Write your own all-things-considered response to the case utilizing an ethical-decision making framework/orientation (see below) as well as evidence from the case study “A Wage with Gravity” (from the 2017 IEB Regional Cases). Write at least 500 words.
Follow the outline below, which I introduced in class prior to Assignment 6 (our first Case Study Response):
- Intro paragraph that briefly summarizes the case and identifies a central ethical question or issue in it.
- Body paragraph(s) that draw from at least one ethical orientation (egoism, consequentialism, duty, virtue, ethical relativism) — I’d recommend two to show how different views converge or contrast — to analyze the ethical issue/question in the case.
- Conclusion paragraph that offers a final (even if tentative or unsure) assessment in light of the body paragraphs — if you were a owner/manager/policy-maker/etc. looking at the case from an impartial perspective, what response would you recommend?
Image Source: https://sites.psu.edu/ethicsofdatamanagement/unit1/using-ethical-concepts-to-analyze-case-studies/
The case file isn’t posting so I’ll paste it below:
Case #14: A Wage with Gravity
As co-founder, majority shareholder, and CEO of Gravity Payments, a credit card processing
company, Dan Price was disturbed when one of his employees accused him of underpaying
workers. It was 2011, and the employee was making $35,000 a year at the time. But the
employee felt exploited. Price had just shepherded his company through the 2008 recession,
where revenue fell by 20%. Gravity Payments had made a turn-around and was registering
double digit growth each year, yet employee pay had remained relatively stagnant. In 2012, Price
decided to do something about the disparity and implemented an across-the-board 20% pay
increase.
The following year, productivity increased by 30-40%, and Gravity Payments’ profitability
increased. Price’s yearly pay at the time was $1.1 million or “about 23 times the $48,000 average
at Gravity.” On April 13th, 2015, still disappointed with the quality of life of his employees,
Price announced that starting pay for all positions at Gravity would begin at $70,000. The plan to
increase minimum wages would roll out over three years and would be funded in large part by
reducing CEO pay to the new firm minimum.
The move to increase Gravity’s minimum wage upset several executives, who felt undervalued
since they now earned the same amount as entry level sales clerks. Similarly, when Walmart
increased minimum wages, one employee wrote, “It took me four years to get to $10.80. When
minimum wage goes up we don’t receive a pay increase unless we are under the minimum. Now
our 2 newest associates are making $10.75 and my annual raise is going from 40 cents down to
26 cents. Apparently experience doesn’t get rewarded.”
Although there were some initial worries that Gravity would lose midlevel employees over the
pay increase, only two workers have left since the new minimum wage was announced. A
greater concern for the financial services company is the growing rift and legal battle between
Dan Price and his brother Lucas. Lucas Price is a partner in the company, and has sued his
brother over excessive CEO compensation and reduced value of the company. According to
Lucas, the dispute is unrelated to Gravity’s new minimum wage, but, as a shareholder, he may
have a legitimate concern that Dan is not meeting his fiduciary duties. For his part, Dan says,
“My 40-year goal is to create a world where values-based companies suck up all the oxygen and
take over the economy.”
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