Seattle entrepreneur Dan Price, CEO of Gravity Payments, announced April 13 that he was setting the company’s minimum wage at $70,000 and taking a $930,000 pay cut in order to do so. Of Gravity’s 120 employees, many earn less than $40,000. Price’s announcement means a significant increase for about 70 workers, including 30 employees whose pay will double.
Price’s decision was big news. Most major news outlets covered the story at a time when it’s predicted U.S. workers will receive a 3 percent wage increase in 2015, and CEO pay rose 12 percent in 2014.
The reaction to the news, however, was mixed. Once they got over the shock, Gravity employees were overjoyed. “This gives us so much freedom to just do our jobs and not have to worry about money,” Gravity technician Jason Byrd, 38, told CNN Money.
“Our clients came to us and said we’re so happy to be a part of this,” Price told the Wall Street Journal. “We’ve had businesses all over the country say, we want to do business with you because of this type of policy.”
But Price also told NBC News that he has received criticism for his decision, especially on social media. “I would like to have this spark a conversation and basically have people start to think about a different way of doing business,” he said.
Critics say it’s just a publicity stunt and claim it will be bad for businesses across the country. Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida told MarketWatch.com, “I would not want to live in an economy where all the CEOs were Mother Teresa.”
In the same article, Tim Sackett, president of HRU Technical Resources said, “This is more risky than genius …What happens if they grow from 120 to 1,200? Can you still sustain $70,000 for everyone? What happens if he decides to sell out and a new multinational buys them decides that isn’t their compensation philosophy?”