Remember that $70K salary experiment? Here's what happened over a year later

[Theinquisition]

http://www.today.com/money/gravity-p...esults-t101678

Now, im sure that this post will be a surprise to some here on MMOC. Most know that im a conservative libertarian, and abhor excessive government intervention in commerce.

Now, when this event oringinally occurred, I fully expected the company to fold. Low and behold they are doing well, which is great, I want all business to be successful, as long as they provide a valuable product.

The wage increase was done at the behest of the CEO and not the Gov't, which at the end of the day, I think is awesome.

It's been nearly a year and a half since CEO Dan Price announced plans to slash his roughly $1 million salary to $70,000, also making that the minimum salary for all the employees at his credit card processing company, Gravity Payments. The move shocked the business world and thrust the 32-year-old into the spotlight.

Since then, a lot has changed. After the initial flurry of praise — and then resumes, of course — there was the inevitable criticism: Was this all really a clever publicity stunt?

Looking back, Price insists it wasn't. But he also knows the experiment was, at least in part, a deliberate business move.

"It's not like I'm throwing money into a charity and having no hope of return," he told TODAY recently by phone. "I view this as a long-term investment."

A 'Happier' Workplace

Since the initial pay hike, there's been a baby boom at the office, and Gravity Payments, based in Seattle, has seen increased retention and happiness rates (the latter is measured by an online-survey service employees use) among workers. Their overall commute time is shorter, since some employees used the additional money to move closer to work.

Gravity Payments

A graph shows how turnover rates are at an all-time low at the company.

Price himself made some cutbacks to adjust to the lower salary, although more out of sensibility than necessity. He now rents his house on Airbnb during the summer to make extra cash, and sleeps in the guest room at a friend's house.

"You might call it a sacrifice," he said, speaking from the borrowed room. "But to me, it's fun. It feels good."

A Temporary Pay Cut

Price is quick to state the obvious: that any life adjustments he's made as a result of earning less after earning so much more are hardly "putting me in some horrible, awful position."

Of course, even as he's emerged as a champion for income equality, he won't be making $70,000 forever, and that was never the plan.

"When I made the announcement, I said I would just put my salary back where it was once the company's profits had gone back to where they were," Price said. "I expected us to take a big step backwards."

But that's not what happened. Instead, sales skyrocketed after the announcement, and Gravity Payments continues to take on new clients at a rate it never had before. It reports nearly doubling profits in a year, from $3.5 million in 2014 to $6.5 million in 2015. So Price is re-evaluating the metrics, and still trying to decide what his income should look like.

The million-dollar-plus salary Price once earned, and presumably will again, has often been scrutinized, even amid praise for his wage hike, which he refers to as "the program." It was also at least partly to blame for his legal troubles with his brother, Lucas Price, with whom he co-founded Gravity Payments in 2004. Price recently won a court battle against Lucas, who'd claimed in a lawsuit that Price overpaid himself and abused a corporate spending account, according to reports

[Paranoid Android]

I just read the article. Pretty much the owner "gets by", in renting out his home and I think he was living with other people. His workers seem happy and he got a bump from all the good publicity.

Now his company is more profitable and he may again take his million dollar salary. Which he said he always intended if his company did well. Again, for all those that think us liberals rail against capitalism. I am fine with him making his money and paying his employees a very good salary.

The bad. All those people are now having kids. I am one who thinks the world is overpopulated now.

Edit: Also there was stuff about his wife and fight with his brother. Embezzlement charges that were cleared. Basically small stuff to show he is not an angel.

[Cyberowl]

Did you also copy paste your homework from wikipedia with all the hyperlinks tony?

Or was that after your time.

[Celista]

Aww. Happy endings It likely was a publicity stunt and I don't think we can extrapolate findings from this experiment to mean that it is feasible for the majority of companies to pay their employees $70k a year, but I do think that all or most companies can afford to pay a living wage. And those that can't, probably shouldn't be in business.

[Bollocks]

Great news but please edit the format.

[Kapadons]

What do they attribute the increase in sales to? The copy/paste doesn't say. Are they saying employees are happier and now signing more clients ?

[Paranoid Android]

What do they attribute the increase in sales to? The copy/paste doesn't say. Are they saying employees are happier and now signing more clients ?

It was attributed to the publicity he received.

But that's not what happened. Instead, sales skyrocketed after the announcement, and Gravity Payments continues to take on new clients at a rate it never had before. It reports nearly doubling profits in a year, from $3.5 million in 2014 to $6.5 million in 2015. So Price is re-evaluating the metrics, and still trying to decide what his income should look like.

[Edge-]

What do they attribute the increase in sales to? The copy/paste doesn't say. Are they saying employees are happier and now signing more clients ?

That's implied, yes. Happier employees are more productive, generally.

[GennGreymane]

What do they attribute the increase in sales to? The copy/paste doesn't say. Are they saying employees are happier and now signing more clients ?

Could be for numerous reasons, the company got publicity for this after all.

Also

Geez, and they say that I just copy and paste... fix the formatting Tony!!!!!

[Shalcker]

Aww. Happy endings It likely was a publicity stunt and I don't think we can extrapolate findings from this experiment to mean that it is feasible for the majority of companies to pay their employees $70k a year, but I do think that all or most companies can afford to pay a living wage. And those that can't, probably shouldn't be in business.

Well, 1 million CEO salary dropped to 70k, that's enough for 14 (including CEO himself) people right there without any change of profits; as they were making at least half of that already, probably closer to 30 people.

Which is a lot for small company.

And current CEO salaries are definitely on higher side of historical CEO payments compared to average company salary, so they could use some trimming.

[Kapadons]

That's implied, yes. Happier employees are more productive, generally.

But as a credit card processing company, the only way to increase "sales" is to sign more clients or the businesses they do have signed increase their sales. Seeing as this was in Seattle ( a town very conscience of employee wages) I would be inclined to think that the publicity they received had more to do with it than him just raising salaries. I'm unfamiliar with there particular business, but it seems it would be pretty standard to base signing clients with bonus and quota systems. If so, signing clients would already be monetarily rewarded.

Maybe I'm wrong. Or just a cynic

[Damajin]

Could be for numerous reasons, the company got publicity for this after all.

Also

Geez, and they say that I just copy and paste... fix the formatting Tony!!!!!

That is all you do, I've seen inside your computer before. All those Word files with copy and pasted responses already saved so you can keep on copy and pasting without putting any effort into it other than finding a new article or 15 a day. Not sure how you live with yourself.

[Theinquisition]

I just read the article. Pretty much the owner "gets by", in renting out his home and I think he was living with other people. His workers seem happy and he got a bump from all the good publicity.

Now his company is more profitable and he may again take his million dollar salary. Which he said he always intended if his company did well. Again, for all those that think us liberals rail against capitalism. I am fine with him making his money and paying his employees a very good salary.

The bad. All those people are now having kids. I am one who thinks the world is overpopulated now.

Edit: Also there was stuff about his wife and fight with his brother. Embezzlement charges that were cleared. Basically small stuff to show he is not an angel.

the important thing to me, is that it was HIS CHOICE as a CEO to give out those high starting salaries. He wasn't compelled by the gov't or anyone else, but his own conscience.

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Did you also copy paste your homework from wikipedia with all the hyperlinks tony?

Or was that after your time.

Absolutely not, I always paraphrase or use direct quotes with links to sources In APA format in school work. I'm lazy on MMOC because...well...its a online forum full of people that I don't know.

[GennGreymane]

That is all you do, I've seen inside your computer before. All those Word files with copy and pasted responses already saved so you can keep on copy and pasting without putting any effort into it other than finding a new article or 15 a day. Not sure how you live with yourself.

Very easily actually.

[Independent voter]

If another company raised everyone's salary to $70K they wouldn't see the boost in revenue due to all that free publicity. Being #2 is rarely newsworthy.

[Pipboi]

I laughed and then cringed at the baby boom part.

[Theinquisition]

Great news but please edit the format.

Yeah, my bad. I was due for a work meeting and was literally standing above my computer and hit "post"

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I laughed and then cringed at the baby boom part.

I've read a lot of stuff that has stated that decreasing birthrates are partially due to wage stagnation.

[Milchshake]

He makes everyone plank during staff meetings.... best meetings ever! I'd imagine they're short and to the point.

[Muddysmind]

So you want your BigMac and fries to be 30-40$?
Interesting.

[Theinquisition]

So you want your BigMac and fries to be 30-40$?
Interesting.

No?

I believe its a issue of Commercial freedom. He was free as a business owner to raise wages as he saw fit, it was a gamble, and he came out on top. I'm all for wage increases as a function of economic freedom within the market place, meaning, if the owner increases wages to be more compettive in the marketplace, the more power to him/her.