Giving Employees Raises Is Better for the Bottom Line

There is no doubt that the distractions caused by low income can impede an employee’s ability to perform at work. This expense is real, and it’s costing your business.

As the boss, you can try the latest leadership methodology or implement incentive programs. You can give an employee-of-the-month award or a gift certificate to a restaurant. You can sit down with your team once a week to discuss their goals and progress.

But no management techniques in the world will change the fact that your team has student loans, medical bills they can’t afford and past-due rent. These aren’t just people below the poverty line. These are your employees, and because they are strong, independent and self-motivated, they’re not telling you about their financial woes. Too often leaders focus first on creative ways to force motivation on their employees while ignoring the simple act of paying more. Evidence abounds when it comes to the power of increasing salaries.

Related: Become a Servant Leader in 4 Steps

In early 2015, McDonald’s increased the hourly rate for its lowest-paid workers by almost a dollar. Since then customer service has improved, and the company’s share price has risen more than 25 percent. Aetna raised its lowest-paid workers’ salaries by an average of 11 percent in April 2015, and net income that year increased 17 percent. When Henry Ford implemented his famous $5-a-day wages in 1914, productivity increased and absenteeism decreased.


Allowing your employees to live a modest middle-class lifestyle will have a positive impact on the financial performance of your business.


At my company Gravity Payments, getting members of our team to a living wage by increasing everyone’s salary to $70,000 or more has been incredible for our business. We saw profits double, client attrition decrease and employee turnover cut in half. I operated for years without realizing the opportunity I had right in front of me. Allowing your employees to live a modest middle-class lifestyle will have a positive impact on the financial performance of your business.

Although you can get by paying employees a certain amount, that doesn’t mean that amount is the optimal one for success. There is no law stating you can’t invest more in your employees. Wages as a percent of the economy are at an all-time low, according to the Federal Reserve Bank of St. Louis. Employee disengagement remains stagnant at about two-thirds of the U.S. workforce, according to a January 2016 Gallup poll. The Gallup Organization has reported this disengagement is costing our economy half a trillion dollars annually. There are levels of productivity and engagement that can be unlocked by paying members of your team above what the market dictates.

At this very moment, your team possesses a surplus of potential energy that could be used to benefit your business. Paying your employees more might just be your biggest investment opportunity of 2017.

Related: 7 Ways to Create a Sense of Family in the Office


This article originally appeared in the April 2017 issue of SUCCESS magazine.


Price is the founder and CEO of Gravity Payments, a credit-card processing company that supports independent businesses. In 2015 he took a personal pay cut that secured a $70,000 minimum salary for his employees.

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