CEO decides to take a cut in his $1 Million Salary to help the lowest paid workers get a hike in their salary
The lowest paid employees working for a company in Seattle to get a salary raise because their CEO decides to take a pay cut
In today’s world, where every individual is trying to strengthen his financial status, Dan Price, the founder and CEO of Gravity Payments in Seattle decided to took a pay cut of $930,000 in his salary three weeks ago.
The growing income disparity among people had been hovering on his mind for months. One afternoon, he had gone for a hike with a friend who explained her struggle of coping up with ever increasing rent prices. On listening to her suffering, Price realized that he wanted to do something for his own employees. It is as this instance that he decided to take a pay cut in his salary.
An average pay for employees in any company is $48,000. Price decided to increase the minimum salary at his 120-person payment processing company to $70,000. The move made by Price was first reported by The New York Times on Monday, which stated that this move affected 70 workers, 30 of whom saw their salaries double.
A majority amount for these raises are expected to come from Price’s pay cut; the salary which was $1 million per year is now $70,000. The remaining funds are expected to be earned from the company’s profits this year which is slated to be $2.2 million.
“There’s greater inequality today than there’s been since the Great Recession,” Price told The Huffington Post on Tuesday. “I’d been thinking about this stuff and just thought, ‘It’s time. I can’t go another day without doing something about this.’”
An ideal yardstick to achieve happiness was stated as $75,000 in a 2010 Princeton University study. The $70,000 figure is just below the above mentioned figure. According to a 2012 survey from the jobs site, CareerBuilder, about 28 percent of the Americans told that would feel a sense of achievement if they earn at most $70,000 per year,
The deduction in the pay package would not make a much of a difference to Price’s lifestyle. From the time his company, Gravity was founded in 2004, Price has saved a lot of the money earned. He said that he doesn’t plan to sell his 12-year-old Audi, which has clocked more than 140,000 miles and buy a new car. He also said that his new reduced salary would still allow him to buy bat tab for his friends once every month.
“There will be sacrifices,” said Price, 30. “But once the company’s profit is back to the $2.2 million level, my pay will go back. So that’s good motivation.”
On an average, a CEO In the U.S. earns more than 350 times than what the average worker does. Seattle, where a minimum wage of $15 is considered as one of the highest in the country has become a hub in the battle for higher wages. Seattle’s wealthy investor, Nick Hanauer, a self-styled champion for higher pay has issued a warning to his fellow billionaires that pitchfork-wielding mobs will follow them to their private jets if income inequality isn’t addressed.
Price looks at the pay raises as an investment rather than looking at it as an humanitarian offer to his workers. It has always been noticed that higher salaries stimulated workers attract more business and take care of the clients much better.
“This is a capitalist solution to a social problem,” Price said. “I think it pays for itself, I really do.”