When you run a successful company, criticism is expected. Dan Price, the CEO of Gravity Payments, faced a lot of it six years ago when he made big changes in his company, Gravity Payments. In 2015, he decided to cut his $1 million salary by 90 percent. He then raised the minimum salary of his 130 employees to $70,000 a year.
CEO Dan Price: His Uncommon Move
The move was surprising and not typical in business. A study from the Economic Policy Institute found that CEOs in the United States usually make a lot of money. They make 320 times more than their workers, with average salaries of $21.3 million a year as of 2019.
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Today, it seems Price’s decision has paid off. On the sixth anniversary of his announcement, Price shared on Twitter that Gravity’s revenue has tripled since 2015.
The Result
“Six years later, our revenue has tripled, and our staff and company are doing great in many ways.” Price said this in an interview with PEOPLE. “We’ve a 10-time increase in new homes bought and babies born. Employees have also saved more money and paid off debts.”
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Price heard the criticism back then. He kept track of those who gave it, especially Fox News pundits. He said they called him a socialist and said his employees would end up needing welfare, he also shared some of these clips in a video on social media.
“Trickle-down Economics”
“There are still many people around the world who think we failed. They think so because we’ve been misled by trickle-down economics,” Price says. He was referring to the idea that cutting taxes for businesses and the rich will eventually help everyone.
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Price decided to cut his salary after reading a 2010 study by Angus Deaton and Daniel Kahneman. The study found that happiness and well-being increase with income, but only up to a certain point.
Happiness and Self-Satisfaction
The study found that happiness and well-being increase with income, but only up to a certain point. “They thought earning more than $75,000 wouldn’t really improve someone’s happiness. They also think incomes higher than that could improve life satisfaction but not happiness,” Price said.
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After a friend mentioned that $70,000 would help her raise her son and pay rent, Price decided to change things at his company in Seattle, which also has a branch in Boise, Idaho, and now has about 200 employees.
CEO Dan Price: Making a Difference
Price felt it was important to share the update on social media. He wants to help reduce doubts and encourage other leaders to be different. “I wanted to show our progress and remind everyone to question what we see on TV and read online,” Price says.
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“We need to be on high alert. The false economic stories that benefit the wealthy must be challenged by all of us.”