CEO Who Raised Company Minimum Wage to 70K Says Revenue Has Tripled

Seattle-based company Gravity Payments has tripled its revenue since CEO Dan Price raised the company's minimum wage to $70,000 six years ago.

Price confirmed in an email to Newsweek on Wednesday that before the pay-policy change, Gravity Payments had a processing volume of $3.79 billion in 2014, and last year, despite the pandemic, the company had a processing volume of $11 billion and estimates to make about $13.5 billion this year.

"When you pay workers enough to meet their needs it creates a safety net," Price told Newsweek. "They no longer have to be stressed about making enough money to cover the basics and it creates a situation where people can focus on their work, career progression, and increasing their capabilities.

"There is a sense of pride someone feels when they're making a living wage, and that their voice matters, which is good for productivity. Our employee turnover was also cut in half since we implemented our pay policy."

The CEO shocked fellow business leaders in 2015 when he announced he would cut his own $1.1 million paycheck over the next three years to fund a minimum wage of $70,000 for every employee at the credit card processing company he co-founded, according to a profile about Price by Inc.

The decision to raise staffers' pay came after Price learned that one of his employees was hiding a second job in order to meet living costs.

"What helped inspire our $70k min wage?" Price wrote in a Twitter thread. "An employee was secretly working a 2nd job at McDonald's. It was clear I was an awful CEO who was failing his employees. I gave her a raise to quit that job. No one should have to work two jobs to make ends meet."

Price posted a Twitter thread and video Wednesday showing how the company has stood to defy expectations of failure. Since the wage hike six years ago, Price wrote in the thread, the company's employee base grew by 70 percent and the number of Gravity Payments' customers doubled.

He also cited that number of staff members who had babies and purchased homes both grew by 10 times in that period, and employee turnover dropped by half.

Price said the "baby boom" was the most unexpected outcome realized through the pay-policy change.

"When people have the resources to make the choices they want to, a lot of them do," Price said. "When people can give kids a good life and a good upbringing, they do it. We also have unlimited paid time off for our employees, and we encourage people to take the maternity and paternity time they need to do it right."

In his tweets, Price also cited data that 70 percent of employees paid down debts, and 401(K) contributions grew by 155 percent among workers. The price hike also had benefits for employee productivity; Price said that 76 percent of Gravity Payments' employees are engaged at work, which is twice the national average.

"We started our $70k min wage with about 130 employees in Seattle," Price wrote. "It worked so well we expanded it to a new Boise office, where the cost of living is lower but people deserve good pay all the same. We now have about 200 employees."

The decision didn't come without personal sacrifice for Price. After announcing the minimum wage raise, Price's brother and co-founder sued him, alleging Price paid himself "excessive compensation" and demanding that the court order Price to buy his brother's shares or dissolve the company, according to Inc.

Price told Newsweek that the judge ruled and "unequivocally cleared me," and the court of appeals affirmed the judge's decision.

Price also took the risk of selling all of his stocks, draining retirement accounts and mortgaging two properties in order to directed money into Gravity Payments.
"Most people live paycheck to paycheck," Price said to Inc.

"So how come I need 10 years of living expenses set aside and you don't? That doesn't make any sense. Having to depend on modest pay is not a bad thing. It will help me stay focused."

Price also wrote that the economic costs caused by the COVID-19 pandemic cut Gravity Payments' revenue by 55 percent "overnight."

"Our employees were so invested they volunteered to take temporary pay cuts to prevent any layoffs," Price wrote. "We weathered the storm, paid everyone back and are now giving out raises."

The success story comes amid renewed debate regarding President Joe Biden's plan to increase the federal minimum wage to $15 per hour, which CNBC reported could come via an executive order within weeks. A number of other CEOs, including those from big restaurant chains, are telling investors that a national minimum wage hike won't threaten business.

"We've proven that it works," Price said. "We have proven that these big companies can afford to pay a higher minimum wage, a living wage, and we've proven that that it also increases productivity.

"But unfortunately, by showing that it works, it's clear the larger companies won't do it voluntarily even if they know it can work. Those companies are giving their workers an ever-shrinking share of the pie and making it more and more difficult to reach the American Dream."

One lawmaker, Representative Ilhan Omar (D-Minn.) reacted to Price's thread, voicing her support: "Dan shouldn't be the exception but the norm. Investing in people works."

On April 13, 2015, Price invited NBC News and the New York Times to cover his ground-breaking announcement, which was met with viral social media praise and a barrage of criticism. Some accused Price of a publicity stunt while Fox News and Fox Business rebuked Price as "foolish" a "lunatic of all lunatics" and a "socialist."

"Fox News called me a socialist whose employees would be on bread lines," Price said in a viral Twitter thread posted Wednesday. "Since then our revenue tripled, we're a Harvard Business School case study & our employees had a 10x boom in homes bought. Always invest in people."

"I hope this company is a case study in MBA programs on how socialism does not work, because it's gonna fail," said the late conservative radio host Rush Limbaugh.

This story has been updated to include comments from Price.