Quick answer: In 2015, a CEO cut his salary to $70,000 to raise the minimum salary for his employees to the same amount. That CEO was Dan Price, founder of Gravity Payments in Seattle. He reduced his own pay by nearly 94% and started a worldwide debate about CEO salaries and fair pay that continues today.
He cut his salary from $1 million to $70,000… then raised the minimum salary for his employees to $70,000 per year.
Dan Price, CEO of Gravity Payments, made headlines after deciding to cut his personal salary from about $1 million per year to $70,000. A reduction of nearly 94%.
This move was intended to help raise the minimum salary for the company’s employees to $70,000 per year.
A CEO cut his salary to $70,000. Why did he do it?
The decision did not come from nowhere. Dan Price was hiking in the Cascade mountains near Seattle when a friend named Valerie told him her rent had just gone up by $200 a month and she was struggling to pay her bills. Valerie had served 11 years in the military, worked about 50 hours a week across two jobs, and still earned only around $40,000 a year. In an expensive city like Seattle, that was not enough to feel secure.
Price had been reading research by the Nobel Prize-winning economists Daniel Kahneman and Angus Deaton on how much money Americans need for emotional wellbeing. He promised Valerie he would raise pay at his company, and he kept that promise.
Price said his decision stemmed from a desire to provide his Seattle-based team with greater financial stability, after noticing the difficulties some employees were facing due to the rising cost of living.
How the company could afford a $70,000 minimum salary
Gravity Payments is a credit card processing company founded in Seattle in 2004. Price was earning $1.1 million a year, so funding the raises meant real sacrifices.
To cover the higher payroll, he cut his own income to the same $70,000 minimum, mortgaged two of his houses and gave up his stocks and savings.
In April 2015, he announced that within three years every employee would earn at least $70,000 a year. About 70 people in the Seattle office were affected, and roughly a third of the staff saw their salaries double right away. The New York Times reported the news under the headline “One Company’s New Minimum Wage: $70,000 a Year.”
The announcement itself was strangely quiet. Price said the room did not erupt in celebration at first; he had to repeat the news before the scale of it sank in.
The debate about CEO salaries and fair pay
The move sparked a wide-ranging debate about CEO salaries, what constitutes fair pay, and whether companies could redistribute a larger portion of their resources to improve their employees’ financial circumstances.
Supporters called Price America’s best boss. Critics were louder. Radio host Rush Limbaugh, whom Price had listened to growing up, called him a communist and predicted the company would become a case study in how socialism fails. Two senior employees resigned in protest, arguing that doubling junior salaries would make staff lazy and the company uncompetitive. Some customers sent handwritten letters objecting to what they saw as a political statement.
The debate was bigger than one company. In 1965, the average American CEO earned about 20 times the average worker. By 2015, that gap had grown to roughly 300 times. Price’s decision gave both sides a real example to argue about.
What the $70,000 minimum salary actually did
The documented results went against the critics’ predictions:
- Employee retention hit 91% in 2015, against an industry average of 68%.
- Customer retention rose from 91% to 95%, and company profits doubled.
- The value of payments processed grew from $3.8 billion a year to $10.2 billion.
- More than 10% of staff bought their own homes in one of the most expensive U.S. cities for renters.
- About 70% of employees said they had paid off debt, and voluntary pension savings more than doubled.
- Price told the BBC that the company went from zero to two babies a year among staff to more than 40 after the policy.
One call centre employee had been commuting more than an hour and a half each way and worrying every day that a blown tyre would break him. After the raise, he moved closer to the office, started exercising and ate better. His colleagues saw the difference in him.
Staff also noticed the difference in their boss. Price rented out his own house and drove a 12-year-old Audi, so his employees secretly pooled money and bought him a Tesla. In the video they posted, Price walks out to the parking lot, sees the car and cries.
Five years later, in 2020, he was still earning the same $70,000 minimum as everyone else.
A note on what came later
The story above is based on reporting from the 2015 decision through 2020. Later developments matter for anyone reading it today. In August 2022, Dan Price resigned as CEO of Gravity Payments after assault allegations. He pleaded not guilty to misdemeanor charges of assault and reckless driving, and the charges were dismissed in 2023. He returned to the company in an advisory role in 2024. The debate his 2015 decision started, however, never really ended.
Why the story still matters
A single decision by the company’s CEO… He drastically cut his own salary, and at the same time sparked a wide-ranging debate about the meaning of fair pay within companies.
The results were better than most critics expected, and the conversation outlived the paychecks. Every time a company raises wages or rethinks how work is scheduled, the Gravity example returns to the discussion, the same way the Microsoft Japan four-day workweek experiment still comes up whenever office schedules are questioned.
Whether companies should redistribute more resources to their employees is not a settled question. But the story of the CEO who cut his salary to $70,000 proves that asking the question is worth it.
Frequently asked questions
Is the story of the CEO who cut his salary to $70,000 true?
Yes. The New York Times first reported the decision on April 13, 2015, and BBC News, Inc. and other outlets covered it in the years that followed.
How much did Dan Price cut his salary?
He cut his personal salary from about $1 million per year to $70,000. That is a reduction of nearly 94%.
Did every Gravity Payments employee get $70,000?
The policy raised the minimum salary for the Seattle team to $70,000 a year over about three years. Roughly 70 employees were affected at the start, and about a third of the staff saw their salaries double immediately.
Did the $70,000 minimum salary hurt the company?
By the reported metrics, no. Employee retention reached 91% against an industry average of 68%, profits doubled, and the value of payments processed grew several-fold over five years.
Why did Dan Price choose $70,000?
He based the figure on research about money and wellbeing and on what his own staff needed to live in Seattle. He later noted that the study he cited actually pointed to $75,000.
What happened to Dan Price and Gravity Payments?
Price resigned as CEO in August 2022 after assault allegations. He pleaded not guilty, the charges were dismissed in 2023, and he returned to Gravity in an advisory role in 2024.
This article is based on contemporaneous reporting from The New York Times (2015), Inc. (2015), BBC News (2020), GeekWire (2022) and The Seattle Times (2024). No claims beyond those sources have been added.
