Minimum pay of $70,000 good for business, CEO finds
A CEO's offer to provide a minimum wage of $70,000 to all his employees has brought about both approval and debate. But regardless of what one thinks of the idea, it appears to be great for the Seattle company's bottom line.
Gravity Payments chief executive Dan Price told CNN Money that his generous salary plan has resulted in the best week for new business since he founded his company 11 years earlier, thanks to dozens of new clients. On top of that, the credit-card processor has received more than 3,500 applications for its current two job openings. Typically the company receives 300 to 400 applications for a job posting.
"I'm actually shocked by the reaction from businesses," Price told the publication. "It has me on cloud 9."
The plan to boost minimum pay to $70,000 represents a 46 percent jump from the company's current annual average salary of $48,000. To help pay for the boost, Price plans to cut his own $1 million salary to $70,000, with the founder calling current CEO pay packages "absurd." The idea of hiking his employees' salaries came after he read an academic article on how increases in income for people who earn less than $70,000 can help improve their happiness.
While Price is cutting his own pay, most chief executives are continuing to see hefty compensation hikes. CEO pay rose more quickly in 2014 than in other recent years, with median compensation rising 6.9 percent to $12.2 million, according to The Wall Street Journal.
Meanwhile, American workers have been suffering from stagnating and, in some cases, declining wages. According to Pew Research, today's average hourly wage has the same purchasing power as it did in 1979, after adjusting for inflation. Most gains have gone to the upper income brackets, while the lowest paid workers have seen weekly wages decline in real terms.
With additional business coming in, Price said he may end up hiring more employees.
While many applauded Price's decision to raise his workers' pay and cut his own, some critics were less than complementary. The conservative think-tank Acton Institute called the plan "not a rational business decision but .. a peculiar social experiment being played by a rich guy."