The article in the url below follows-up on a 2015 story about a CEO in Seattle who announced that the minimum wage at his company (a payment processing business) was going to be $70,000 a year. The New York Times' original reporting on this story is here:
"Staff members gasped four years ago when Dan Price gathered the 120 employees at Gravity Payments, the company he had founded with his brother, and told them he was raising everyone's salary to a minimum of $70,000, partly by slashing his own $1.1 million pay to the same level."
Four years later it seems that, despite some turbulence immediately following the announcement, the company recovered and is doing well:
"Business has surged, and profits are higher than ever. Gravity last year processed $10.2 billion in payments, more than double the $3.8 billion in 2014, before the announcement. It has grown to 200 employees, all nonunion. The pay raise also helped attract new employees — including some who yearned to join a company with values. Tammi Kroll, a Yahoo executive, took an 80 percent pay cut to move to Gravity, where she is now chief operating officer."
In spite of some concerns expressed by the author about the generalizability of such a decision, it is clear that the firm's employees appreciate their CEO's investment in them:
"The gasps when Price announced his $70,000 initiative were echoed in 2016 by his own, after grateful employees led him to the parking lot and presented him with a new Tesla that they had all chipped in to buy, replacing his ratty old car."
The point of contention I have with the article is that the author describes this as "proof that capitalism can have a heart." In general, I find the rhetoric around good intentions and emotion to be unhelpful. In reality, this is just an example of an entrepreneur who has worked out how to create more value for his employees and, reciprocally, that the employees recognize this value and are rewarding the entrepreneur's progressiveness/creativity with higher productivity and loyalty. In short, it is not capitalism with a heart, but capitalism working exactly how it is intended to work.
Take care
David
David Chandler
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The $70,000-a-Year Minimum Wage
By Nicholas Kristof
March 31, 2019
The New York Times
Late Edition – Final
SR13
