Gravity Payments co-founder and CEO, Dan Price. Dan Price, the 30 year-old founder and CEO of Seattle tech company Gravity Payments, has slashed his $1 million a year salary by 90 per cent in order to raise the minimum wage at his company to US$70k a year.
Announcing the decision to (understandable) applause and cheers from his 120 employees on Monday, Price said “I’m kind of freaking out right now… Is anyone else freaking out?”
The 2014 Entrepreneur Magazine Young Entrepreneur of the Year made the decision after reading some research on happiness, which said that for people earning up to around US$75K a year, even a small amount of extra money can make a big difference to emotional well-being.
And with the average wage at Gravity Payments sitting at around US$45,000 a year, the move will no doubt have a huge impact on many of his employee’s lives. Thirty lucky employees will actually see their salaries double.
“Yes Dan, I am also freaking out” – clapping employee.
Price founded Gravity Payments out of his Seattle dorm room when he was just 19 years old, with financial help from his older brother.
The idea for the company was born when he was playing in a band. A local coffee shop owner told him about how she struggled to cope with the poor service and high costs of her payments system. Price realised there was an opportunity for someone to provide a better system with better service for a cheaper price.
A decade later, Gravity Payments processes $6.5 billion in payments for 12,000 businesses, generating an expected US$2.2 million profit in the process.
Price’s bold move comes as pay inequality pushes to the forefront of discussion in the United States once again. The US has the highest pay gap between CEOs and regular workers in the world, with CEOs earning on average around 231 times their employees according to The State of Working America.
And thousands of workers across the US are currently protesting to demand that the government raise the minimum wage, currently $7.25 per hour, to $15 per hour.
Whether those protests come to fruition of not, we now know there’s at least one CEO with the right idea.
Dan Price giving his team the good news.
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