Six years ago, I cut my million-dollar salary to $70,000 so that everyone at our company, Gravity Payments, could make at least $70,000 per year. As CEO, I was making thirty times what my lowest-paid employee was making before we changed our pay structure. The harder they worked, the more money I made. Some of our employees were working multiple jobs just to make ends meet; meanwhile, my pockets were getting fatter. The system I created was out of whack and I had to re-evaluate my contribution to the growing income inequality in the United States.
I could see the relief and joy on the faces of my employees when I announced the new policy — accompanied by a little bit of skepticism, which was understandable. Worries about the rising cost of living, making their car payments, and rising debt began to disappear. The peace of mind that income stability brings began to set in. I’ll always remember watching that happen. But the response from some media outlets painted a different picture.
“Socialist” was the label given to me by right-wing outlets. Rush Limbaugh publicly stated that he hoped for my failure and said it would be a case study on how not to run a business. Others called me a lunatic or a tree-hugger. I was told my employees would be on unemployment soon and in line at food banks because my company would fold. The barrage of insults, name-calling, and negativity was continuous. I wasn’t asking for anyone else to pay my employees; I made a decision to cut my own salary to better the lives of my employees. But it became clear that when a country places “winner-takes-all” capitalism on the highest pedestal, everything else falls to the wayside, including any sense of humanity.
In the six years since I made that decision, we’ve tripled our revenue, our headcount has grown by 70 percent, and we receive hundreds of applications for each job opening. We attract top-tier candidates who can focus on their job without the stresses that come with trying to live off poverty wages. The amount of babies born to our staff members increased year on year, and is now ten times what it was before the policy came in, because they now have the money to support a family. First time home-ownership has skyrocketed and most employees were able to pay down some of their debt.
Not having to work a second job means they get more rest, and they don’t have the exterior stresses of missing a rent payment, so they’re able to fully focus on their job and come to work with a clear mind. Happy workers make a happy company.
The unfortunate truth is that when you put people over profit, it’s not always celebrated — but it’s always worth it. I quickly found that out. When we invested in our people, our company blossomed in return.
I grew up listening to Rush Limbaugh and even though we proved many of his claims to be inaccurate, he ended up being correct about one thing. He said Gravity Payments would be a case study and it is: It’s a case study at Harvard Business School. Specifically, it’s a case study of the kind of success a company can enjoy with a different kind of business plan.
There are still so many businesses hoarding profit, cutting corners, and leaving their employees with poverty wages. Their bottom line keeps growing, but employee wages and benefits stay stagnant. When is enough, enough?
We’ve shown the growth that can happen when employees are treated as humans and not robots. Our business flourished, our employees are happy, and our turnover rate has dropped. Business owners have the chance to make life more livable for their employees. It’s time to put humanity back in business.
Dan Price is the CEO of Gravity Payments
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