The co-founder and CEO of Gravity Payments, Dan Price did something remarkable. In 2015, the credit card payment processing company made headlines around the world when Price announced that its employees would be paid a minimum wage of $ 70,000. Dan has cut his own $ 1.1 million salary by 90%. At the time, this decision received a lot of criticism, but 6 years later the company is thriving and Price said it made him happier and a better boss.
He started his business as a teenager and had already grown it to reach 2,000 customers and 120 staff workers located in Seattle and his hometown of Boise, Idaho. He realized how unfair it was to have so much as the people who worked under him struggled.
This point was brought home when he discovered a McDonald’s manual on employee Rosita Barlow’s desk. When asked, Rosita burst into tears and confessed that after quitting her job at Gravity, she went straight to her job at McDonald’s to make ends meet. Some evenings she even stood in line at the local food counter.
It was then that Dan decided to do something drastic to end income inequality in his business. In 2015, he made international headlines by slashing his salary by 90%, mortgaging his two houses, and giving up his stocks and savings so he could increase each employee’s salary to 70,000 $ per year!
More than a third of the employees have seen their wages double. Some feared that productivity would drop if everyone earned more. But the opposite turned out to be true. Dan’s employees really started to thrive once the stress of making ends meet was taken out of their day-to-day lives. They were able to do things such as buy homes, pay off debts, and start healthier lifestyle. “There was some concern out there that people were wasting any gains they might have. And we really saw the opposite,” Dan explained.
Employees like Rosita were finally able to quit their second job and focus on their work in Gravity, effectively increasing productivity. Rosita even managed to become their sales manager! “When money isn’t at the forefront of your mind when doing your job, it allows you to be more passionate about what makes you tick,” Rosita said. Now the focus is on ‘How do I do good work?’”
After the changes, they’ve increased the value of the payments they process from $ 3.8 billion per year to $ 10.2 billion.
When COVID19 hit the United States, Dan was terrified of having to resort to layoffs.
Instead of making unilateral decisions, Dan stayed true to form by calling a meeting with all 200 employees. He presented the company’s problems and their options and opened the discussion.
What they decided shocked him! Almost all employees have agreed for a voluntary pay cut of between 5% and 100% to maintain Gravity Payments. “I am so proud of my team,” said Dan. “I’m really shocked how they sacrificed themselves in so many ways for this company.”
The pay cuts worked! Gravity was able to overcome the economic crisis and recently they have restored all salaries to their pre-pandemic amounts. Not only that, but every employee’s “loan” was returned and they also gave them a raise!
A role model!
“To help fund our minimum wage of $ 70,000, I cut my CEO’s salary from $ 1.1 million to $ 70,000. I don’t miss a millionaire lifestyle. Going from rich to very rich won’t make you happier. But, doing what you think is right will.” Price wrote.
Dan remains humble about his skills as a CEO, but explained that he continually learns that greater financial freedom translates into happier and more productive employees. He wants other big companies to follow his lead when it comes to raising the minimum wage.
Before she got the 2nd job, there were nights where she would line up for a food bank.
In our office that day, we went over her finances. We paid market rate. But as a CEO, I was out-of-touch with what it was like to work off student debt at $30k a year in an expensive city.
— Dan Price (@DanPriceSeattle) July 29, 2021
“I’m still learning to be a better boss and to look ‘good’ than other CEOs because the standard is so low,” he wrote. ” You should listen to your employees, trust them and reward them. They are responsible for the success of a business, not the CEOs.”