We all know how tough it is to find a job that pays well. But, imagine being employed by someone who takes a pay cut to ensure you’re paid more?
Living on minimum wage is a reality many Americans face. It’s not easy, and it’s not enough, especially when you have a family to think about. Countless people barely get by, even with support from the government and using food stamps. [1]
The federal minimum wage in the United States is currently $7.25, and it’s been this way for 10 years now – however, it varies from state to state. In 1938, Franklin D. Roosevelt signed the minimum wage into law, and its original intent was to ensure workers received a livable salary. How times have changed.
Now and again, though, we hear about bosses who step up and raise the bar! One such hero is Dan Prince.
Who Is Dan Prince?
In his teen years, Dan Prince created a company that would earn him millionaire status. His company, Gravity Payments, is a Seattle-based credit card processing firm. In 2015, Dan had around 120 employees, and he was earning $1.1 million a year as CEO.
His new perception on minimum wage and treating his employees well started with a hike. He and a good friend, Valarie, were walking in the Cascade mountains when she told him how she was struggling financially. Even with a $40,000 per year salary, she was still unable to afford a proper home. This made Dan angry; his friend deserved more. This got him thinking.[2]
Not All Hero’s Wear Capes
After his chat with Valarie on that hike, Dan came across a study that showed how additional income could make a significant difference in a person’s emotional well-being up to the point when they earn about $75,000 a year. You can read the 2010 paper published in the Proceedings of the National Academy of Sciences of the United States of America.
This is when Dan made an extremely bold move. Each and every one of his 120 employees would now be receiving a salary of $70,000 per year and 30 of his employees would now double their yearly pay.
The most selfless and perhaps insane part of all of this was, in order to make this move, Dan had to take a pay cut. He took from his own 1.1 million dollar salary, 90% of it.
Not Everyone Was Happy
After Dan broke the news to his staff, two of his already higher-paid employees left, saying it was unfair to pay those with less experience and less education the same salary they received.
Despite those who disagreed with what Dan was doing, his pay cut resulted in some pretty awesome things for his company.
Dan’s Pay Cut Trebled his Business
On Twitter last year August, Dan announced some surprising results. He said;
When I started a $70k minimum wage for my company in 2015, Rush Limbaugh said: “I hope this company is a case study in MBA programs on how socialism does not work, because it’s gonna fail” Since then, our company tripled & we’re a successful case study at Harvard Business School. [3]
Dan reinforced this tweet with some stats the next day;
Since my company started a $70k min wage in 2015: *Our business tripled *Staff who own homes grew 10x *401(k) contributions doubled *70% of employees paid off debt *Staff having kids soared 10x *Turnover dropped in half *76% of staff are engaged at work, 2x the national average.
All we have to say is, keep up the good work Dan!
Keep Reading: Meet the man living in a 22,000-square-foot mansion rent-free
Sources:
- “What it’s like trying to live on minimum wage—it’s a ‘constant struggle’.” CNBC. Megan Leonhardt. July 18, 2019.
- “CEO Who Took $1M Paycut To Give All Employees $70K Minimum Salary In 2015 Explains How It Affected The Company.” Bored Panda. Rokas Laurinavičius and Denis Tymulis.
- “Dan Prince.” Twitter.