Gravity Payments was established in 2004 and has a total of 120 employees.
Dan Price, the founder and CEO of Gravity Payments in Seattle, broke the income gap between his employees and himself on Monday. The executive announced to all his employees at the beginning of the week, that he would cut his $1 million salary by 90 percent while raising the minimum salary for all of his 120 employees to $70,000.
The idea came to Price after reading a Princeton study that showed an income of about $70,000 was the threshold of happiness as a result of pay. As a result Price's decision, 30 employees have doubled their salaries and an additional 40 have significantly raised their income. Price believes his decision will allow his workers to be more productive and not have to worry about financial difficulties. The minimum wage will be kept at $70,000 for the next three years. In order to do so, Price will not only cut his salary to $70,000, but dip into the company's annual $2 million profit.
"This gives us so much freedom to just do our jobs and not have to worry about money," said Jason Byrd, an employee.
In the United States, the wage gap between CEO's and employees is large and has been growing; the average CEO makes about 300 times the amount of the average American worker. Price's decision as a CEO is a direct contradiction to the trend in American business.
The employees of Gravity Payments responded on Monday with cheers and clapping. Those who had their wages dramatically increased shared the news with their families, and expressed their relief from financial burden.
Nydelis Ortiz, a 25 year old from a Puerto Rican immigrant family, had one of the lowest salaries in the company, reports CNN. Ortiz and her family struggled with homelessness after moving to the United States. "My mom cried when I told her," said Ortiz.
Price started Gravity Payments in his college dorm at the age of 19. Though he is unique in his decision as a CEO, Price states that about 100 CEO supported his move. "I don't know if we'll see enough to move the needle, but i think people of my generation are committed to making a change," he told CNN.
