Company boss Dan Price cut his own million dollar salary to pay his employees $ 70,000 a year.
Six years later, his company is more successful than ever - and critics are silent.
Seattle, USA - In 2015, Dan Price, the CEO and founder of credit card payment company Gravity Payments, set a minimum salary of $ 70,000 in his company.
For many employees, that meant doubling their salaries.
He himself accepted a million-dollar cut in his income and sold his second home - his annual salary is now also at 70,000 US dollars.
Critics predicted an imminent bankruptcy, but six years later the company is more successful than ever.
That inspired company boss Dan Price for a minimum salary of $ 70,000
Dan Price is said to have got the idea for his radical step while reading an article on the subject of "happiness": For people who earn less than 70,000 US dollars, every extra dollar makes a big difference, it said.
Dan Price also found out that one of his employees was secretly working at McDonalds to make ends meet.
The CEO of Gravity Payments, for example, had a rethink in 2015 - and the employees received a salary increase.
The boss himself cut his own salary by $ 1.1 million.
At that time, critics predicted the downfall of the company, he was described as a “madman” and a “socialist”.
"I hope that this company becomes a case study in MBA programs, [...] because it will fail," said right-wing moderator Rush Limbaugh in 2015.
Critics refuted: Employee loyalty ensures stable finances
Today there is positive news to report at Gravity Payments.
Especially when it comes to employee loyalty: the fluctuation rate is now only half as high as it was six years ago.
“When employees stay twice as long, their knowledge of how to help our customers goes through the roof,” Dan Price told
Independent
.
The number of employees has doubled since 2015 and sales are three times as high today, the company boss told
CBS News
.
And that although the corona crisis hit the company hard. But the loyalty of the employees helped Gravity Payments survive: During the crisis, employees voluntarily waived part of their salaries in order to support the company. The employees then earned 40,000 US dollars. But now her income is as high as before - and not only that: "Gravity Payments has paid us back everything that we voluntarily waived during the crisis," explains one employee.
“My employees did more for me than I could ever do for them,” says Dan Price humbly.
His employees recently pooled money to buy their boss his dream car: a Tesla.
Not only his employees seem to be satisfied, the increase in salary was also the right decision for the CEO himself: "I'm much happier now than before," says Dan Price.
CEOs in the US earn an average of 320 times as much as employees
The average salary in the US in 2019 was around $ 51,915, but the median was only $ 34,248. A CEO in the USA earns an average of 320 times as much as his employees, as a study by the Economic Policy Institute shows - so the differences are large. Although the example of Gravity Payments seems promising, none of the large US companies have followed suit. In Germany, too, employee loyalty could counteract the shortage of skilled workers.
However, there was a wage increase at Amazon in 2018. The online retailer has been criticized several times for its precarious working conditions. In 2018, the shipping giant surprisingly announced that it would raise the minimum wage to $ 15. The legal minimum wage in the United States at the time was $ 7.25. At the same time, Amazon boss Jeff Bezos rose to become the richest person in the world for the first time in the same year. The median annual earnings at Amazon is $ 28,446, for which Jeff Bezos has to work less than a minute.
