According to the New York Times, Price told his entire staff on Monday of the change. They report that Price began to contemplate the idea after reading an article on happiness: “It showed that, for people who earn less than about $70,000, extra money makes a big difference in their lives.”
How is Price going to be able to pay his 120 staffers this respectable wage?
He told the Times that he will cut his own salary of nearly $1 million to $70,000 per year, and use 75 to 80 percent of the company’s annual estimated $2.2 million in profits from this year to fund the raises. They report that it will affect about 70 employees’ wages, with “30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 year.”
As we’ve reported, Price has already made some progressive moves to improve the workplace for his employees. In 2013, he instituted a 2 percent payroll increase to offset a new payroll tax. “The payroll tax is regressive and is the tax that most hits everyday people,” Price told GeekWire then, adding that he decided to “put my money where my mouth is.”
If you don’t know much about Price or Gravity Payments, it’s the startup story dreams are made of. Well, that and a lot of hard work and bootstrapping. A native of rural Idaho, Price started Gravity at the age of 19 while he was still attending Seattle Pacific University. Just a little over a decade later, he’s built the company into a “multi-million dollar powerhouse in the credit card processing arena.”
“When I think about the traditional model of what a company is supposed to be and what a company is supposed to do, and what we are told the goal of a company is, it seems like it fits the unsuccessful people model,” Price said during a talk at a University of Washington Business Competition GeekWire reported on in 2014. “And so when I look at Gravity’s success, it comes from the fact that we are out there serving others. That’s our ethos. That’s who we are…
“What’s being cool is being happy, and serving others and caring about others and all of these things that go along with true success.”
This is a major move that sends a big message to other CEOs. According to this piece by the Washington Post, a recent Harvard study found that “Americans believe CEOs make roughly 30 times what the average worker makes in the U.S., when in actuality they are making more than 350 times the average worker.”
In light of today being Equal Pay Day and the wage gap, this is an amazing move on the part of a CEO. We’ve reached out to Price for comments so be sure to check back for updates.