CEO Slashes Own Pay To Raise All Wages To $70,000, And Business Is Booming (VIDEO)

While other business leaders whine about how they can’t afford to pay $15 per hour, Gravity Payments CEO Dan Price raises his minimum pay to $70,000 per year.

Price caused quite a stir when he announced his plans for his Seattle-based transactions processing firm on April 14. How can he afford this?

For starters, Gravity’s privately held, so he has more leeway. Price also slashed his own salary of $1 million per year to the same $70,000 his employees will make, and plans to invest 75 to 80 percent of the company’s $2.2 million profit into raising wages over the next three years.

In an earlier Addicting Info post, Wendy Gittleson wrote that Gravity already pays more than other companies for comparable jobs in the area: The current average salary at Price’s company is $48,000 per year, and the roughly 30 workers at the bottom of the pay scale make around $30,000 per year.

Fast forward a week later: How’s that working out for him and his company? Price tells Maggie Lake from CNN Money business is booming with dozens of new clients, and (naturally) thousands of job applicants. CBS adds:

Price said the news has brought in dozens of new clients, making it the best week for new business in the company’s 11-year history.

When Lake asked why he did it, and where he came up with the $70,000 number, Price cited a 2010 study on money and happiness from Princeton.

“The 2010 Princeton study, that I’m a huge fan of, basically says up to around 70-75 thousand dollars, every extra dollar you make has an impact on your happiness, because making less than that actually has an impact on your emotional health.”

While $70,000-$75,000 per year would raise Price’s team’s lifestyle to a level where they would have less financial stress, Price mentions that anything over that amount doesn’t increase happiness much. Perhaps that’s why he cut his own salary by over 90 percent.

“And dollars over that don’t really do anything, so you can maybe get more luxuries or things that you don’t need, but your basics are covered once you get to that point.”

Lake declares that some see Price’s new minimum wage for Gravity as a “big publicity stunt,” and he admits he thought that factor might give Gravity a 10 percent boost. But for Price, “The other 90 percent I think was about empowerment, helping people perform better.”

Price adds that after hearing about the impact his move would make on his employees’ quality of life, he has zero regrets.

“I heard, ‘now I can have a baby,’ I heard, ‘now I can move out from my parents’ house,’ I heard, ‘now I can live down the street from the office instead of having an hour commute.’ You know, those are things. . . This is the best money I’ve ever spent in my life.”

Unlike the many CEOs raking in over 331 times the average pay of their workers, Price believes in setting a good example.

“So my message is, think about what’s the right thing for you to do. Because, with leadership, there’s a moral imperative to lead and to do the right thing for those that you’re leading.”

When Lake asked about how other CEOs — who may feel pressured to start paying more — have responded, Price replied that most feedback has been positive. Most of the business leaders he’s heard from either say they’ll do it or that they want to be in a position to do so in the future.

As for those who don’t, yes, Price would like to reverse the current trend towards income inequality.

“So I really think that it will inspire people and I think we’re going to start seeing a reversal of this inequality trend.”

In an earlier chat with The New York Times, Price dismissed today’s levels of CEO pay “ridiculous” and “absurd.”

Price: “This is the best money I’ve ever spent in my life.”

Watch CNN Money‘s Maggie Lake interview Gravity Payments CEO Dan Price.

Featured photo with Gravity CEO Dan Price/CNN Money Video