Dan Price is the C.E.O. of Gravity Payments, but that’s not exactly enough to earn him the headlines and the positive public image Mr. Price has been earning for himself. What has been getting Dan all of that good press is the change he’s made in how he treats the 120 employees under his command.
Mr. Price, who was just named “Entrepreneur of the Year” by Entrepreneur Magazine this past January, has followed up that success by raising the salary of those 120 employees to a minimum of $70,000 per year. The raise in salary will accrue over the next three years, but, by the time it’s all said and done, even the lowest on the pay scale will receive that $70,000 salary.
Dan made the announcement on Monday, making official what must have been considered fantastical rumor for Mr. Price’s stunned staff prior to that meeting.
“Is anyone else freaking out right now? I’m kind of freaking out.”
Doubt naturally settled in amongst employees of Gravity, Dan’s credit card processing company, as well as throughout colleagues of Mr. Price, with people questioning how he could afford to make such an unprecedented change. The change hasn’t come without personal cost. Price has cut his own salary to accommodate the new wages for his workers. No longer earning an income of $1 million, Mr. Price will now be taking home the equivalent of those beneath him: $70,000. Additionally, 75 to 80 percent of Gravity’s estimated $2.2 million annual profit will be relegated to paying his workers’ salaries.
Prior to Dan’s announcement, the average Gravity salary topped off at $48,000, so 70 employees will see a pay raise, while the wage increase will double the pay for many of Price’s subordinates.
Dan Price quotes the notorious wage disparity in the United States as his motivation for making this move. Price acknowledges that the U.S. has the largest wage gap, with top executives making almost 300 times as much as their employees. Dan has seen hard times himself and, like most American companies, Gravity hit hard times in the 2008 recession. Trimming the fat was as difficult for Price as it was for most businesses of the time, but Dan was able to muddle through without laying off his valued employees or raising prices on his services.
As the situation improved for Dan, he was still hearing horror stories from friends, many of whom were making well above the $7.25 minimum wage. Even those making $40,000 a year were struggling to make ends meet.
“They were walking me through the math of making 40 grand a year. I hear that every single week,” he said. “That just eats at me inside.”
Dan expressed a desire to address the inequality he saw around him, even though this proposal made him initially wary. Mr. Price’s goal was to raise salaries without having the wage increases impact the quality of services or the prices to his customers. Mr. Price estimates that he’ll be able to earn a higher salary, once the three-year wage increase has been established and Gravity’s fiscal budget adjusts accordingly.
[Feature image: Dan Price, CEO of Gravity Payments. Image courtesy of Gravity Payments]