Boss takes $1 million pay cut to raise employees’ salaries to $70k

The business owner who took a 90 per cent pay cut to give his employees a $70,000 minimum salary tripled his business in the process.

Dan Price took a $1 million pay cut five years ago – and it has paid dividends for his staff.

A boss who took a million-dollar pay cut so his employees could have a $70,000 minimum salary has explained that his business tripled as a result.

Dan Price of Seattle-based financial services company Gravity Payments slashed his million-dollar salary by 90 per cent in order to raise the minimum salary for all his employees. And the move to give his staff a better life actually paid dividends for his company.

Dan Price has listed all the benefits to paying his staff a $70,000 minimum salary.

On Twitter, he said when he started the $70,000 minimum wage for his company in 2015, American radio personality and conservative political commentator Rush Limbaugh said: “I hope this company is a case study in MBA programs on how socialism does not work, because it’s gonna fail.” Mr Price hit back: “Since then our company tripled and we’re a successful case study at Harvard Business School.”

In five years, the business model is a clear success.

Mr Price claims that not only did his business triple, he says staff who own homes grew 10 times, their superannuation (known as 401(k) in the US) contributions doubled, and 70 per cent of his employees were able to pay off their debts.

Staff turnover halved and he also said 76 per cent of employees were more engaged at work.

He also claimed that more of his staff were able to buy homes and have children.

“What I got back in return is, we went from instead of having zero first-time homeowners per year, now we have many first-time homeowners here at Gravity, and that is so exciting to me,” he told Forbes.

“Staff having kids soared 10x,” he wrote on Twitter.

Dan Price takes $1 million pay cut

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The recent COVID-19 pandemic posed another challenge for the CEO.

“Our company faced 50 per cent revenue loss. We did zero lay-offs. Employees volunteered temporary pay cuts,” he said on Twitter. “Five months later, our staff responded with record sales, all pay cuts were paid back and we’re doing great. Amazing what treating your employees like people can do.”

He told BBC Money: “We’re glorifying greed all the time as a society, in our culture. And, you know, the Forbes list is the worst example – ‘Bill Gates has passed Jeff Bezos as the richest man.’ Who cares!?”