American boss cuts own salary and increases salary of staff to reduce income inequality
An American boss introduced a $70,000 minimum salary in his card payments company and cut his own annual salary of $1m, aiming to decimate inequality. Now, five years later, he still takes the minimum salary of $70,000, reports BBC.
Dan Price, owner of Gravity Payments, took the initiative five years ago, and all his 120 staff enjoy the minimum salary till now. The gamble, according to Price, has paid off.
However, things were not the same before.
Dan Price set up his company, Gravity Payments, in his teens, and at the age of 31, he became a millionaire. Gravity had about 2,000 customers and an estimated worth of millions of dollars, that brought Price an annual earning of $1.1m.
Raised in rural Idaho, Price was an upbeat and positive youth and generous in his praise of others.
It was his friend Valerie who made him to think about the huge inequality between rich and poor, that was widening day by day across the world.
While hiking in the Cascade Mountains in Seattle, Valerie shared her struggle to pay her house rent, which her landlord raised by $200.
Valerie, who Price had once dated, had served for 11 years in the military, during which time she had made two tours in Iraq. She was now working 50 hours a week in two jobs to make ends meet.
She was earning around $40,000 a year, but it was not enough to afford a decent home in Seattle.
Price was angry that the world had become such an unequal place, and suddenly it struck him that he was part of the problem.
Breathing in the crisp mountain air as he hiked with Valerie, Price had an idea.
He immediately promised Valerie that he would significantly raise the minimum salary at his company. He took help from one of his reads of a study by Nobel prize-winning economists Daniel Kahneman and Angus Deaton. The study looks at how much money an American needs to be happy.
After crunching the numbers, he arrived at the figure of $70,000. To do that, Price not only had to slash his own salary, but also mortgage his two homes and give up his stocks and savings.
Gravity has been transformed since then.
The headcount has doubled and the value of payments that the company processes has gone from $3.8bn a year to $10.2bn.
But Price did get a lot of flak. Along with hundreds of letters of support, and magazine covers labelling him "America's best boss", many of Gravity's own customers criticised him for the step.
At that time, Seattle was debating an increase in the minimum wage to $15 an hour, making it the highest in the US at the time. Small business owners were fighting it, claiming they would go out of business.
The right-wing radio pundit, Rush Limbaugh, whom Price had listened to every day in his childhood, called him a communist.
Price had hoped that Gravity's example would result in far-reaching changes in US businesses. He is deeply disappointed and sad that this has not happened.
Before taking a pay cut, Price lived in a beautiful house overlooking Seattle's Puget Sound, he drank champagne in expensive restaurants.
Afterwards, he rented his house out on Airbnb to help stay afloat.
A group of employees became sick of watching him turn up for work in a 12-year-old Audi, and secretly clubbed together to buy him a Tesla.
A film the company posted on YouTube follows one of the group, Alyssa O'Neal, as she schemes with her colleagues to surprise him with the car.
"I feel like this is the ultimate way to say thank you for all the sacrifices he has made, and all of the negative stuff he has had to deal with," she says.
Price then walks out of the office into the car park, sees the car, and starts crying.
Five years later, Price is still on Gravity's minimum salary. He says he's more fulfilled than he ever was when he was earning millions, though it's not all easy.
"There are tests every day," he says.