A technology start-up CEO slashed his own salary by more than 90 percent in order to implement his plan to raise the minimum salary of every employee to $70,000 a year over the next three years by December 2017.
Dan Price, the founder and CEO of credit-card payments company Gravity Payments, said he hit on the idea to raise the minimum salaries of his employees after he read a study about happiness in a 2010 Princeton University study.
The article revealed that the extra money makes a big difference in their lives for people who earn less than about $70,000 annually. However, increases above that figure did not have a significant positive effect on happiness.
Price said his annual salary will be reduced to $70,000 from about $1 million until or unless the company's profits are greater than last year's about $2.2 million.
"I may have to scale back a little bit, but nothing I'm not willing to do. I'm single. I just have a dog," Price said.
The move was announced this week to the surprise of his 120 employees. Price announced that any employee at Gravity earnings less than $70,000 annually will receive a $5,000-per-year raise or be paid a minimum of $50,000, whichever is greater.
The company currently pays its 120 employees an average annual salary of $48,000. Price said paychecks of 70 of these employees will grow with this plan, while 30 of those will double their salaries.
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