A Seattle entrepreneur on Monday delivered a startling message to his employees — he is raising the minimum pay for all of his employees to $70,000, while reducing his own pay to the same amount from about $1 million.
Dan Price, the founder of Gravity Payments, said he increased the minimum pay to $70,000 because of concerns about income inequality — and also because he wants his workers to not have to worry about basic needs.
"Seattle is not the most affordable city and I want everyone that I know and care about to be able to do all the same basic stuff that I do," Price said. "I want them to be able to drive whatever car they want to drive as long as it's reasonable, live in a decent place. Just all the basics."
Many of Price's employees earn just shy of $40,000. The raise will be a significant increase for 70 workers. Thirty employees will see their pay doubled.
When Price started his business, whenever potential clients asked his age, he deflected the question. "I told them, 'I'm 12,' and then they would laugh," Price said.
But his success has been nothing to laugh at. In January, he graced the cover of "Entrepreneur" magazine after he was named Entrepreneur of 2014. The company also has offices in St. Louis and Hawaii, and processes payments on behalf of about 12,000 clients.
When Price made his announcement Monday, at first there was silence, with employees mouthing the words "Oh my God" and "What?" After a few minutes, the news sunk in and they broke into a standing ovation.
"I would not do this if I thought I was doing anyone a favor," Price told his employees. "I just think this is what everyone deserves."
Price said he was motivated by concerns over the income gap. One of six children, Price said he grew up in a household that had difficulties trying to achieve a middle-class lifestyle.
"It's a big struggle for the middle class," Price said. "I think part of that is things are getting more expensive and the wage growth just isn't keeping up."
The change will chew into a majority of the company's projected profits this year. But to help out, Price said he will lower his salary from about $1 million to $70,000.
For Gravity employees, the big pay raise is life-changing.
"We are going to be able to start to have a family months before we initially thought we could," Cody Boorman said.
Alyssa O'Neal, a single mother, said she can buy a house by the time she turns 21, which was her goal.
"As a mom, it just means stability, confidence," she said.
Price said he's gotten criticism on social media over the pay raise, from those who say the increase is bad for business. "I don't think that's true," he said.
"I would like to have this spark a conversation and basically have people start to think about a different way of doing business," Price said.