skyrocketed. But the absolute best thing for the CEO out of instituting the increased wage has been hearing about how they went from close to zero first-time parents every year at Gravity to about 20 babies born to families there each year.

“I can’t think of anything better that I could get in return out of it than that, and that’s the impact. That’s the legacy. Because, those babies, they carry with them almost infinite potential, solving some of the existential crises of humanity, curing cancer, solving things like global warming. You name it. Who knows what those babies are going to do, and probably I won’t be around to find out all the cascading effects that will come from that.”

His tweets sparked an important discussion on the way companies treat their employees

Image credits: DanPriceSeattle

Image credits: a_ecunningham

Image credits: DanPriceSeattle

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Image credits: DanPriceSeattle

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mph seti
Community Member
1 year ago

CEOs and management shouldn't be allowed to make more than 10 times their lowest paid employee.

Amazon QT
Community Member
1 year ago

Yes some CEOs have earned the extra wage above the regular employees, BUT IF IT WASN'T FOR THOSE EMPLOYEES, they wouldn’t be able to make that larger wage in the first place. Helping those that have helped them is an excellent way to show their employees that they value and care about them. ~ WIN-WIN in my eyes. ~

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troufaki13
Community Member
1 year ago

What employers fail to understand is that when you overpay your employees, they will overwork. When you underpay them, they will underwork. Keeping people happy in their work environment is what brings the sales up and the money coming in. But what do I know? I'm an underpaid employee who gives minimum effort at work...

Mary Ellen Johnson
Community Member
1 year ago

A decent salary and/or hourly wage is more than money in the bank. It say you are of valve. Without you my enterprise would not have successfully made it from paper to fruition. “The whole is greater than the sum of its parts,” ....it's called Teamwork

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CatWoman312
Community Member
1 year ago

Jeff Bezos will one day be worth a trillion dollars. I ask myself what the hell are going to need that much money for? You could have a nice house in every state and still be a billionaire. You could take a grand vacation to Maldives every summer and still be a billionaire. If greed had a face it would be Jeff Bezos. Companies like amazon would fire people and put them on the streets as long as Jeff Bezos stays a billionaire. Money isn’t going to follow you when you die. It’s disgusting to treat people this way. It’s clear you don’t value workers just the numbers they produce. Capitalism sucks.

Robert Manning
Community Member
1 year ago

Jeff Bezos owns 11% of Amazon. The next three largest investors are mutual fund companies - Vanguard, BlackRock, and Advisor Group. (If you have an S&P 500-tracking mutual fund in your 401k or IRA, 3% of that is Amazon.)

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mph seti
Community Member
1 year ago

CEOs and management shouldn't be allowed to make more than 10 times their lowest paid employee.

Amazon QT
Community Member
1 year ago

Yes some CEOs have earned the extra wage above the regular employees, BUT IF IT WASN'T FOR THOSE EMPLOYEES, they wouldn’t be able to make that larger wage in the first place. Helping those that have helped them is an excellent way to show their employees that they value and care about them. ~ WIN-WIN in my eyes. ~

Load More Replies...
troufaki13
Community Member
1 year ago

What employers fail to understand is that when you overpay your employees, they will overwork. When you underpay them, they will underwork. Keeping people happy in their work environment is what brings the sales up and the money coming in. But what do I know? I'm an underpaid employee who gives minimum effort at work...

Mary Ellen Johnson
Community Member
1 year ago

A decent salary and/or hourly wage is more than money in the bank. It say you are of valve. Without you my enterprise would not have successfully made it from paper to fruition. “The whole is greater than the sum of its parts,” ....it's called Teamwork

Load More Replies...
CatWoman312
Community Member
1 year ago

Jeff Bezos will one day be worth a trillion dollars. I ask myself what the hell are going to need that much money for? You could have a nice house in every state and still be a billionaire. You could take a grand vacation to Maldives every summer and still be a billionaire. If greed had a face it would be Jeff Bezos. Companies like amazon would fire people and put them on the streets as long as Jeff Bezos stays a billionaire. Money isn’t going to follow you when you die. It’s disgusting to treat people this way. It’s clear you don’t value workers just the numbers they produce. Capitalism sucks.

Robert Manning
Community Member
1 year ago

Jeff Bezos owns 11% of Amazon. The next three largest investors are mutual fund companies - Vanguard, BlackRock, and Advisor Group. (If you have an S&P 500-tracking mutual fund in your 401k or IRA, 3% of that is Amazon.)

Load More Replies...
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