Boss takes paycut so staff make more

Gravity Payments head Don Price has taken a pay cut so he can raise the wages of lowest-paid staff.

The boss of a technology start-up in Seattle has shocked his employees by raising his company's minimum wage to US$70,000 ($92,160) - and funding it by cutting his own US$1 million salary to the same amount.

Dan Price, the founder and chief executive of Gravity Payments, a credit-card payment processing company, told staff he would reduce his own wages and eat into the company's profits to raise the salaries of the firm's lowest-paid staff.

"You might be making US$35,000 a year right now but everyone in here will definitely be making US$70,000 a year and I'm super excited about that," said Price, 30, who started the company as a teenager.

The national minimum wage in the United States is about US$7 an hour - US$17,000 in gross annual income.

Price decided to raise his employees' pay after reading a study about happiness in the workplace.

The research by Angus Deaton, a Nobel Prize-winning economist, and Daniel Kahneman, a psychologist, found that emotional well-being rises with income, but only to a point - about US$75,000 a year.

"The market rate for me as a CEO compared to a regular person is ridiculous, it's absurd," Price said. He did not think it was right that he should earn up to 100 times more than most of the rest of his staff.

The chief executives of Standard & Poor 500 companies made 354 times the average wages of US workers in 2012.

Gravity Payments paid an average salary of US$48,000. Of its 120 employees, 70 will see their pay cheques grow. Thirty will double their salaries. The change will be phased in over the next three years.

Price owns a three-bedroom house and drives a 12-year-old Audi, but said his friends included the super-rich. "I'm a big believer in less: the more you have, sometimes the more complicated your life gets," he said.