Company Sets New Minimum Wage: $70,000 a Year

A study a few years back told us that money doesn’t buy happiness, except for people earning under $75,000 a year. The conclusion of the research was that money only contributes to emotional well-being up to the point of not having to stress about money. Above that point, more makes no difference. Dan Price is the owner of Gravity Payments, a credit-card processing firm. He took that study to heart in a concrete way. Yesterday, he announced to his staff of 120 people that he will be giving raises over the next three years to bring them all up to $70,000 a year.

If it’s a publicity stunt, it’s a costly one. Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

The paychecks of about 70 employees will grow, with 30 ultimately doubling their salaries, according to Ryan Pirkle, a company spokesman. The average salary at Gravity is $48,000 year.

Price hopes to raise his own salary again when the business becomes more profitable. But he still benefits from company profits, and presumably doesn’t have to make monthly car payments. And with employees who should be near the peak of emotional well-being, at least financially, Gravity Payments will most likely continue to do well. Read the entire story at the New York Times.