This CEO Is Taking Minimum Wage Hikes Into His Own Hands — At $70K Per Year
If only everyone had a boss like Dan Price, owner of credit card processor Gravity Payments, maybe income inequality wouldn't be at its worst since 1928.
After reading a study on happiness that suggested extra money makes a big difference in the lives of people who make under $70,000 a year, Price did something that would never occur to most CEOs. He told his staff that over the next three years, every employee of his company will make at least $70,000, reports the New York Times.
According to the New York Times, the pay-rate increases will benefit about 70 of his 120 employees, of which about half will see their income double. Before the announcement, that company's average annual paycheck was $48,000.
Price cut his own salary from just short of $1 million to $70,000 to help fund the pay raise, telling the New York Times that "the market rate for me as a CEO compared to a regular person is absurd."
That's a great boss. As Price rightly points out, the CEO-employee pay ratio across many U.S. companies is truly absurd. According to the left-leaning Economic Policy Institute, corporate CEOs at the top 350 American companies now make about 296 times as much money as the average employee working in production and nonsupervisory roles.
What's worse, in many cases, employees aren't even making anywhere close to the $48,000 figure most of Price's staff had been earning. Workers in low-skill, labor-intensive industries like retail or food service are particularly subject to exploitative wages.
Take Wal-Mart, for example. It pays its staff so little money that Americans for Tax Fairness estimates the government spends about $7.8 billion a year in food stamps, Medicaid, subsidized housing and other government benefits supporting its low-wage workers.
So while Price's decision to reward his hard-working employees with a respectable share of the profits is both noble and fair, it certainly doesn't look like many other corporate leaders are eager to join him. For most workers, pay has remained stagnant for decades despite skyrocketing corporate profits and worker productivity. Put simply, most CEOs are content to live high on the hog while their employees struggle to get by.
When companies are left to their own devices, they really don't try very hard to address concerns about worker pay. McDonald's recently announced a $1, one-off wage increase at its corporate stores, which was really just a sneaky tactic to push a meager raise in a slim percentage of its stores to draw attention away from massive employee protests over its working conditions and compensation.
Why you should care: Fast-food workers are planning a nationwide walkout campaign this week that the New York Times expects to draw tens of thousands of people demanding a $15 hourly minimum wage.
Their timing conveniently matches the announcement of generally pro-business Democrat Hillary Clinton's campaign for president. While Clinton recently mentioned the growing CEO-employee pay gap, progressive activists are still waiting for her to explain just how she will fix it. This is probably the week the strikers will find out just how deep Clinton's commitment to fairer wages goes.
But as Price has demonstrated, many people care less about what the boss makes than what they take home (a conclusion reaffirmed by several polls). Unfortunately, since inequality and stagnant wages are so closely connected, expect the business community and its army of well-paid lobbyists to continue doing its best to resist making major changes in either arena.