Linked by Thom Holwerda on Sat 1st Aug 2015 11:12 UTC
In the News

Three months ago, Mr. Price, 31, announced he was setting a new minimum salary of $70,000 at his Seattle credit card processing firm, Gravity Payments, and slashing his own million-dollar pay package to do it. He wasn't thinking about the current political clamor over low wages or the growing gap between rich and poor, he said. He was just thinking of the 120 people who worked for him and, let's be honest, a bit of free publicity. The idea struck him when a friend shared her worries about paying both her rent and student loans on a $40,000 salary. He realized a lot of his own employees earned that or less.

Yet almost overnight, a decision by one small-business man in the northwestern corner of the country became a swashbuckling blow against income inequality.

Whether you support his actions or not, ask yourself this question: what does it say about our society that a young man slashing his own salary to increase that of his employees draws more ire than a CEO raising his own salary to 70 times that of an average employee?

Most mystifying of all, though, are the employees leaving because their coworkers got a pay raise to $70000, while they themselves already earned $70000. I don't understand this mindset. You still have your salary. You still get your $70000, except now your fellow men and women on the work floor also get it. Is your self-worth really derived from earning more than the people around you? Is your sense of self really dictated by how much more you earn than Jim from accounting or Alice from engineering?

Maybe I'm just too Dutch and too little American to understand this mindset, but I firmly believe this world would be a massively better place if more CEOs cut their own salaries to raise that of their employees.

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Interesting
by DrJohnnyFever on Sat 1st Aug 2015 12:00 UTC
DrJohnnyFever
Member since:
2012-03-07

I don't in principle think its bad for a CEO to make a lot of money, unless they are really bad at their job. That said I do find this interesting. I can see how someone might be annoyed if they have been working hard trying to get a pay raise, and someone else gets one instead even though they've been doing the same crummy job for years and years. Not to say thats happened in this case, but if it did. In America at least, and I think other places, a pay raise is a form of recognition for hard work and dedication, its more than just money. Not to say its right but some may view it as a slap in the face to see everyone else's pay get raised but their own and I don't think that necessarily makes them mean people.

Reply Score: 1

RE: Interesting
by Athlander on Sat 1st Aug 2015 12:16 in reply to "Interesting"
Athlander Member since:
2008-03-10

In America at least, and I think other places, a pay raise is a form of recognition for hard work and dedication, its more than just money. Not to say its right but some may view it as a slap in the face to see everyone else's pay get raised but their own and I don't think that necessarily makes them mean people.


This seems to be the case here. It's not so much the increased minium wage that caused the internal dissent, it's the pay-raise implementation (regarded as unfair reward/recognition of hard work and dedication).

I'm sure this could have been handled better - the article indicates that the new wages were being introduced in phases but perhaps it needed to be implemented even more slowly.

Edited 2015-08-01 12:17 UTC

Reply Parent Score: 3

RE: Interesting
by cb88 on Sat 1st Aug 2015 17:23 in reply to "Interesting"
cb88 Member since:
2009-04-23

Agreed to throw the 40k'ers a bone and not give the 70k'ers anything was not very smart.

That said..... the 70k'ers have no right to complain when their CEO is making the same amount they are.

Edited 2015-08-01 17:23 UTC

Reply Parent Score: 3

RE[2]: Interesting
by galvanash on Mon 3rd Aug 2015 22:26 in reply to "RE: Interesting"
galvanash Member since:
2006-01-25

That said..... the 70k'ers have no right to complain when their CEO is making the same amount they are.


They didn't complain, they quit, and they have every right to do so. Its a job, not slavery.

If given a choice between a 75k a year job working for this guy and a 75k job working for virtually anyone else I would go elsewhere in a heartbeat, because at least elsewhere my chances for earning further opportunities would be higher than zero... This guy's actions demonstrate he places no value on individual contribution, he even calls people selfish for suggesting that maybe there job role is worth more to the company than others.

Sorry, I already give to charity. I have no desire to work for someone who steals it from me. Maybe one day I will be as rich as he is and I will have to freedom to act so selflessly, but right now I have 3 kids to put through college and my time is all I have - I want to get as much money for it as the market will bear.

Reply Parent Score: 3

RE: Interesting
by Bill Shooter of Bul on Sat 1st Aug 2015 20:42 in reply to "Interesting"
Bill Shooter of Bul Member since:
2006-07-14

Recognition? Seriously?

I wouldn't want those kinds of people working for my company. You work for money and to do a good job. Everything else is BS.

Things like this are what ruin economists lovely modeling. People don't act intelligently in their own self interest, they act irrationally and emotionally much more often.

Reply Parent Score: 3

RE: Interesting
by d3vi1 on Sat 1st Aug 2015 21:15 in reply to "Interesting"
d3vi1 Member since:
2006-01-28

I don't in principle think its bad for a CEO to make a lot of money, unless they are really bad at their job. That said I do find this interesting. I can see how someone might be annoyed if they have been working hard trying to get a pay raise, and someone else gets one instead even though they've been doing the same crummy job for years and years. Not to say thats happened in this case, but if it did. In America at least, and I think other places, a pay raise is a form of recognition for hard work and dedication, its more than just money. Not to say its right but some may view it as a slap in the face to see everyone else's pay get raised but their own and I don't think that necessarily makes them mean people.

Does anyone wonder why the poorly payed are "slackers"? If you have to work 250+ hours per month just to make it through, you won't be very productive at your main job.
Furthermore, the CEOs making large amounts of money makes sense when the ratio is 1:20. However, in a lot of companies the ration is reaching 1:500. The CEOs that are getting the 1:500 are the ones that keep minimum pay across the board in large companies (thus "saving" money) or outsourcing the jobs in developing countries. If they had reasonable salaries for CxOs, you wouldn't need to outsource.

Reply Parent Score: 2

RE: Interesting
by kaiwai on Mon 3rd Aug 2015 05:42 in reply to "Interesting"
kaiwai Member since:
2005-07-06

I don't in principle think its bad for a CEO to make a lot of money, unless they are really bad at their job. That said I do find this interesting. I can see how someone might be annoyed if they have been working hard trying to get a pay raise, and someone else gets one instead even though they've been doing the same crummy job for years and years. Not to say thats happened in this case, but if it did. In America at least, and I think other places, a pay raise is a form of recognition for hard work and dedication, its more than just money. Not to say its right but some may view it as a slap in the face to see everyone else's pay get raised but their own and I don't think that necessarily makes them mean people.


That being said there is a difference between a CEO being paid more vs. being paid an obscene amount of money. For example, if your average worker is earning $70,000 then it is in the realm of acceptance by most that the CEO will earn something like $700,000 to $1million. The problem starts to occur when you end up with massive pay differences such as the average worker earning $70,000 and the CEO is earning $30million per year. There is a fine line between most people accepting that the 'higher up the food chain the more risk and the higher the reward' vs. the point when the difference becomes obscene to the point of being disgusting. Maybe as a New Zealander I'm too left wing for my own good but it does make my stomach churn when people living in $100million mansions and earning $30million is some how as seen as morally acceptable whilst that excess casts a shadow over a large section of society who don't have access to healthcare, healthy food and healthy affordable housing.

Edited 2015-08-03 05:43 UTC

Reply Parent Score: 2

RE[2]: Interesting
by dnebdal on Mon 3rd Aug 2015 14:45 in reply to "RE: Interesting"
dnebdal Member since:
2008-08-27

There is a fine line between most people accepting that the 'higher up the food chain the more risk and the higher the reward' vs. the point when the difference becomes obscene to the point of being disgusting.


I'm not even sure if I agree with that. At the very highest levels, CEOs seem to float around in a cloud of board memberships and new companies entirely independent of how well the companies they managed performed. At both those and the slightly lower levels, the sheer amount of money itself is a risk reducer: If you can save up some millions first, it doesn't matter if you crater the company; in the worst case you can retire and live off that money.

In comparison, a specialised engineer making $70k seems to be at a larger personal risk - if the company fails he can only hope there's another similar position to be found; if he's not young it might be hard to get hired again.

Reply Parent Score: 2