"Is anyone else freaking out right now? I'm kind of freaking out." said Dan Price, the CEO of Seattle-based Gravity Payments, as he announced that the new minimum salary for current employees will be raised to $70,000 a year. Price is taking a pay cut from $1 million to $70,000 and spending an appreciable amount of the company's profit to raise annual salaries from the current average of $48,000.
From the article:
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.
[...] Under a financial overhaul passed by Congress in 2010, the Securities and Exchange Commission was supposed to require all publicly held companies to disclose the ratio of C.E.O. pay to the median pay of all other employees, but it has so far failed to put it in effect. Corporate executives have vigorously opposed the idea, complaining it would be cumbersome and costly to implement.
[...] The happiness research behind Mr. Price's announcement on Monday came from Angus Deaton and Daniel Kahneman, a Nobel Prize-winning psychologist. They found that what they called emotional well-being — defined as "the emotional quality of an individual's everyday experience, the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant" — rises with income, but only to a point. And that point turns out to be about $75,000 a year.
(Score: 3, Informative) by frojack on Friday April 17 2015, @06:35AM
all of the profit is still theirs.
The Story said:
spending an appreciable amount of the company's profit to raise annual salaries from the current average of $48,000...
surprised his 120-person staff by announcing that he planned over the next three years to raise the salary of even the lowest-paid clerk, customer service representative and salesman to a minimum of $70,000.
So to move the average employee from 48000 to 70000 times 120 people takes 2,640,000
The story also says
cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.
Whats not clear if his former million dollar salary was part of that 2.2 million profit.
If it was, his company profit will be reduced to around 440 thousand, and even if he pocketed ALL of that, he will still have cut his salary by about half. (That assumes he leaves nothing in the bank for a rainy day.)
No, you are mistaken. I've always had this sig.
(Score: 5, Insightful) by TheRaven on Friday April 17 2015, @09:24AM
In the short term, that's no doubt true. The story also said that he's had 1500 applicants for jobs since making the announcement, so I wouldn't be surprised if he's able to grow the company quite quickly. Note that he said he'd raise the salaries to $70K over three years, so there's the potential to spend a big chunk of that $2M on new employees' salaries.
And, honestly, I hope this is what happens. Seeing CEOs who pay their employees well and promote a positive working environment get rich by increasing the value of their companies significantly would send a good message to investors...
sudo mod me up