We often hear tales of corporate greed in the news. Many big-time CEOs make millions or even billions of dollars a year while their employees — especially lower-level employees — barely make enough to get by. This financial stress can affect the workers, of course, but it can also hurt the company, leading to lower productivity and higher turnover rates.
A few years ago, the CEO of Gravity Payments, Dan Price, decided to do things differently. He learned that a friend of his, a military veteran, was living on a $40k salary in Seattle and struggling to deal with a $200 rent increase from her landlord. Dan, on the other hand, was earning $1.1 million, and the disparity made him realize that his own employees may be experiencing some of the same frustrations and fears.
Dan made headlines in 2015 when he decided to cut his own salary by $1 million to set a $70k minimum wage for his 120 employees. The decision was polarizing, with many people praising his sacrifice and many others ridiculing or criticizing him for it. Years later, though, Dan is happy to report that his choice has helped both his employees and his company as a whole, and he’s speaking up about the benefits of treating your employees like people.
Dan saw substantial improvements in his staff, both in their quality of life and their performance at work.
Since my company started a $70k min wage in 2015:— Dan Price (@DanPriceSeattle) August 23, 2020
*Our business tripled
*Staff who own homes grew 10x
*401(k) contributions doubled
*70% of employees paid off debt
*Staff having kids soared 10x
*Turnover dropped in half
*76% of staff are engaged at work, 2x the national average
Dan has also been actively responding to people who have questions or comments about his choice.
absolutely. Our internal surveys show the level of employee stress has gone way down since the pay bump, and they've been able to buy more homes, have kids, pay off debt, etc. When someone can actually focus on work without outside stresses, the company also benefits.— Dan Price (@DanPriceSeattle) August 22, 2020
Dan is currently taking a $0 salary due to the pandemic, and he reiterates that the $70k is the minimum salary for his employees. He doesn’t hold back in paying them what they’re worth.
a lot of people think we pay everyone the same because we have a $70k minimum wage. Key word there is minimum. Only myself and a few new employees make $70k now (although I'm taking $0 salary during the pandemic). Our company median wage is now closer to $100k.— Dan Price (@DanPriceSeattle) August 22, 2020
While Dan’s story is one of success and gained a lot of media attention, he points out that few, if any companies followed his lead.
the problem is Amazon doesn't have this mentality, and neither do any of their peers. It's been 5.5 years since we started the $70k min wage, my story has been out there a ton – and virtually 0 companies followed suit. Most just dismissively pat me on the back & say "that's nice"— Dan Price (@DanPriceSeattle) August 22, 2020
Lots people are saying this proves capitalism and the free market work— Dan Price (@DanPriceSeattle) August 24, 2020
I think it's the opposite
People point to me as a novelty. I stand out for a reason: Virtually no one followed suit
Relying on benevolent CEOs is a recipe for exploitation of workershttps://t.co/VMZgplGFKW
Overall, it seems like this risky move had a big payoff for everyone involved. Hopefully, Dan’s story can convince more wealthy CEOs to give more to the people who’ve made their business so successful.
this part gets lost so often. Yes, paying your employees more costs more. But recruiting and training costs for losing people are also high, and the loss of institutional knowledge when employees leave is incalculable— Dan Price (@DanPriceSeattle) August 23, 2020