Seattle CEO who pays workers at least $70K US says it's paying off in spades
Dan Price of Gravity Payment hiked his employees' salaries and dramatically cut his own in 2015
It's been five years since Dan Price took a massive pay cut so he could raise his employees' salaries, and he says he doesn't regret it at all.
But he stopped short of calling the experiment a success.
"I'm pleased that it's worked very well for us. I'm pleased that we're making progress and that people's lives are better," Price, CEO of the Seattle credit card processing company Gravity Payments, told As It Happens host Carol Off.
"But I can't really fully declare it a success, because in the five years since we've implemented our living wage program, income inequality, wealth inequality and just the disparity of power between the wealthiest and the most powerful and everybody else has continued to grow in an alarming way."
In 2015, Price decided he wanted be part of the solution, not the problem. So he raised the minimum annual salary at Gravity to $70,000 US ($94,000 Cdn.) Seventy of his 120 employees got a raise, and 30 doubled their salaries overnight.
'I'm happier than I've ever been'
To make the new numbers work, he realized he would have to make the same as his lowest paid employees. So he cut his own salary from $1.1 million US a year, down to $70,000.
The impact on his own life has been minimal, he said. For example, back when he raked in over a million dollars a year, he would go heli-skiing in British Columbia. Now he just goes regular skiing.
"I'm happier than I've ever been. I don't miss those other things," he said. "It's way better for me to be part of a system where people are having their needs being met, even if I have less."
Meanwhile, Price says the benefits to his employees' lives have been invaluable.
Before 2015, many struggled to make ends meet, he said. Now, many are starting families and buying homes. He estimates one-third of Gravity workers have become debt-free, and two-thirds have significantly cut back on their debt.
It's been good for business too. He acknowledges Gravity doesn't make as much as its competitors, but says the company has grown, both in terms of staff and clients.
Still, his decision has not been without criticism.
"Probably the biggest ones was just that it's not fair and that we're living in a market-based economy and you have to follow the market," Price said.
Customers wrote him angry letters. Right-wing radio personality Rush Limbaugh dubbed him a communist. And two senior Gravity staffers quit in protest, saying the sudden pay hikes were unfair, and that junior workers would slack off.
But Rosita Barlow, director of sales at Gravity, told BBC News the opposite has been true. Her junior colleagues work harder than ever, she said, easing everyone else's workload in the process.
"When money is not at the forefront of your mind when you're doing your job, it allows you to be more passionate about what motivates you," she said.
As for Price, he admits he's "not without ego" and that he's sometimes tempted to cash in the way California CEOs have.
He says a colleague at a competitor recently suggested to him that if Gravity adopted a more traditional business model, Price could become a billionaire and do a lot of good with that money.
"He's telling me that the world needs another billionaire philanthropist, and I just don't know if that's the case. Because we've been relying on billionaire philanthropists for so long, and I don't really think that's working out very well for us," he said.
"I think we need to have, you know, kind of more of a justice and integrity engineered and designed into our system. I think we need to have companies where, you know, people are taking care of and given opportunities. And so that's more intriguing to me than trying to become a billionaire, competing with [Facebook CEO] Mark Zuckerberg or [Amazon CEO] Jeff Bezos on the Forbes list."
Written by Sheena Goodyear. Interview with Dan Price produced by Tayo Bero.