A Seattle CEO recently cut his $1 million salary to $70,000. The pay cut will help to fund pay raises after he set a new $70,000 minimum wage.
Dan Price is the CEO and founder of Seattle's Gravity Payments, a payment processing company. After listening to a friend's struggles caused by rising rent, he became determined to financially help his own workers.
Price decided to up the minimum salary at his 120-employee company to $70,000. The change was significant considering that the company's previous average wage was $48,000 per year.
As a result of Price's major minimum wage increase, 70 employees' salaries were impacted. Meanwhile, 30 of those workers saw their wages increase 200 percent.
The majority of the salary increases' funding was from Price's pay cut. Meanwhile, the remainder will be paid by the company's projected profits of $2.2 million for 2015, according to The New York Times.
Price explained on Tuesday that today's salary "inequality" is the greatest since the late 2000s Great Recession. After evaluating the situation he concluded, "It's time."
Interestingly, a Princeton University study in 2010 set the benchmark for acquiring happiness at a $75,000 yearly salary, according to Huffington Post. That is just $5,000 above Gravity's new minimum wage.
Also, around 28 percent of Americans said that earning a maximum of $70,000 per year would make them "feel" successful, based on a 2012 survey. The survey was conducted by CareerBuilder, a jobs website.
Price says that his salary cut will not change his lifestyle much, since he has saved a nest egg since launching Gravity in 2004. He does not intend to replace his Audi, which is 12 years old; and he will keep paying his friends' bar tabs once monthly.
The CEO perceives the pay increases as an investment, rather than a gift. His theory is that higher-paid salaries will boost sales and customer service. Price says the salary increase "pays for itself."
The average CEO in the United States earns over 350 times more than the average employee. Seattle is now implementing a $15 minimum wage, which is one of the highest in the nation.