CEO Slashes Pay to Raise Company 'Minimum Wage' to $70,000

The well-being of his employees is more important to this CEO than his own pay check

He said he will slash his own salary from nearly seven figures to $70,000 in order to realize his new definition of minimum wage. He also said he plans to direct a large chunk of his company's estimated $2.2 million in profit this year towards salaries.

This excerpt is from the New York Times

The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 year.

Mr. Price’s small, privately owned company is by no means a bellwether, but his unusual proposal does speak to an economic issue that has captured national attention: The disparity between the soaring pay of chief executives and that of their employees.

The United States has one of the world’s largest pay gaps, with chief executives earning nearly 300 times what the average worker makes, according to some economists’ estimates. That is much higher than the 20-to-1 ratio recommended by Gilded Age magnates like J. Pierpont Morgan and the 20th century management visionary Peter Drucker.

“The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd,” said Mr. Price, who said his main extravagances were snowboarding and picking up the bar bill. He drives a 12-year-old Audi, which he received in a barter for service from the local dealer.

NYT article
NBC video

That's amazing he did that! With a smaller company it would be easier to do, but he will definitely have to better filter out new hires because I'm sure there are a lot of people going in just to make a quick buck.

a reply to: ArnoldNonymous

That's definitely true. I'm sure he'll have people crawling over each other to get a job there. I'm also sure the people there now won't leave unless they are unable to even crawl to work. It'll be one of those jobs where someone has to die before there's an opening.

Read this earlier. Apparently he read an article sawing a salary oh 70 k was the level that people felt comfortable and were happier (paraphrase) and slashed his own salery from 1 million to 70 k as well.

Not thinking there enough employers in this world who care no
enough about employees to make this a trend.

I wonder if anyone was making over $70K? If Bob was making 82K, did his salary drop?

I get what the company is doing and I applaud the owner for caring so much for his employees, but I don't see this working out in the long run.

Human nature takes over and eventually somebody will be PO'd that the stock boy makes as much as an executive with multiple degrees. What happens if you hit the 70K mark? No more rewards or goals (raises) for somebody who is working much harder for the company. We have a pay scale for a reason.

I think a better way to do it would be to just drop the CEO pay and give an X amount raise to employees across the board.

a reply to: jtrenthacker

So your argument is that we're lab rats living in a cage and are only prepared to perform if there's a chance we might be rewarded a bigger slice of cheese than the rest?

Did Newton come up with the law of motion because of the motivation of a bigger slice of cheese than everyone else? What about Einstein, was it a bigger slice of cheese that motivated him to design the theory of general relativity?

If anything, having people that are higher up earning way more money but only working half as hard, makes people resentful and less productive.

a reply to: N3k9Ni

A Vulcan greeting is in order for this noble man.

We'll see how it goes.

As someone pointed out, depending on how complicated his business is, there will be people who will be able to make more at other places if they have any kind of talent. They will leave. $70K is nice, but it opens the door to lots of taxes and other things ... like lack of Obamacare subsidy, so your life only gets more financially complicated. It's not all sunshine and rainbows like you might think. People who can make more and who have a family to raise and educate will soon be looking for more especially out where they're at on the coast.

Those who are working less skilled jobs won't be able to leave because they'll be in a position really quickly where they'll be living a $70K lifestyle on a $40K job skill. They won't be able to leave unless they are very financially savvy. He's created a basic wage slave class with them, and they'll face all the problems of the above when it comes to building a future.

And there are always going to be people for whom it won't ever be enough.

So we'll see. Maybe they'll be happy with it and learn how to be content.

This is so refreshing! Real value in Mr Price's decision.

High qualification employees who dislike the new policy could always seek employment elsewhere where fake values continue to proliferate.