CEO Dan Price Says Company’s Revenue Has Tripled Since He Gave Employees $70K Minimum Salary
In 2015, Gravity Payments CEO Dan Price announced he would cut his own $1 million salary by 90 percent and bring the salaries of his employees up to a minimum of $70,000 per year
Criticism is part of the job when you're the head of a successful company, and Dan Price received plenty of it six years ago when he announced a radical shake-up at Gravity Payments.
It was in 2015 that Price, the credit card processing company's CEO, announced he would cut his own $1 million salary by 90 percent. Not only that, he also announced plans to bring the salaries of his 130 employees up to a minimum of $70,000 per year.
The move was surprising, and definitely wasn't par for the course in the world of business. A study from the Economic Policy Institute found CEOs in the United States typically make 320 times as much as their workers, and most receive lucrative salaries averaging $21.3 million a year as of 2019.
Today, it seems Price's decision has worked out for the best. On the sixth anniversary of his announcement, Price revealed on Twitter that Gravity's revenue has tripled since 2015.
"Six years later and our revenue has tripled. More importantly, our staff and company are thriving in various ways," Price tells PEOPLE. "[We have a] 10-time increase in new homes bought and babies born. Employees have increased savings and paid down debts."
Price did hear the criticism back then, and he kept receipts on those who delivered it, namely Fox News pundits who called him a socialist and predicted his employees would end up in "the welfare line." He shared a few of the clips in a video on social media.
"There are still people all over the world who believed we failed because we've been barraged with the scam of trickle-down economics," Price says, referencing the economic theory that reducing taxes on business and the wealthy will benefit the whole of society in the long term.
Price was initially inspired to cut his salary after reading a 2010 study by Angus Deaton and Daniel Kahneman. In it, the researchers claimed that one's happiness and well-being may rise with income, but only to a certain point. They believed a salary past $75,000 wouldn't significantly affect one's emotional well-being, and that incomes higher than that could buy life satisfaction, but not happiness.
Then, after speaking with a friend who said a salary of $70,000 would help her raise a son and pay rent, Price was inspired to make a change at his Seattle-based company, which expanded to Boise, Idaho a few years ago and now has about 200 employees.
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Price says he felt it was important to share the update on social media to relieve skepticism and hopefully inspire other leaders to go against the grain.
"It was important not only to share how we are doing but also how we all need to be skeptical of what we hear on TV and read online," Price says. "The B.S. detector needs to be on full force knowing that these false economic narratives that benefit the rich need to be defeated by all of us."