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CEO cuts pay to give employees big raises

  1. rhamson profile image77
    rhamsonposted 18 months ago

    The CEO of Gravity, a credit card processing service, cuts his personal pay from a million dollars a year to give the minimum wage earners in his company $70,000 a year. The workers describe the raise as freedom, family starting and house buying ability. Could this be something to spark the economy if enough companies follow suit. Or should we give the top earners more tax breaks and wait for them to hire more people?

    http://www.nbcnews.com/nightly-news/sea … 00-n341546

    1. Credence2 profile image85
      Credence2posted 18 months ago in reply to this

      RH, i read this story and it is an anomaly within a world of business as usual. I would be impressed if American CEOs took one tenth of this effort in regards to its workers. What Gravity has done is to position itself as the equivalent to the one off color grain of sand among all the granuals found on Waikiki Beach. Gravity is doing pretty well, taking greed  as a motive off of the table, how many companies are profitable enough to do this?

    2. wilderness profile image96
      wildernessposted 18 months ago in reply to this

      I wonder if he will have his job next year?  Because cutting his own salary isn't going to do much towards doubling even 30 salaries to $70,000 per year, let alone giving 70 people a "substantial raise".  $930,000/30 only equals $31,000 per person; it isn't enough to even double those few wages to make them $70,000.

      1. rhamson profile image77
        rhamsonposted 18 months ago in reply to this

        Gravity is a privately owned company. Dan Price, a co-owner of the company also related in follow up stories that the difference between his cut in salary will be combined with shares of the companies profits to make the $70,000 base wage possible.

        1. wilderness profile image96
          wildernessposted 18 months ago in reply to this

          I did catch that profits would be affected as well as the CEO's salary.  I'd have to say that if the company is making that kind of money to pay their CEO a M plus profits of multiple millions with only 70 employees it is rather special.  And, unlike the large majority of businesses, could actually afford to pay wages like that.

          Not unheard of in the dot com industry, but never seems to last, either.

          1. rhamson profile image77
            rhamsonposted 18 months ago in reply to this

            I agree that $70,000 is a bit much for any company to sustain but maybe the credit card business is doing well beyond our ability to comprehend. I think the more relevant idea should be what are profits and CEO pay having an affect on the lesser employees in their companies. With the ownership of companies like Wallmart making and assessing huge fortunes while paying their employees minimum wages and reduced hours to avoid providing healthcare insurance is there any room in between? This is some of the Walton family breakdown.
            Sam Walton had an estimated worth of $65 billion before he died. His descendants are as follows:

            Christy Walton (daughter-in-law), $35.4 billion
            Jim Walton (son), $33.8 billion
            Alice Walton (daughter), $33.5 billion
            S. Robson Walton (son), $33.3 billion
            Ann Walton Kroenke (niece), $4.7 billion
            Nancy Walton Laurie (niece), $4 billion

            Total Walton family wealth: $144.7 billion.

            This was built on the backs of minimum wage labor with little or no benefits.

            1. wilderness profile image96
              wildernessposted 18 months ago in reply to this

              No, this was based on the concept of supplying the public with the minimum cost products it could.  Which the public ate up with a vengeance and didn't care that employees weren't paid much (few WalMarts pay only minimum wage, but it still isn't much).

              And given the size of WalMart an accumulation of 150 B by the primary owners (who have other investments as well) over the time WalMart has been in business is not out of line.  IMO.

              While I recognize you would like to turn the Waltons into relative paupers, that isn't how the world works.

              1. rhamson profile image77
                rhamsonposted 18 months ago in reply to this

                It is funny how you turn a phrase. I would not like to turn the Waltons into paupers. I was merely stating the obvious which you have trouble with. Walmart escapes paying people a decent wage because it can. Yes recently Walmart has increased their minimum wage scale slightly. However all the other things such as healthcare etc. are still atrocious. It does this by taking advantage of legislation that allows foreign labor pools to displace American labor pools trying to maintain their standard of living. In doing so it also monopolizes the market with cheap goods people who are trying to survive have to buy. Try and buy a cheap pair of shoes made in this country. The aim of NAFTA and the soon to be passed TPP is to drive globalization and effectively equalize the world's economies. It is a totally socialistic aim that has been working it's way into our banks and governments. So essentially we will eventually be competing to make cheaper goods and services than some of the poorest nations and economies of the world. Sam Walton figured it out a long time ago and exploited it as quickly as he could. But even the rise of Walmart is starting to slow as plans for smaller stores are on the horizon as profits are lessening because of slowing sales. You see the very people Walmart was serving  through cheaper products are the ones who are losing their jobs due to it. You are correct that people are all too willing to belly up to the bar for cheap products because they are so short sighted to have allowed their government to sell them out and they don't realize what has happened.

                1. wilderness profile image96
                  wildernessposted 18 months ago in reply to this

                  And it's funny how you fail to read, turning a statement into something it wasn't.  I said that you would turn the Waltons into relative paupers; paupers when compared to what they are now.  I also notice you totally failed to consider the size of the empire and it's age when deciding what is too much in the way of profits.

                  And we very much disagree on what a "reasonable" wage is: I find what they pay (in general) adequate for the training, abilities and skills of the employees.  And the marketplace agrees or they wouldn't have any employees.  See, the problem is that it isn't YOU that decides what a wage should be; it's a mutual agreement between employer and employee.  Nothing at all to do with you.

                  1. rhamson profile image77
                    rhamsonposted 18 months ago in reply to this

                    Typical of your tough sh!# or die philosophies. Offering full time work (40 hours per week) would have little affect on a billion dollar empire. Get real man, paupers! The reason why they do this is to avoid overtime and healthcare benefits which you and I pick up through our taxes. Why would you want to fund the Walmart dynasties benefit package they so conveniently deny their low wage workers? It would not even dent their massive holdings.

                    We can never agree on a reasonable wage as long as you support overseas employment draining our jobs to profit the corporations even farther. Your take is "get a better job". I guess you have been out of the job market for awhile reasoning this way. The jobs for the middle class are disappearing at a increased rate as corporations buy more legislation to export more jobs.Training has nothing to do with making a wage that is determined by foreign low wage competition. Why do you think India is cashing in on the support services of the top computer sellers. Because they can get a person to work for less which improves their bottom line. This after we told all the kids to go get computer training at college level costs. Then we pulled the jobs out from under them.

                    Walmart is one of the most egregious employers in this country with chauvinist and oppressive wage to hour commitments to their employees. You ask why don't they find another job? Because there are no others available especially for older desperate workers and those that cannot afford the education to get out of there. Walmart exploits this situation continually. I refuse to shop at their stores with two within a twenty minute drive because of their hiring and import policies.

      2. gmwilliams profile image85
        gmwilliamsposted 18 months ago in reply to this


    3. Don W profile image84
      Don Wposted 18 months ago in reply to this

      Remember when most big companies didn't care about the environment? Then customers started caring about the environment, and suddenly companies started promoting how 'green' they were.

      In economics the concept of 'consumer sovereignty' is about how consumer preferences influence the production of goods and services. I think consumer preferences can not only determine production of goods and services, but also how a company operates beyond that.

      Boycotting is one method, but that is an example of negative reinforcement. Studies have shown that positive reinforcement is much more powerful in influencing behaviour than negative. Rewarding companies that act in a socially responsible way is positive enforcement. For us customers, that means giving them our business, and encouraging others to give them our business.

      That principle can be extended to those who represent the public in local government. The business in this story is in Seattle. Does the state of Washington process payments? Is the company it uses as socially responsible as Gravity Payments? If not, why not ditch them when it comes time to renew the contract and go with this company instead? It's public money, so the public can decide which businesses to give it to if it really wants to.

      And therein lies the problem. Unless the public makes it voice heard, nothing will change. CEOs of companies can be catalysts of social change, but lasting change will only come, in my opinion,  when consumers start to understand that within a capitalist society, the consumer is king. People need to embrace that power and start using it.

      1. rhamson profile image77
        rhamsonposted 18 months ago in reply to this

        I am afraid that waiting for the public to react to corporate greed is going to go like waiting for politicians to stop taking bribes. The politicians are making great strides in accommodating their handlers with more free trade agreements in the TPP. This piece legislation will finish what NAFTA started, effectively opening the Pacific region up to an additional 90 million low cost workers to compete with US workers jobs.

        1. Don W profile image84
          Don Wposted 18 months ago in reply to this

          This is where political activism plays a part. There need to be individuals willing to take up a cause, and thankfully there are, but not enough. There's a great book 'The Age of Acquiescence' that looks at how and why American resistance to the 'establishment' has simply vanished. It's an interesting read. Demonstrates the need for people to be organised, vocal and active within society.

      2. 61
        retief2000posted 18 months ago in reply to this

        That is the strength of a capitalist market, it must eventually respond to market pressures. A business must eventually answer for its public image or take actions to improve that image. Market pressures eventually decide who survives and prospers and who does not.

        UNLIKE - Governments that need only appear active during campaign season and mobilizing true believers is usually all that is required to retain office. There is precious little dynamism in politics compared with capitalism. All one has to do as a politician is sew up key constituencies that are passionate or have money, or in the case of the homosexual lobby - both.

        Demagogues are eventually revealed in the market place. In politics, they are prosper.

    4. 61
      retief2000posted 18 months ago in reply to this

      Good for him. If it works and his company survives and prospers, good. He may choose to sell off the company someday, I wonder if he will find a buyer under those terms. Perhaps everyone should take note, there is no government involvement in his decision.

  2. ahorseback profile image54
    ahorsebackposted 18 months ago

    I love it when people do this - it shows such humanity .  Of course ,--- he already made his millions----  and  anything at all looks better than  a rich man at the throne .