CEO Who Took $1 Million Pay Cut To Raise Employee Salaries Has Tripled His Business

Sep 08, 2020 by apost team

Dan Price from Idaho just might be the world's best boss. Back in 2015, Dan introduced a minimum salary of $70,000 at his card payment company, Gravity Payments, taking a pay cut from his $1.1 million salary in the process.

While many in the media criticized Dan's move, five years later, the Seattle-based CEO says that the move has done wonders for his company and his many happy employees.

According to the BBC, Dan came up with the idea of a $70,000 minimum salary while he was out hiking with his friend Valerie in the Cascade Mountains. As they strolled through the woods, Valerie confided in Dan her many financial struggles. Although making $40,000 a year, Valerie still struggled with basic necessities, including her rent in the incredibly expensive Seattle metropolitan area.

Speaking with reporters from the BBC, Dan says that he was heartbroken by Valerie's plight. Part of what moved Dan so much about what Valerie was going through was that she was a veteran of the War on Terror, having served two tours in Iraq. Dan saw Valerie as the embodiment of honor and service and as a person who shouldn't have to face such difficult times.

Looking over the picturesque mountain scenery, Dan realized that he himself was part of a larger problem facing America's working people. At only 31 years old, Dan was already a huge success. But his success had been built on the backs of others who didn't benefit nearly as much from it as he did. Read on to find out how he handled this revelation and what changed for his employees.

As a teenager, Dan had set up Gravity Payments and the company had made him a millionaire. Looking at his $1.1 million salary in comparison to that of his employees, Dan was able to infer that many of them were also probably struggling financially like Valerie.

Dan has always seen himself as a champion against inequality. Raised in a deeply devout Christian family in his home state of Idaho, Dan has always scoffed at extreme wealth. The CEO points out that while the average worker struggles to make ends meet, executives live in the lap of luxury.

Dan also told the BBC that the situation has gotten worse in recent years. Back in 1965, the average CEO made 20 times as much as one of their workers. This number ballooned to 300 times in 2015.

Dan immediately promised Valerie that he would get to work fixing the inequality at Gravity Payments. Returning home, Dan did some number crunching and determined that a base salary of $70,000 would be enough to ensure that his employees could be financially secure.

Nevertheless, this base salary could not come without a fair amount of sacrifice on Dan's part. In addition to cutting his salary, Dan also had to give up his savings and stocks and had to get additional mortgages on two of his homes.

When Dan made the big announcement at Gravity, he was surprised to find that his workers didn't immediately realize how much this would change their lives. Nevertheless, about a third of the company's employees had their salaries doubled overnight.

apost.com

The new $70,000 base salary had other benefits for employees as well. Many staffers, unable to afford homes in the Seattle area, moved closer to the company, giving them more free time in their personal lives. Dan proudly told of how one employee used this new free time to get healthy, dropping 50 pounds.

Employees also started having bigger families. Before the $70,000 minimum salary, among the entire staff, employees welcomed at most two new children each year. Since the salary growth, Dan's team has had more than 40 babies.

Rosita Barlow, one of Dan's employees, told the BBC that the higher salaries make workers contribute more to the company. Rosita further adds that she feels that employees are more passionate now that they are receiving a higher salary. Dan's move has also been helpful for Gravity Payments itself. Before 2015, the company processed about $3.8 billion in payments each year, compared to $10.2 billion now.

When the Covid-19 pandemic hit, Dan's company was affected as well as many others. Faced with swindling profits, Dan decided on another unconventional approach. As he wanted to avoid layoffs at all costs, he instead called a general meeting of all employees to look for a solution together with everybody else. In an astounding move, the employees opted to take voluntary pay cuts ranging from 5% to 100% so that nobody would need to be laid off! The solution worked - the company weathered the crisis without laying a single worker off and salaries have since returned to normal.

"I'm still learning to be a better boss and only look 'good' when compared to other CEOs because the bar is so depressingly low," Dan wrote on Twitter in July 2021. "Listen to your employees, trust them, reward them. They are responsible for a company's success — not CEOs."

What do you think of Dan’s decision to pay his employees more? Let us know your thoughts and feel free to pass this on to others so they can weigh in as well!