Dan Price, CEO of Seattle-based credit processing company, Gravity Payments, spoke out on his recent decision to implement a $70,000 minimum salary to combat the ever-growing issue of income inequality.

In an interview with the Centurion, Price explained how the increase would be executed. “As soon as I made the announcement, everyone at Gravity Payments who was making under $50,000 was immediately boosted to $50,000 or higher. By December 2016, everyone will make $60,000 or more. By December 2017, everyone will make $70,000 or more. I want to be clear this is a minimum, not a maximum. It’s up to each individual to execute.”
Price claims he has dropped his own salary from $1 million a year to the company’s base salary of $70,000 to accommodate the change.
“I’ve gone down to the minimum until the company gets back to where it was. For the record, I think CEO pay is way out of whack. It’s ridiculous. My salary wasn’t $1 million because I need that much to live, but that’s what it would cost to replace me if something were to happen,” explains Price.
The decision to bump up the employee’s pay was based on a 2010 Princeton study that claims, up to around $75,000, the amount of person makes has a direct impact on self-reported happiness.
“Immediately after I announced the decision, I heard things like, ‘Now I can start a family,’ ‘Now I can move out of my parents’ house,’ ‘Now I can move closer to work and not have to commute an hour a day,’ ‘Now I can pay off my student loans quicker than I had anticipated,’” claims Price.
“The reason I made this decision is because my team is very passionate. I didn’t want them to be distracted by worries about how they’re going to make ends meet,” Price said.
When asked whether the salary increase was a way to help motivate his workers, Price explained that the decision was more about enabling the employees to achieve their highest level of productivity via minimalizing the stresses associated with living in an expensive city, paying rent, and student loans on a $40,000 salary.
Price went on to say that he feels this move will benefit the company as a whole by optimizing clientele relations.
Price explains, “As CEO, part of my job is to look out for what will benefit the company in the long-run. In the past, doing what is best for our clients has benefited the company greatly. Investing in the team has and will enable them to continue to ensure client success by putting them in a position to be a strategic decision maker.”
Price started Gravity Payments in 2004 along with his brother, Lucas. Price, only 19 at the time, created the company with a goal of helping small businesses with credit card processing at a low price. Price explains how, after a decade of hard work, he is finally able to ensure his employees some financial stability.
Price said, “When Gravity first started, I was only able to pay my first new hire $24,000 with no health benefits. It ate away at me every single day that I couldn’t pay more, so I made it my mission to solve that problem as soon as possible. It has been a burden I’ve carried with me for 12 years.”
Asked whether any unforeseen backlashes have arose since the decision, Price explains he has dealt with a fair share of naysayers. He also addressed some potential issues that could cause some growing pains within the ensuing months and years.
“A few critics have come out against this decision and I think they’re half right and I’m half right. They bring up valid points that touch on some of my major concerns with this decision. I know there will be some challenges and difficulties we’ll have to overcome in the next few years.”
Price has even dealt with some negative consequences within the company. Some long-standing employees felt the raise was without merit. Some employees felt so strongly about the unfair wage increase they decided to leave the company.
Price explains the positives certainly outweigh the negatives and that, despite the change, they have been able to maintain competitive in the marketplace.
When asked if his decision spur from any political motive, Price responded with a glimpse of his opinion towards mandated wage hikes.
“A lot of times people are proposing government solutions, which I look at as a sign of failure. We should have self-regulated and self-governed. If we take more of these problems seriously, they’ll be less need for politics to be involved. I wanted to find a practical solution to solve the problem. We have a moral imperative on us as leaders to do the best we can for those we’re leading.”
Price claims he hopes this type of change in the workplace catches on with more employers.
“When I made this decision, my hope was that other business leaders would recognize you can pay a living wage and not only survive, but thrive.” Price continued, “I think this will inspire people and we’ll start to see a reversal of this inequality trend. I’ve already started to see a few examples of this happening.”
Price went on to list some examples. “One of my colleagues told me her friend walked into work at ReMax one day and got a $10,000 raise because the owner was so inspired by this decision. Most recently, Facebook announced they were increasing the minimum wage for their team.”
Price explained what he hopes to see in the future, as far as closing the income inequality gap.
“The income gap is a big struggle for the middle class and part of that is things are getting more expensive and the wage growth just isn’t keeping up. I would like to spark a conversation and have people start thinking about a different way of doing business,” Price says.
In addition to raising the minimum wage to $70,000, Gravity Payments also allow unlimited vacation time. Price spoke about his reasoning on giving his employees a perk most workers could only dream of.
“When you show your team you trust them and give them the freedom over themselves it gives them responsibility to make the best decisions possible. We implemented the policy over a year ago, and so far have not seen anyone taking advantage of vacation days,” Price explains.
Since the decision to raise his company’s minimum wage, Price has received a good deal of backlash on the issue.
According to The New York Times, two of Price’s most prized employees quit the company. Both employees cited Price’s wage raise as an unfair and meritless one.
Many of the longest serving employees receive little, if any, raise with the decision.
Price has also lost some long-standing clients who viewed this decision as a political statement. However, this loss of business has been counter-acted by new clients who are inspired by the decision to raise the minimum wage.
Additionally, Price’s decision was met with a lawsuit by none other than his brother and co-founder of Gravity Payments, Lucas Price.
Greg Holland, who represents Lucas Price says the lawsuit is not necessarily in response to the minimum wage raise but a series of events preceding it.
Despite the negative responses Price has received, he remains positive moving forward.