Forget $15 an hour. How about $70,000 a year?
That’s what employees at a Seattle credit card processing company soon will make as a new minimum wage. The CEO is slashing almost all of his nearly $1-million salary to hand out big raises to his staff.
Gravity Payments Chief Executive Dan Price, 30, reportedly stunned his employees with the announcement Monday, which will double some staffers’ pay as the raises gradually take effect through 2017.
The dramatic move has gotten widespread media attention, in part because it comes at a time when CEO pay has skyrocketed nationally and fast-food employees around the country have been protesting for a $15 minimum wage. ($15 an hour equals about $30,000 a year for a full-time worker.)
Price, who started Gravity Payments out of a dorm room when he was 19, wholly owns and operates the company, which processes credit card payments for small businesses across the U.S.
A company spokesman says Price’s pay has dropped to $50,000 and will reach $70,000 by the end of 2017, which will make his compensation equal to the company’s lowest-paid employees.
That’s quite a contrast with the pay for the average CEO, which is 257 times the average worker’s salary, according to a 2014 Associated Press/Equilar pay study. That gap has increased more than 50% since 2009.
“I think CEO pay is way out of whack,” Price said in an interview with ABC News, adding: “I may have to scale back a little bit, but nothing I’m not willing to do. I’m single. I just have a dog.”
After Monday’s announcement, anybody making less than $50,000 -- more than half of the company’s 120 employees -- immediately got bumped up to at least $50,000, according to a company spokesman. The minimum will increase to $60,000 by the end of 2016 and $70,000 by the end of 2017.
“It’s been a really exciting week for us over here, man,” Ryan Pirkle, Gravity Payments’ marketing manager, told the Los Angeles Times in a phone interview Wednesday, in which he detailed the move’s immediate effects. “For some of these people, that meant a $14,000 or $15,000 raise.”
The company made $2 million in profit last year, and that will drop to about $500,000 with the new pay increases, according to company figures.
“If it is a publicity stunt, it’s a pretty risky one, but it isn’t,” said Pirkle, who said Price approached him a week ago to discuss the idea.
Price, who still drives an Audi he bought in 2002, cited the public debate over raising the minimum wage and the shrinking middle class as wealthy Americans get wealthier, Pirkle said.
“I want everybody here to afford a house or car,” Price said, according to Pirkle. “Living in Seattle is expensive. ... What I want to do is I want to self-impose a minimum wage” rather than wait for a government mandate to increase pay, he said.
“That’s what this is; it’s meant to inspire people,” Pirkle said. “Everybody knows this is a problem.”
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