Gravity Payments CEO Dan Price announced to his 120 employees on Monday (April 13) that he’d be raising their minimum pay to $70,000 a year. He was met with a standing ovation from the group, most of whom make a little less than $40,000.
“It’s not about making money. It’s about making a difference,” Price said on the TODAY Show this morning (April 15).
Price made this monumental decision after reading an article on research done by the National Academy of Sciences, which said that a higher income can have a positive impact on those who make less than $70K.
He also plans to gradually lower his own salary from $1 million to the new minimum.
“For me, I really do view everything I do as a responsibility. Seeing growing inequality and seeing how it’s harder to just make ends meet and kind of live the normal American dream, things are getting more and more expensive, especially in a city like Seattle, and the wages aren’t keeping up,” Price explained when asked why he’s choosing to do this.
Price started his Seattle-based business in his college dorm room. It now handles more than $6 billion in transactions for 12,000 business across the country, and is projected to make $2.2 million in profit this year.
The raised salaries would account for about 75%-80% of that profit, but Gravity isn’t publicly traded, so Price isn’t risking any shareholder fallout.
“I think people were a little nervous for me, to be honest. Taking that big of a pay cut, first of all. Secondly, creating these expectations. I heard from a lot of people, can you do this? Can you pull this off? Are you going to go out of business from this? It is a risk, I think in the short term, but I have 100 percent confidence in the medium and long term. It’s gonna be great for the company, and even more importantly, great for all of the independent businesses we serve,” Price said.