Dan Price, the young chief executive of a Seattle-based credit card processing firm, has made national news by cutting his salary 90 percent and promising to make the minimum wage of his employees $70,000 within three years.
Why is that news? Because the average CEO now makes 300 times what the average worker earns in this country, the largest such differential in the world, according to the estimates of several economists.
Price was making $1 million a year, while a 24-year old communications specialist in his company was taking home $45,000. Some would say that $45,000 isn’t bad for such a young person and that Price, who founded his company at the age of 18, earns every penny of his salary.
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Hey, without Price, there would be no company, and those employees might not have a job.
That’s the way many people view capitalism today, and that economic model, as much as democracy itself, has come to represent what America stands for in the minds of many of our countrymen.
Yet when I look back over the history of this nation, what stands out to me is the period when the average person earned enough money to buy a home, a car, send his children to college and have enough cash on hand to pay his credit card bills in a timely fashion.
Of course, those were the days when working stiffs could expect fully paid health insurance benefits from employers and a pension. It was a unique time in the history of the world.
The economy soared. People spent money on lots of stuff they didn’t need, other people made money and more people got jobs. Everyone, it seemed, expected to go to college and get a better-paying job than their parents. The dreams of our immigrant forefathers became realty.
Those days are over forever, many people will tell you, even as the stock market hits all-time highs and advances in technology have given the average person access to more information and knowledge than ever before in the history of man.
And so the political debate focuses not on restoring the standard of living of the middle class but on increasing the minimum wage or cutting taxes to ease the burden on the very wealthy so they can make more money and create new jobs.
Price, a young entrepreneur who launched his business with some investment help from his brother, is living the American dream. He was named entrepreneur of the year in 2014 by Entrepreneur Magazine and in 2013 by GeekWire. He appeared on NBC’s “Today Show” Wednesday morning and was treated like royalty or the latest pop music star.
He talked about the importance of his employees, their devotion to their clients and how he hopes by increasing the salaries of his workers it will eventually result in even larger profits for his company.
In the process, of course, he’s also generated millions of dollars worth of publicity for himself and his company, which has caused many people to wonder if this pay raise idea is merely a publicity stunt.
It may well be. It’s always best to be wary of a shooting star in the business universe.
But while the American economy seems to be well on the road to recovery following the Great Recession, most ordinary people don’t feel very optimistic.
Their wages are stagnant, and many who lost their jobs have been forced to seek employment in new careers where their pay is much less than it once was. People are afraid to buy homes for fear that they won’t be able to keep their jobs and pay for them.
Like those who lived through the Great Depression, I suspect a lot of folks who lived through the economic downturn will forever be looking over their shoulders, looking for the next big financial calamity.
Living within your means is a good thing, and too many of us got out of that habit. Living in fear is a bad thing and keeps people from living happy, productive lives.
There’s also an impact on our government that rarely gets mentioned. A smaller middle class, or a middle class whose wages are stagnating, means less money to fund government programs and to pay public employees and their pensions.
In Illinois, we’ve all been focused on the state’s deep pension deficit with good cause. The roughly $100 billion debt is threatening to drain away money from schools, road projects, social services and public transportation.
As today’s government employees begin to retire, the taxpayers required to pay for their pensions as well as the bills to keep government running are going to have less money available to pay their bills.
And that makes it more and more likely that government employee wages and benefits are going to be cut.
That will mean another segment of the middle class, the largest group that remains from the “good old days,” will erode. They will be just like the rest of us, which some people think is a good thing, but I can’t help believing is a sign of a diminishing civilization.
A person who works hard, who obeys the laws, ought to be able to make a decent living wage. He ought to be able to save enough money to retire comfortably when he can no longer work. He ought to believe he will still have a job tomorrow so he can put money away to send his children to college, although with the skyrocketing costs of a college education that looks out of the question.
Those days are gone, people tell me. The message seems to be that if you want that American dream you better start your own business, make as much money as you can, produce a bigger profit each year for investors and be willing to tell employees to work elsewhere if they want raises or benefits.
That seems like a pretty bleak future to me, just as ugly as a future without business innovators such as Bill Gates, Steve Jobs and Dan Price.
I often tell people there have been cultures throughout history where people made vast fortunes, and there are billionaire businessmen today even in Communist China.
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What was different about this country, what set it apart for more than 50 years, was the ability of working people to live better and dream bigger than ordinary people had done in the history of mankind.
We’re still living that dream now. We have smartphones, microwave ovens, two cars (instead of one), big-screen TVs and dozens of other luxuries that our ancestors couldn’t envision.
But the ability to sustain that sort of lifestyle comes with a price, and economists keep warning that in future years people will be unable to retire or, worse, unable to work. More and more of our countrymen will find themselves without the money to stay in their homes or pay for basic needs, while future generations try to cope with competition from Third World countries that see no need to pay anyone a living wage.
Dan Price is getting national attention because he’s decided that in addition to shared sacrifice, there’s still such a thing as sharing the wealth. He could have made that point by making $250,000 a year instead of lowering his salary to $70,000.
There are many who would say he deserved that $1 million-a-year salary. I wouldn’t argue with that. I merely argue that many workers deserve better than they are getting, and that seems to anger a lot of people. And I find that an amazing change in the way Americans think about themselves.