To Dan Price, the founder and CEO of Gravity Payments, a credit card processing company here in the land of $6 Starbuck’s latte’s and $1800/mo. studio apartments, it’s a simple formula: employee happiness = job satisfaction = $70K annual salary. To create that good fortune for the 120 employees of his company, Dan needed to do only one thing. Cut his own one million dollar annual salary to pay for it.
Where did Price get such a crazy idea? Where else — the National Academy of Science!
Writing in the PNAS Journal, Nobel Prize-winning economist Angus Deaton and psychologist Daniel Kahneman, both affiliated with the Center for Well-Being at Princeton University, reported on analysis of more than 450,000 responses to the to Gallup-Healthways Well-Being Index. The findings: emotional well-being rises with income up to the point of $75K a year where it plateaus like Lake Sammamish.
Conversely, low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. The study concludes that “high income buys life satisfaction but not happiness, but that low income is associated both with low life evaluation and low emotional well-being.”
Where better than Seattle, where a $15-an-hour minimum wage has now become law, can a CEO put this social theory to the test? The national minimum wage in the US is around $7 an hour, which equates to $17,000 in gross annual income. According to research, the CEOs of Standard & Poor 500 companies made 354 times the average wages of US workers in 2012.
The apple of social justice does not fall far from the tree for Price. Dan’s aunt is a state state representative, Amanda Price, in Park Township, Michigan. She gave a shout-out to her nephew this week on Facebook: “Incredible gift … amazing nephew!”
“He is an amazing young man,” said Rodger Price, noting his nephew started his company at 19 while in college with his brother, Lucas. He was named the National Small Business Administration Young Entrepreneur of the Year at age 25 and recently graced the cover of Entrepreneur Magazine.
The young executive has said taking a deep pay cut was worth it to make the company’s more than 100 employees happy and to build loyalty, according to the Associated Press. “I may have to scale back a little bit, but nothing I’m not willing to do. I’m single. I just have a dog,” he said. [24×7]
