CEO Dan Price raised all his employees’ salaries to at least $70,000 by cutting his own

Faith in Humanity Restored! Chief Executive Dan Price has announced plans to raise the salary of every single employee at his company to at least $70,000 (£47,000) and will fund it by cutting his own salary by 90 percent. Mabuhay ka! Dan Price, the CEO of Seattle-based tech company Gravity Payments, gathered together his 120-strong workforce on Monday to tell them the news, which for some will mean a doubling of their salary. Seattle was already at the heart of the US debate on the gulf in pay between CEOs and ordinary workers, after the city made the ground-breaking decision to raise the minimum wage to $15 (£10.16) an hour in June. But Mr Price, 30, has gone one step further, after telling ABC News he thought CEO pay was “way out of whack”. In order not to bankrupt the business, those on less than $70,000 now will receive a $5,000-per-year pay increase or an immediate minimum of $50,000, whichever is greater. A spokesperson for the company said the average salary was currently $48,000, and the measure will see pay increase for about 70 members of staff.

The decision is an extraordinary one when you look at the numbers. At the Seattle-based company, the average salary has been $48,000 a year among its 120 employees, the Times reported. Now, 70 of those workers will see a raise and 30 will see their salaries roughly double. To pay for those huge increases, the newspaper reported, Price plans to cut his nearly $1 million salary down to $70,000, as well as use roughly three-quarters of this year's profits.

The report said Price would keep his salary low until those profits are earned back. According to the Times, Price's idea came from research by Princeton economists Angus Deaton and Daniel Kahneman, who found, essentially, that money can buy happiness up to a certain point. The duo's research showed that for salaries below about $75,000 a year, increases in income correlated with greater emotional well-being. The extremely generous raise is, of course, far easier to pull off in a small company with few employees than in one with many. And Price may have a hard time keeping pay at that rate if the company were to struggle at some point or potentially, if it grows very quickly. But the goodwill he just engendered is likely to pay itself back not only through hard work, greater loyalty and better talent, but through the greater returns that usually follow in such a culture.
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