What if everyone had equal money ?

My instinct is to say, "this isn't fair". Someone just starting out doesn't deserve as much as someone who's invested years of their lives in something. Someone who works longer hours, or does a more difficult job which required more training, deserves a greater reward since they've expended more effort.

Of course, this doesn't mean any level of inequality is potentially fair and that it should be subject purely to market forces, because that's stupid. For one thing, I'd be highly skeptical of claims that CEOs really work a thousand times harder than their underlings, and even more skeptical that they actually need that money. Why take such a large slice of the pie that could be given to employing more people ?

More importantly, money does not act as an incentive under all conditions. There's no point paying someone a salary too low for them to live on; if they're constantly struggling just to keep treading water, they're not going to become more determined to swim harder : they will, eventually, just sink. Improvement takes willpower, yes, but it also takes simple resources. Without providing those, people will simply remain trapped, not because they're lazy but because they have no spare energy left for anything beyond basic survival.

I could go on. In short, it's nice to reward people for doing extra work, provided everyone is earning enough that they have a chance to do extra work in the first place.

But what about just giving everyone equal pay ? I've long been curious about the effects of a maximum wage, but this is one way of cutting the Gordian Knot without any problems of deciding what's fair. I instinctively dislike it, but I also can't ignore the evidence : for one company, its seems to be working, and working very well.

Price had an idea. He had read a study by the Nobel prize-winning economists Daniel Kahneman and Angus Deaton, looking at how much money an American needs to be happy. He immediately promised Valerie he would significantly raise the minimum salary at Gravity. After crunching the numbers, he arrived at the figure of $70,000. He realised that he would not only have to slash his salary, but also mortgage his two houses and give up his stocks and savings. 

Since then, Gravity has transformed. The headcount has doubled and the value of payments that the company processes has gone from $3.8bn a year to $10.2bn.

A major caveat is that the headline says "everyone" but the text says "minimum salary". Price himself takes the minimum, but I can't find out if everyone gets this or not. I get the impression that they do, but it's hard to be sure. Certainly not everyone was happy about it :

Two senior Gravity employees also resigned in protest. They weren't happy that the salaries of junior staff had jumped overnight, and argued that it would make them lazy, and the company uncompetitive. This hasn't happened.

I cannot imagine why it would make them uncompetitive. Price's pay cut pays for a bunch of new employees who earn a very decent wage. No cost to the company and a strong incentive for new recruits. How is that "uncompetitive" ? Except in that two senior staff resigned, of course, but that seems like an artificial, self-fulfilling problem : and a self-solving one, in that it opens two new positions. The unanswered question is what those two employees were earning. Did Price just raise everyone up, or did he also reduce other people's pay besides his own ?

In any case, the benefits to the staff seem a result only indirectly from equality, in that there's now more money to spread around, but more from simply giving them enough to live on.

Rosita Barlow, director of sales at Gravity, says that since salaries were raised junior colleagues have been pulling more weight. "When money is not at the forefront of your mind when you're doing your job, it allows you to be more passionate about what motivates you," she says. Senior staff have found their workload reduced. They're under less pressure and can do things like take all of the holiday leave to which they are entitled. 

Price tells the story about one staff member who works in Gravity's call centre. "He was commuting over an hour and a half a day," he says. "He was worried that during his commute he was going to blow out a tyre and not have enough money to fix that tyre. He was stressing about it every day." When his salary was raised to $70,000 this man moved closer to the office, now he spends more money on his health, he exercises every day and eats more healthily.

"We saw, every day, the effects of giving somebody freedom," Price says. He thinks it is why Gravity is making more money than ever. Raising salaries didn't change people's motivation - he says staff were already motivated to work hard - but it increased what he calls their capability. "You're not thinking I have to go to work because I have to make money," Rosita Barlow agrees. "Now it's become focused on 'How do I do good work?'"

It should also be mentioned that Price could easily afford to take the pay cut, being a millionaire by this point already. Fair play to the guy for admitting this isn't an easy decision, but that he did it at all is pretty damned awesome. More innovations like this, please.

The boss who put everyone on 70K

In 2015, the boss of a card payments company in Seattle introduced a $70,000 minimum salary for all of his 120 staff - and personally took a pay cut of $1m. Five years later he's still on the minimum salary, and says the gamble has paid off.