When Dan Price, the CEO of Seattle-based Gravity Payments decided to cut his annual salary of about $1 million to $70,000, while promising to pay each of his workers the same amount, it not only made his employees happy but also helped the company gain customers. For some workers, the increase will more than double their pay. One 21-year-old mother said she’ll buy a house. And the $70,000 figure is not a random number — Price said it came out of a Princeton study that indicates that money does buy happiness. People making roughly $75,000 tend to be happier than those who make less than that.
Making a higher income doesn’t appear to affect your daily happiness after a point, but making more and more money does continue to improve your outlook on life indefinitely.
Daniel Kahneman, author of the Princeton study and Nobel Prize-winning psychologist
At a time of increasing anger nationally over the enormous gap between the pay of top executives and their employees, the announcement received immense attention. Gravity’s CEO launched the company, a credit card payment processing firm, from his dorm room at Seattle Pacific University when he was just 19. He has long taken a progressive approach that includes allowing his workers to take unlimited paid vacation after their first year.
If I look at my colleagues, and what they talk about on a day-to-day basis and what their concerns are — just looking at their faces when Dan announced the pay increase, it was pretty phenomenal.
Stefan Bennett, a customer relations manager at Gravity Payments