CEO Who Took $1M Paycut To Give All Employees $70K Minimum Salary In 2015 Explains How It Affected The Company
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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
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CEOs and management shouldn't be allowed to make more than 10 times their lowest paid employee.
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. ~
sooo ur saying just cuz u work for amazon, u should make 10,000 dollars a day?
This comment has been deleted.
That's not true. His brother sued him after he made the decision to pay his employees a living wage. Undoubtedly, because his brother was a greedy coward who was afraid he was going to lose his own exorbitant profits.
This comment is hidden. Click here to view.
Good way to incentivize companies to automate and outsource all of the low-skill positions.
Robert Manning love
This comment is hidden. Click here to view.
If earning limits are forced on you, it wouldn't be as lucrative to put in the time, money and effort just to risk it all on an idea that may or may not work out.
This comment is hidden. Click here to view.
I disagree. So long as you are paying a generous wage, if you started the company... you put in all the risk and capital, then you definitely deserve the high wages. After all, without that risk, those people wouldnt have a job.
The risk ended when he started making big money. And there is no way he could do anything without his employees.
Up All Night easy
The risk isn't always as big as it sounds. If the company goes bankrupt, the person who started the company is usually not that much worse off than before, especially if they started off wealthy.
This comment is hidden. Click here to view.
Won't matter SirPatTheCat because commenter is apparently a copywriter at bored panda Twitter is @JonasGrin_BP
Ok I talked to bp and got them banned lol
Yeah looks like a troll? The people who work for bp all have tons of information on their account page and this person has none.
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...
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
I agree. Because once they started paying me more, I wanted to keep it that way so I worked harder.
I’m with you @Potato, but I started out in my last job working harder and trying to make the company better way before I got a 12% raise 9 months later.
This comment is hidden. Click here to view.
You have no teamwork or work ethic in you
This comment is hidden. Click here to view.
Maybe you should get some new skills and a new job where you're not a burden?
You're always so miserable. I'd pity you, but I have better things to do.
Idiot.
@John Smith and @KT I get more job done with my minimum effort than my colleagues who work full engine and make double of what I make. So keep those remarks to yourself if you don't know what you're talking about.
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.
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.)
Net worth for someone like Bezos is a bit misleading. It just means he owns many shares of stock in the company he started, and the stock price is driven up by other investors. Mainly, he's worth so much because OTHER greedy people are buying more and more stock, believing the stock will go even higher. Also, he can't actually cash it out at the current stock price - as soon as he starts selling a lot of shares, the stock price will go down.
This sounds truthy, but if he sold 1% of his stock, he'd have $2b *in cash* and it wouldn't make a difference to his position. His salary is about $80k, but he still manages to spend hundreds of millions of dollars on houses and toys, so that cash is coming from somwhere. If Amazon decided to buy back that stock (like lots of other companies have, thanks to deregulation and Trump's tax cuts) he'd realize and enormous boost. Plus, having that much value even just *on paper* confers an enormous amount of power on an individual, which is fundamentally anti-democratic. And having that much power in the market and owning that much of our vital infrastructure (AWS) is fundamentally anti-market.
This comment is hidden. Click here to view.
Capitalism drives all prosperity and fuels all socialistic impulses. There, fixed it for you.
CEOs and management shouldn't be allowed to make more than 10 times their lowest paid employee.
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. ~
sooo ur saying just cuz u work for amazon, u should make 10,000 dollars a day?
This comment has been deleted.
That's not true. His brother sued him after he made the decision to pay his employees a living wage. Undoubtedly, because his brother was a greedy coward who was afraid he was going to lose his own exorbitant profits.
This comment is hidden. Click here to view.
Good way to incentivize companies to automate and outsource all of the low-skill positions.
Robert Manning love
This comment is hidden. Click here to view.
If earning limits are forced on you, it wouldn't be as lucrative to put in the time, money and effort just to risk it all on an idea that may or may not work out.
This comment is hidden. Click here to view.
I disagree. So long as you are paying a generous wage, if you started the company... you put in all the risk and capital, then you definitely deserve the high wages. After all, without that risk, those people wouldnt have a job.
The risk ended when he started making big money. And there is no way he could do anything without his employees.
Up All Night easy
The risk isn't always as big as it sounds. If the company goes bankrupt, the person who started the company is usually not that much worse off than before, especially if they started off wealthy.
This comment is hidden. Click here to view.
Won't matter SirPatTheCat because commenter is apparently a copywriter at bored panda Twitter is @JonasGrin_BP
Ok I talked to bp and got them banned lol
Yeah looks like a troll? The people who work for bp all have tons of information on their account page and this person has none.
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...
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
I agree. Because once they started paying me more, I wanted to keep it that way so I worked harder.
I’m with you @Potato, but I started out in my last job working harder and trying to make the company better way before I got a 12% raise 9 months later.
This comment is hidden. Click here to view.
You have no teamwork or work ethic in you
This comment is hidden. Click here to view.
Maybe you should get some new skills and a new job where you're not a burden?
You're always so miserable. I'd pity you, but I have better things to do.
Idiot.
@John Smith and @KT I get more job done with my minimum effort than my colleagues who work full engine and make double of what I make. So keep those remarks to yourself if you don't know what you're talking about.
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.
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.)
Net worth for someone like Bezos is a bit misleading. It just means he owns many shares of stock in the company he started, and the stock price is driven up by other investors. Mainly, he's worth so much because OTHER greedy people are buying more and more stock, believing the stock will go even higher. Also, he can't actually cash it out at the current stock price - as soon as he starts selling a lot of shares, the stock price will go down.
This sounds truthy, but if he sold 1% of his stock, he'd have $2b *in cash* and it wouldn't make a difference to his position. His salary is about $80k, but he still manages to spend hundreds of millions of dollars on houses and toys, so that cash is coming from somwhere. If Amazon decided to buy back that stock (like lots of other companies have, thanks to deregulation and Trump's tax cuts) he'd realize and enormous boost. Plus, having that much value even just *on paper* confers an enormous amount of power on an individual, which is fundamentally anti-democratic. And having that much power in the market and owning that much of our vital infrastructure (AWS) is fundamentally anti-market.
This comment is hidden. Click here to view.
Capitalism drives all prosperity and fuels all socialistic impulses. There, fixed it for you.