Imagine going in to work one day to hear that your boss was going to double your salary and significantly increase the salaries of all your co-workers?
This became a reality for 120 employees at Gravity Payments – a credit-card payment processing company from Seattle.
CEO entrepreneur Dan Price decided to make this radical decision after viewing research which showed that additional money makes a positive mark on the emotional wellbeing of people who earn less than $70,000 per annum, but not necessarily for those who earn more.
Reflecting upon his own wage of almost $1 million, he decided to spread profits evenly amongst his workforce - lowering his own salary to $70,000 and raising the salary of even the lowest paid workers to $70,000pa over the next three years. This leap of faith is the first decision of its kind in the business world.
In the USA, the average annual salary for a CEO was $15.2 million in 2013, up by 21.7% since 2010. As a result, the average ratio of CEO to worker payment was 295 to 1.
Equality of pay is a widely talked about issue. Amongst recent talks of changes to the minimum wage across the United States, this story stands out as a bold move towards workplace equality. This is an encouraging policy, as it breaks the link between employee pay and employee worth (to a company).
Mr Price is a self-proclaimed capitalist, but he believes that the market does not have to determine his monetary advantages. With hope, this can inspire other companies to follow his business model, understanding the perks of content employees and the needlessness of excessive pay cheques in comparison.
Economic Policy Institute (2014, June 12) CEO Pay Continues to Rise as Typical Workers are Paid Less
New York Times (2015, April 13) One Company’s New Minimum Wage: $70,000 a Year
Guardian (2015, April 15) Fight for $15 swells into largest protest by low-wage workers in US history