Gravity Payments, a financial services company, made headlines in 2015 when it raised its minimum wage to $70,000 per year. Dan Price, the CEO and founder, made this decision in response to the growing problem of income inequality in the United States. Price believed that anyone who is intelligent, hardworking, and does a good job deserved to live in the middle class.
Dan and Lucas Price founded Gravity Payments in 2004. This was done with the intention of providing low-cost credit card processing services to small businesses. The success of the company was largely due to its low-cost strategy and word-of-mouth publicity. By 2008, the company had grown to become Washington’s largest credit card processor. It was serving more than 15% of Seattle’s small businesses.
Gravity Payments has always had a charitable mission. It launched the “Gravity Gives” programme in 2008. 2% of the company’s revenue was donated to charity as part of this programme. World Vision, the Fred Hutchinson Cancer Research Center, and Northwest Harvest are a few examples.
Price announced in April 2015 that he would raise the minimum wage for all employees to $70,000 over the next three years. A conversation with a friend who was struggling to pay her bills and student loans on a $40,000 annual income sparked the idea. Some of Price’s own employees were paid the same or less.
Based on a study conducted by economist Angus Deaton and psychologist Daniel Kahneman, the conclusion was $70,000. According to the study, those earning less than $75,000 were depressed and dissatisfied with their jobs. Those earning more than $75,000 did not report a higher level of happiness. Price believed that $70,000 was the income level at which employees could begin to meet their financial objectives. Some of these objectives include saving for college, purchasing a home, starting a family, and others.
When Price’s employees heard the news, they were ecstatic. Some people’s pay doubled overnight, while others got raises to reach the $70,000 mark. However, the decision was met with criticism and backlash from some quarters. Some claimed that the decision would result in decreased productivity and profitability. Others felt it was unjust to those who had worked hard to earn higher pay.
Despite the criticism, Price stuck by his decision, and the company thrived. Indeed, the decision to raise the minimum wage resulted in increased publicity and new business for Gravity Payments. In three years, the company’s revenue more than doubled. Price came to represent the fight against income inequality.
Subsequently, Gravity Payments’ decision to raise the minimum wage for all employees to $70,000 was a bold move that drew both praise and criticism. It was, however, a successful business strategy, as the company’s revenue doubled in three years. The decision demonstrates the importance of leadership and addressing income inequality in the workplace.
My Unforgettable Experience in Nigerian Hospitals: Part 1