A lot of people thought that the city of Seattle was absolutely nuts to push forward with a $15 minimum wage hike. The idea was truly unprecedented, but has since been copied by other cities, most notably San Francisco. While the arguments both for and against the minimum wage bump were persuasive in their own way, in the end, a plan was developed and set in motion and is currently in the first stage of implementation.
For those who thought $15 was way too much for a starting wage, one Seattle-based company’s decision will blow your freaking mind with what they’re offering. Gravity Payments, a credit card processing firm, has decided to set its minimum pay at an incredible $70,000, per The New York Times.
Perhaps the most impressive thing about the change is how it came about. The New York Times says that the company’s founder Dan Price reportedly read an article discussing the relationship between earnings and happiness, and realized that $70,000 seemed to be a magic number that propelled people to greater levels of personal satisfaction. So, he made the change, and in the process, is taking a monstrous pay cut to make up the difference.
The change will impact around 70 of the company’s 140 or so employees, where the average salary is $48,000, and will double the salaries of many. Naturally, the company’s employees were shocked, and many other companies are probably wondering just what the hell Price was thinking.
“As much as I’m a capitalist, there is nothing in the market that is making me do it,” Price told The New York Times. “The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd.”
You’re probably wondering just what Price read that made him decide to give up a huge chunk of his nearly $1 million salary to give his lowest-paid employees a raise. It’s called High Income Improves Evaluation of Life but not Emotional Well-Being, and basically explores how emotional health correlates to given income levels. The study’s authors find that emotional well-being tends to rise as income rises, but only until earnings hit the $75,000 mark.
With that realization in hand, Price set about making huge changes to his own company.
While Price can probably count on a huge influx of resumes from prospective employees, it’s hard to say what exactly will happen as a result of his minimum wage decision. Gravity Payments is located in Seattle, where he already faces stiff competition for talent from the likes of Amazon, Microsoft, and a slew of others that already pay their employees quite well. It may not lead to a diaspora of talent, although working for Price now might look like an awesome opportunity.
As far as his business, it’ll be interesting to see how the structure of Gravity Payments holds up as Price’s plan is put into place. For example, will the company’s functions on the lower end of the pay scale be automated, or even outsourced? Will Price end up taking huge bonuses to make up for what he gave up in salary? Also, it’s fair to wonder if any of the extra wage bumps will work their way down to the subcontractors Gravity uses, if any.
It’s definitely exciting and inspiring to see a young CEO make such a generous move, but there are, of course, those questioning his motives. While it does seem that Price is sincerely concerned about the financial security of his employees, some are wondering if this isn’t some sort of big PR stunt to garner his company some attention. Either way, it appears that Price is pushing ahead with the idea. Even if he does end up giving himself extravagant bonuses, 30 of his employees still saw their salaries double, so they probably wouldn’t be too critical of him.
Oh, and in case you’re wondering, Gravity Payments does have some job openings, for support and sales representatives. You’d better get those resumes in as soon as possible, though.
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