Payment processor raises minimum wage to $70,000 a year

The founder of Gravity Payments has pledged to boost the minimum wage for his 120-strong team to $70,000 a year, funding the generous bump in part by slashing his own pay.

Dan Price, who started the Seattle-based credit card payment processing firm in 2004, has set a three year target to reach the $70,000 mark in stages for his staff, who currently earn an average of $48,000.

To pay for the move, Price is cutting his own salary from nearly $1 million to the $70,000 figure and committing up to 80% of the privately owned company's profits for the year. His remuneration will rise again when Gravity earns back the profit that goes into the wage hikes.

According to the New York Times, Price decided to take the dramatic step after reading an academic article on happiness that found that emotional well-being rises with income up until about $75,000 a year but that after that point there are no further gains.

For those interested, Gravity Payments is currently advertising two jobs on its website.

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Comments: (4)

A Finextra member 16 April, 2015, 08:09

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It is a joy to watch this short video and read this story. The world needs clever and generous business men and women who can think laterally or outside the square. If employees owned part of the business that they work in it would definitely motivate them to work harder and in a more intelligent and resourceful manner. Profit sharing, treating employees with greater respect that seeks to motivate and empower their creativity and ongoing work, will be an important part of forward thinking and clever businesses in future. There are many people in this space and Dan Price is another clever and generous example.

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A Finextra member 16 April, 2015, 14:03

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Where could we get this Academic Paper? It might be worth sharing. Seriously though, according to the Center For Economic Policy Research, as income inequality rises, America's middle class shrinks (most probably similar trends around the world apply too).

Middle incomes defined as ranging from 35,000-100,000 are disappearing. "The share of the working-age households falling into this middle-class range fell all the way from 56.5 percent in 1979 to 45.1 percent in 2012. And there is no sign of this trend reverting". Assumingly, income inequality negatively affects long-term economic growth.

Perhaps, CEOs' re-inforcement of the middle-class amongst their staff by way of salary increase would not only promote employee' stickiness but also drive growth as businesses need a vibrant and prosperous middle-class to prosper.