Do we jump on the $70,000 salary bandwagon?
It might be appropriate to file this under "all good deeds get punished.”
Dan Price is a 31-year-old chief executive and co-founder—with his brother—of Seattle-based Gravity Payments, which processes credit card payments.
After reading that $70,000 is the annual income needed to give people financial peace of mind, Price announced that he would raise his workers’ compensation so that everyone earned at least $70,000 and that he would cut his own $1 million-plus salary to that same amount. The savings from Price’s salary and corporate profits would fund the raises.
Good or bad move?
Applauded as a champion in the fight against income inequality, Price enjoyed a lot of complimentary press regarding his decision. But now he is facing a lot of unintended consequences, including:
- The resignation of prized employees who were reportedly angry that marginal, inexperienced workers now earned the same amount or close to the high-performing employees.
- Loss of other key employees who, when raising their concerns about the new plan, were not listened to but criticized for being greedy.
- A lawsuit from his brother, owner of 30% of the company, claiming that Price enriched himself (net worth of $3 million) while the cofounder brother did not financially benefit.
- With the company's earnings committed to the new compensation plan, the company lacks resources to fight the lawsuit and, according to Price, the survival of the company is threatened.
So how this story will play out is uncertain.
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