Closing the pay gap

Dan Price is the CEO of a Seattle company, Gravity Payments. He created the company while he was in his teens and had grown the company to a point where he was able to afford to pay himself just over a million dollar per year by age 31.

Dan was hiking with a friend who had served in the military and this friend revealed that she was having a rough time paying her bills. Her rent had been increased by $200 per month and the situation forced her to work 50 hours per week in two jobs. She was making around $40k per year, but as people who live in Seattle will tell you, that’s not really a lot to live on in that city.

Dan Price was angry having learned about the growing inequalities in the world. As he was becoming more aware of the problem, not only did he decide to become part of the solution, he vowed to become a crusader against wage inequality. He had become disgusted that our culture glorified greed and celebrated super rich people. We have gone from an economy where in the 1960s, CEOs earned roughly 20 times more than the average worker to a modern reality where it’s now 300 times the average worker’s salary.

Dan soon became aware of a financial pressure situation developing in his own company. One worker was experiencing financial problems, and secretly working a second job at McDonald's. She accidentally left a training manual on her desk at Gravity, and someone spotted it.

Her bosses called her in for a meeting. She cried, thinking she was about to be fired. Instead raised her salary to $40,000. It took Dan a while to grasp the scale of the problem among his staff. Because of course, workers don’t normally go to their bosses to tell them how much they’re struggling financially. The hike on the mountain with his friend was the final wakeup call.

Dan looked at studies by Nobel prize-winning economists on how much workers need to be happy and after looking at the numbers he planned what he was going to do at Gravity Payments. In 2015, Dan introduced a $70,000 minimum annual salary for all staff. This meant that around a third of them would be getting an immediate doubling of their salary. He cut his own salary to the same amount and made many other financial sacrifices to make it work.

Needless to say, this has been trans-formative. More staff started having children. More people were able to purchase homes. People started saving more. Financial pressure evaporated. Some people moved closer to the office. People started taking their vacations. The company grew too, both in headcount and value.

Critics predicted that people would squander the extra money. They didn’t. A couple senior employees resigned and felt the new salary would make workers lazy. It didn’t. They worked harder. Dan was labelled a communist by right wing pundits and they predicted absolute failure. They criticized him for making the whole thing political, when all he was trying to do was make people comfortable and reward their hard work.

Dan is walking the walk too. He still lives on that minimum salary. He no longer lives the life of your typical young tech millionaire. In fact, his colleagues at work became sick of watching him turn up at work in a 12-year-old Audi and secretly clubbed together to buy him a Tesla.

Dan Price had hoped that other companies would follow his lead. But aside from a small handful, it hasn’t happened.