You get a raise. You get a raise. Well maybe not you; but everyone who works for Gravity Payments will be getting a raise. Thanks to last year’s Entrepreneur of the Year Dan Price, 70 workers will see a salary increase and 30 will see their salaries double, according to the Washington Post. So how much is Mr. Price, the CEO of the Seattle-based credit card processing firm, planning to pay his employees?
In a daring move that has propelled him into the spotlight; Mr. Price has implemented a company-wide $70,000-a-year minimum wage from an average salary of $48,000 for all of his employees.
“Is anyone else freaking out right now?” Mr. Price asked his employees when he told them the good news, as reported by Market Watch. “I’m kind of freaking out.”
Well Mr. Price, the entire nation is “freaking out,” especially the tens of thousands of protestors who hit the streets of over 200 U.S. cities on April 15 for a labor union-backed movement. Then there are the CEOs and one-percenters who vehemently oppose any wage increases—they are probably really unhappy with you right now. But to those who have been struggling to make ends meet since the Great Recession, you are a hero, Mr. Price. And the fact that you would like to see other companies follow your lead, according to CBS News, also makes you a champion for equality in American.
“I want to be a part of the solution to inequality in this country, and so if corporate America also wants to be a part of that solution, that would make me really happy,” Price told CBS News.
There is no doubt that that would really make the nation’s low-wage workers and the wage increase supporters really happy too. According to the New York Times, America has one of the world’s largest pay gaps, with company CEOs earning nearly 300 times what the average employee makes, as cited by some economists’ estimates.
“The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd,” Mr. Price told the New York Times, who added that his main extravagances were snowboarding and picking up the bar bill.
And that statement alone, along with his other actions of course, has made Mr. Price the most beloved CEO in America right now. The question is: how will he pay for it? And most importantly, will his courage create any positive and lasting change or just more empty rhetoric?
In another astonishing move, according to the New York Times, Mr. Price will pay for the wage increases by slashing his own salary from almost $1 million to $70,000 annually; and by using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year. Price, who made the announcement at his company’s quarterly meeting, said he was moved by a 2010 Princeton study on happiness, “Proceedings of the National Academy of Sciences,” that found that “… emotional well-being rises as one’s income rises, up to about $75,000 dollars a year”. Mr. Price, who launched Gravity Payments at age 19 from his dorm room at Seattle Pacific University, also had conversations with some of his friends who are earning $40,000 a year.
“I realized that people who are making less than that, there is an emotional cost that they have every single day. And you only get to live once, and so those are days that are lost in terms of really getting to live a full life. And so getting them there was really based on that research that Princeton did in 2010," Mr. Price told the New York Times.
So how did his employees react when they heard the news? Jose Garcia, a 29-year-old supervisor, told CBS News that he was in tears when he called his mother.
“I think it’s life-changing for everybody in various ways,” Garcia added.
Garcia, who is just one of the millions of Americans loaded down with student debt, will now be able to pay off his school loans. And Alyssia O’Neal, a 21-year-old single mother who works in customer service, will now be able to afford daycare.
“It just gives you a little bit more confidence to go about your day and not having to worry about going paycheck to paycheck," O’Neal told CBS News.
It is all really life-changing news for the 120 employees at Gravity Payments; but what about the other 1.6 million hourly workers who are only earning the prevailing federal minimum wage of $7.25 per hour?
Five years after the start of the Recession, according to the U.S. Bureau of Labor Statistics (BLS), 75.3 million U.S. workers age 16 and over were paid at hourly rates, representing 59.0 percent of all wage and salary workers. In 2012, 6 percent of women paid hourly rates had wages at or below the prevailing federal minimum, compared with about 3 percent of men. Approximately 5 percent of White, Black, and Hispanic or Latino hourly paid workers earned the federal minimum wage or less. Among Asian workers paid at hourly rates, about 3 percent earned the minimum wage or less, says the BLS.
But the Labor Unions, according to New York Times, have invested tens of millions of dollars in a campaign for a $15-an-hour minimum wage that goes further than the old-school style of the labor organizing by embracing a cause that has captured national support. That’s why fast food workers, students, union organizers, and healthcare industry workers worked together to stage a protest in New York City as part of a nationwide protest to push for higher pay in restaurant chains across the U.S., according to the Wall Street Journal.
“America, period, is unequal,” Chasten Florence, a 26-year-old construction worker from Queens, N.Y. who joined the protest told the New York Times. “Once we accept that, we can change that."
The Tax Day demonstrations, according to the Wall Street Journal, were the latest part of an ongoing effort that began in 2013; and that the Labor Unions have dubbed the “Fight for $15 — a bid to secure that minimum hourly rate and unionize at outlets such as McDonald’s, Wendy’s Burger King, KFC, and other major national restaurant chains”.
“We respect people’s right to peacefully protest, and our restaurants remain open every day with the focus on providing an exceptional experience for our customers,” McDonald’s said in a statement to the New York Times.
And the protestors had assembled just two weeks after McDonald’s Corp. announced that from July 1 it would increase salaries by at least $1 an hour more than the local minimum wage at the roughly 1,500 restaurants it owns in the U.S., according to the Wall Street Journal. The increase, however, doesn’t apply to the workers of franchisees, which operate nearly 90 percent of the 14,350 America’s McDonald’s restaurants—a fact that the Unions highlighted during the protests, according to the Wall Street Journal.
But the fact of the matter is that the labor-backed movement is up against a greedy business sector that is protected by a decades-old federal labor law that makes it difficult for workers to challenge the wealthy companies that dominate the fast-food and hospitality industries, according to the Wall Street Journal.
So Mr. Price, if you are reading this, please send a few copies of that 2010 Princeton study on happiness that inspired you to your fellow CEOs!
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