The chief executive of a Seattle-based payment-processing company has pledged to cut his million-dollar salary in order to raise the pay of dozens of his employees.
Dan Price, the founder and CEO of Gravity Payments, said he will cut his own $1 million salary to bring the minimum wage of his 120 employees to at least $70,000 a year.
The move will boost the salaries of around 70 workers at the company, The New York Times reported. Currently, the average salary among workers at Gravity hovers around $48,000 a year.
Price said he was influence by a research paper authored five years ago by Angus Deaton and Daniel Kahneman. The pair found that a worker’s happiness generally increased as their salary rose, capping out at around $75,000 a year.
“The market rate for me as a CEO compared to a regular person is ridiculous,” Price told the Times. “It’s absurd.”
In addition to reducing his own pay, Price says he hopes to return 75 to 80 percent of the company’s profits to its employees in the form of the minimum pay hike. Gravity is expected to bring in $2.2 million in profit from its 12,000 business clients.
Gravity’s minimum wage hike will well-exceed that of the city it calls home. Last year, Seattle’s city council passed a comprehensive minimum wage increase that would require employers to pay their workers $11 an hour by the middle of this year, with the minimum pay eventually reaching $15 an hour by 2021. The law went into effect earlier this month.
“Everyone is talking about this $15 minimum wage in Seattle,” said Gravity communications coordinator Hayley Vogt. “It’s nice to work someplace where someone is actually doing something about it and not just talking about it.”
Price says he hopes to maintain the company’s minimum wage hike without charging more to his business clients or cutting back on services, the Times said.
Gravity’s minimum wage hike is part of a new trend of companies raising the rate of pay for its workers.
In February, retail giant Wal-Mart announced it would raise the minimum salary of its 500,000 part-time and full-time store associates to at least $9 an hour this month with another dollar increase by next February. Wal-Mart, the largest private employer in the country, said the move was expected to cost the company approximately $1 billion. In recent years, the company has faced the looming possibility of unionization by some of its more-critical associates.
Earlier this month, fast food mega-company McDonald’s announced it would order pay hikes for 90,000 of its employees, but only at restaurants the company owns outright. The decision meant hundreds of thousands of employees at 90 percent of its branded, franchised restaurants would not see the benefit of the pay increase, though the company is hopeful its move will influence franchise owners. McDonald’s, which boomed during the recession with its offering of cheaply priced food, has been struggling lately as consumers choose healthier, better-quality options served by competitors like Chipotle.
Other companies, including Target and TJX (which owns T.J. Maxx, Marshalls and HomeGoods), have followed Wal-Mart and McDonald’s leads, announcing pay increases of their own.
But few employees at Wal-Mart, McDonald’s and the other stores are celebrating the way they are at Gravity, primarily because the increase in wages comes with a sharp decrease in available hours. Shortly after Wal-Mart announced its pay hike last February, the Times published a story in which store associates praised the company for raising their base rate of pay, but said it was not enough because the company was slashing hours or not making enough working hours available.
Matthew Keys is a contributing journalist for TheBlot Magazine.