Dan Price introduced the $70,000 project and his profits increased, providing benefits for hundreds of employees in his company.
A 2010 study from Princeton University confirmed that the salary you get has a huge impact on your emotional health and joy. Does this mean that money can buy happiness? Daniel Kahneman and Angus Deaton made a similar claim.
The researchers showed that our emotional wellbeing increases with every dollar we get. Every increase in your salary has an impact on your happiness. This stops somewhere around $75,000. After this limit, money doesn’t make a positive impact.
“Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone,” researchers explain. “We conclude that high income buys life satisfaction but not happiness and that low income is associated both with low life evaluation and low emotional well-being.”
How Dan Price, CEO of Gravity Payments decided to make a change?
Price’s first employee was getting $24,000 a year and received no health benefits.
He said, “Ever since then I’ve always tried to work on getting better pay, getting better wages. It’s always been on mind, but there was the question of could the company afford it?”
Recession affects every aspect of life. Price was careful with the decisions he made regarding his company. He earned profits even when times got hard. The economy evened out, but Price’s employees had their own struggles.
An entry-level employee was earning $35,000. “You’re ripping me off,” the person told Price. “You brag about how financially disciplined you are, but that just translates into me not making enough money to lead a decent life.”
It was time for action.
In 2015, Price decided to establish a minimum salary of $70,000. His 120 Seattle based employees were more than happy. He cut his salary from $1.1 million to $70,000 to make this happen.
Everyone’s life changed. Price’s employees were happy. They eliminated their debts and started families. Some of them bought their first homes and other got a chance to travel the world.
According Price the $70,000 initiative was the best decision in his life
“I think in the future, a key competitive element in business will be ‘what do you believe?’, ‘how much integrity do you have?’, ‘do you follow through?’” he said.
Media members weren’t really impressed by Gravity Payments and Price. Many said Price was just naïve. Others said he was socialist. Well, these words didn’t bother the CEO as his business was thriving. He even opened a new branch.
Dan Price added employees in Idaho to his $70,000 project on Sept. 24, 2019.
“We’re … excited to announce that all of our Boise employees making less than $70,000 a year will be put on a plan to increase their salaries to $70K by 2024,” Gravity Payments’ website read.
Gravity Payments created the perfect environment for its employees. Everyone was able to balance work with personal life. Gravity Payment earned the Best Workplace Award on multiple occasions.
Price’s company offers:
- Open paid time off
- Medical, dental, and vision insurance
- Flannel Fridays
- Company-sponsored outings
- Volunteer opportunities
- Catered breakfasts and lunches
The best business opportunities
Price’s company did wonders. But, not everyone was an enthusiast. Rush Limbaugh wanted to see Gravity Payment turn into a case study in MBA programs on how socialism doesn’t pay off.
“Since then our company tripled and we’re a successful case study at Harvard Business School,” said the proud owner.
Dan Price documented each and every positive change in his company
Since 2015, the number of employees who are homeowners had increased ten times. About 70% of Price’s employees paid eliminated their debts. The number of employees with kids was 10 times bigger. Price’s staff are 76% “engaged at work.” That’s twice the national average.
“When money is not at the forefront of your mind when you’re doing your job, it allows you to be more passionate about what motivates you,” explained employee Rosita Barlow. “You’re not thinking I have to go to work because I have to make money. Now it’s become focused on ‘How do I do good work?’”
Price was working on a book about the wage experiment. He joined forces with Tina Bennett, a literary agent representing Malcolm Gladwell. He is working with Rick Kot, an executive editor at Penguin Random House’s Viking imprint. Price was writing his book really fast because it was about himself.