Dan Price
- Gravity Payment's CEO Dan Price introduced a minimum wage of $70,000 in 2015.
- In the years afterwards, revenue rose, and staff had more babies and bought more homes, he said.
- Amid the pandemic, revenues dropped 50% but Price said the company was able to recover.
- See more stories on Insider's business page.
Six years ago, Dan Price, the founder and CEO of credit-card processing company Gravity Payments made waves when he announced that he was raising the firm's minimum salary to $70,000 for his 120 employees.
To accommodate the change, Price slashed his own $1 million salary.
In the following years, revenue soared, and staff had many more babies and bought more homes, Price told Insider. To show their appreciation of the minimum-salary change, staff bought him a Tesla.
Dan Price
"That was a really beautiful gesture and any day I drive to work or a client meeting, I can just feel the amazing relationship that we're able to have," he said.
The Seattle-based company's starting wages used to be roughly $35,000 a year, Price said. But for the company to thrive, he felt he needed to make sure that all employees were making enough to look after themselves.
This led him to double their salaries. The move inevitably drew skepticism. "The media in general predicted and said we would fail. Or even in some cases, rooted for us to fail," Price said.
But he believes he's proved them wrong: "It's been over six years now and we've had really fantastic results. We've had a 10 times increase in the number of first-time homeowners every year and 70% of our employees were able to pay down debt," Price said. About a third of his staff reported they were debt-free.
"Our employees had a 10x boom in terms of the number of babies they were having. We went from having between 0-2 babies born per year among the entire team, to over 65 born or announced over the last six years," he added.
The company has more than tripled its payment-processing volume for small businesses, according to Price. Revenue grew every year, up until the pandemic hit.
When the COVID crisis really began to bite, things looked less rosy. "2020 was the first year our revenue didn't grow in our 17-year history as a company, Price said. In fact, the company lost 50% of its revenue.
Still, "we were able to recover from that," Price said, adding that staff volunteered to take pay cuts to prevent mass layoffs and were reimbursed once the firm bounced back.
Price believes that this year the company will be able to report revenue growth again. Unlike other companies though, he is not struggling with a more recent crisis: the labor shortage.
His employee-centric business model, which includes unlimited parental leave and unlimited paid time off, has led to more than 300 applications per vacancy this year. "It gives a little perspective that paying a living wage is a huge factor in keeping and finding employees," Price said.
This echoes the findings of &pizza's CEO, Michael Lastoria, who, in a previous interview told Insider he received more than 100 applications for each vacancy, which he attributes to paying people a "proper wage." He added: "If you aren't paying your employees enough to cover basic survival costs, what possible incentive could a person have to take that job?"
Referring to the labor shortage's impact, Price said: "What we've had is a brutal and systematic redistribution of wealth from the vast majority of American workers to the people at the very top."
Because of that, "and coupled with the cost of housing, healthcare, and education, which has gotten completely out of control at the same time, we've created a scenario where it's just not workable," he added.
Price is keen to raise his employees' salaries again in future. "Things do get more expensive every year so if our minimum wage is not going up, that means it's really going down," he said.