That was six years ago when he was CEORaise everyone’s salary at Seattle-based credit card processing company Gravity Payments to at least $70,000 a year.
Price cut his salary by $1 million to be able to give his employees a raise. He was hailed by some as a hero and met with bankruptcy expectations from his critics.
But this did not happen; Instead, the company thrives.
“Have you nearly doubled the number of employees?” asked Carter Evans of CBS News.
Price replied, “Yes.”
He said his company has tripled and he still pays his employees $70,000 a year.
“How much do you make?” asked Evans
“I earn $70,000 a year,” Price replied.
To pay his bills himself, Price cut his life short, sold a second home he owned, and used his savings. Some financial experts believe Price’s decision was too risky.
“It goes against what people expect and what we typically see in terms of businesses and corporations,” said Andrew Hafenbrack, associate professor of administration and management at the University of Washington’s Foster School of Business in Seattle.
According to the Economic Policy Institute, the average CEO pays 320 times more than the salaries of their typical workers.
“This shows that this is not the only way for the company to be successful and profitable,” said Hafenbrack. “Do you pay what you can get? Or do you pay what you think is ideal, reasonable, or fair?”
Price said that despite his company’s success with the policy, he hopes other companies will follow suit.
“I would say this is the failure of this. You know, I feel like I’ve been screaming from the rooftops like, ‘This works, this works, everyone should do this!'” “No major companies follow suit because the values of the system have the highest return, the lowest risk and the least amount of work.”
Price believes Gravity’s revenue has gone up in large part because bigger salaries have led to deeply loyal employees.
“Our turnover has been halved, so when you have employees staying twice, their knowledge of how to help our customers has gone up over time and that really paid off more for the increase than my salary cut,” Price said.
The company took a hit during, lost 55% of its business in March 2020. At one point, Price thought Gravity was just four months away from failing, but it came back after its employees voluntarily took a temporary pay cut.
Among the employees who volunteer were new parents and co-workers Carrie Chen and Alex Franklin.
“We cut our salary to $40,000,” Chen said.
“Yeah, I think we took about 60% somewhere,” Franklin said.
Since then, both Chen and Franklin’s salaries have returned to normal, and Graffiti has repaid them the lost wages they voluntarily gave up.
Chen and Franklin just had a baby, Thomas. They said Price’s policy enabled them to start a family.
“We’re on the right track to achieving the American Dream, you know, we’ve got a beautiful baby, a wonderful home, and a beautiful life. Not only are we living, we’re able to thrive,” Chen said.
Baby Thomas is one of 60 new additions to the company family over the past six years. He also claims that the number of employees buying homes has increased.
To pay for his sacrifices and the dreams he made, his employees decided to get involved and buy him a car. A gesture that meant a lot to Price.
“The staff have done for me so much that I could ever do for them. So the fact that they wanted to get me such an unreal and amazing gift, it’s so special. I don’t know if I can put it into words,” Price said.
“You could have put up with that with your old salary,” Carter said.
Price replied, “Yes, that’s right. I’m much happier now than I was before.”