At a time when the income gap between top executives and employees is growing as a major issue across the nation, a 30-year-old founder of a Seattle-based credit-card payment processing firm has decided that all of his employees should be earning at least $70,000 annually, even the lowest-paid clerks.
The company is relatively small, about 120 employees, but the gesture is huge, certainly for the workers at Gravity Payments, and for the broader and politically-heated debate on the income gap.
The firm’s founder, Dan Price, told the New York Times that he got the idea after reading an article on happiness. The article found that workers earning less than about $75,000 find it more difficult to achieve a level of “life satisfaction.”
Euphoria, more than happiness, is an apt word to describe the reaction of his staff when Price made the announcement. Price surprised employees by announcing that he planned over the next three years to raise the salary of everyone, from clerks and customer service representatives to salespeople, to a minimum of $70,000.
Price started the credit-card payment processing firm in 2004 at the age of 19. He said he would pay for the wage increases by cutting his own salary from almost $1 million to $70,000, and from 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.
“The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd,” Price told the Times. He drives a 12-year-old Audi, which he received in a barter for service from the local dealer. “As much as I’m a capitalist, there is nothing in the market that is making me do it,” referring to paying wages to help his employees achieve the American dream, buying a house and paying for their children’s education.
Here’s what the Gravity Payments site says:
“We gladly choose long-term relationships over profit. We operate on the principle of supporting our community businesses. The most compelling reason businesses switch to Gravity is our team of dedicated, local, customer service members. Our reps are part of your community. When you call us, you’re not talking in a call center overseas, they’re in our office, standing by and ready to help when needed. They can be in your store or office at almost a moment’s notice to help with any credit card issue.”
Here’s an excerpt from the abstract to that article on happiness that inspired Price:
“Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.”