Gravity Payments sets a $70,000 pay floor and cuts the CEO's salary to match

Gravity Payments processed card payments for small merchants in Seattle, and founder Dan Price had already experimented with policies like unlimited paid vacation. After a friend described her rent rising by a few hundred dollars a month with no way to absorb it, he concluded the firm's pay floor was failing its people.

A $70,000 minimum salary for every employee, funded by cutting the CEO's own pay to match and spending profit on raises rather than charging clients more.

At an April 13, 2015 staff meeting, Price announced wages would rise in steps to a $70,000 minimum by the end of 2017 — more than doubling some salaries. He cut his own roughly $1m salary to $70,000 and said the raises would consume at least half of company profit, with no plan to raise rates on clients.

The announcement became national news within a day and, according to the company, brought in new customers. By May 2016, GeekWire reported annual profit had nearly doubled to about $6.5m and the average salary had risen 50% to $72,000.

Gravity Payments, a Seattle credit-card processing firm, announced on April 13, 2015 that every employee would eventually earn at least $70,000 a year. Founder and CEO Dan Price stunned his 100-plus staff at the quarterly meeting by cutting his own roughly $1m salary to the same $70,000 and saying company profit — not higher client fees — would fund the raises over three years.

For some workers the increase more than doubled pay, and the firm already offered unlimited paid vacation after a first year. Price acknowledged the cost: the raises would eat into at least half of the company's profits, and he had no plan to pass the expense to merchants. A customer-relations manager told the AP that the firm had already gained new customers in the first days after the news.

The move was read as a direct answer to the national argument over executive pay. Stanford corporate-governance professor David Larcker called it 'an alternative way to think about a tough problem' while doubting it would scale. Within thirteen months, according to GeekWire, Gravity's profits had nearly doubled to about $6.5m and the average salary had climbed 50% to $72,000.

The experiment became a reference point in minimum-wage debates and turned the founder into a national figure — but the mechanism that made it work was internal: pay set as a company-wide floor, executive compensation attached to the same number, and the cost absorbed by profit rather than customers.

Cutting the CEO's salary to the same floor as the lowest-paid role made the promise self-imposing, not a handout.

Funding raises from profit instead of client fees kept the customer relationship out of the trade-off.

A three-year ramp with named steps let the company absorb the cost instead of shocking the P&L.

The policy compressed the pay gap to zero at the top of the company, giving the idea a story that travelled.

A pay decision can be the company's loudest statement: setting the CEO's salary equal to the worker floor made the $70,000 pledge credible in a way a policy memo never could.

Gravity kept the $70,000 floor as it expanded, and when COVID-19 cut roughly half the company's revenue in March 2020, Price reduced his own salary to zero rather than lay people off, according to the AP. Six years after the announcement he said revenue had tripled and the customer base had doubled. The decision remained the firm's defining act and one of the most discussed workplace pay experiments of the decade.