This company raised minimum wage to $70,000 — and it helped business

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• RECEPTIONIST:

  Gravity Payments, this is Korinne.

• JOHN LARSON:

  About a year-and-a-half ago, life changed for the 100 employees of Gravity Payments in Seattle when their boss, Dan Price, announced the company's minimum wage would jump to 70-thousand dollars a year.

• DAN PRICE:

  Effectively immediately, we are going to put a scaled policy into place, and we are going to have a minimum 70-thousand dollar pay rate for everyone that works here.

• JOHN LARSON:

  The hikes would be phased in. A 50-thousand dollar a year minimum wage took effect immediately, and would rise to 60-thousand by the end of 2016, and 70-thousand in 2017. Price said he'd help pay for the increases by slashing his own million dollar a year compensation by more than 90 percent to 70-thousand.

• DAN PRICE:

  I'm curious if anyone has any questions?

• JOHN LARSON:

  Stories of his announcement went viral.

• CBS/SCOTT PELLEY:

  Everyone is getting a raise at a Seattle-based company.

• NBC/LESTER HOLT:

  One boss just changed the lives of his employees.

• JOHN LARSON:

  One of six kids, homeschooled in an evangelical family in Idaho, Price was a member of a local Christian rock band until he was 16. And that's when, with assistance from his dad, he helped a local coffee house owner with her credit card processing — the fees charged by banks and credit card companies each time her customers used a card.

• DAN PRICE:

  I was able to get her costs lowered, and it was a good experience for her. All of a sudden I had a reference.

• JOHN LARSON:

  Price parlayed that reference and a passion for helping small businesses into hundreds of clients and created his company. By his early 20's, he was getting rich, but growing increasingly troubled by what he called extreme income inequality in the United States.

• DAN PRICE:

  Frankly, the reality was disturbing, but the trend was even more disturbing.

• JOHN LARSON:

  According to the Washington Center for Equitable Growth, the average income of the nation's top one-percent of families last year was about $1.4 million dollars, while the average income of the bottom 99-percent of families was 49-thousand dollars a year.

• DAN PRICE:

  When you create a society that has so much inequality, where the rich and the poor have a divide that is hundreds of times over. To me the way we were going everybody was going to be hurt.

• JOHN LARSON:

  All this was happening at a time when the cost of living here in Seattle was skyrocketing. The cost of housing, especially rent, was going up so fast that many medium and lower income families couldn't afford it.

• JOHN LARSON:

  Two years ago, Seattle voters approved gradually raising the local minimum wage from 10 to 15 dollars an hour — the first major American city to do so. A study published in July by the University of Washington found the city's lowest-paid workers experienced a significant increase in wages. Which is precisely the effect Price wanted for his staff – and then some.

• ALYSSA O’NEAL:

  Gravity Payments, this is Alyssa.

• JOHN LARSON:

  Alyssa O'Neal, a single mom, used to make 21-thousand dollars a year before coming to Gravity Payments. Now she makes almost 60-thousand as a customer support representative. She's paid off her car loan, credit card debt, and moved into a better home.

• ALYSSA O’NEAL:

  It's something I never could have imagined.

• KORINNE WARD:

  Let me see if I can find that for you.

• JOHN LARSON:

  Korinne Ward, in customer support, used to have a long commute. Now she can afford to live close enough to walk to work.

• KORINNE WARD:

  And I'm able to afford the cost of living in Seattle, which is incredible.

• JOHN LARSON:

  Many employees told me they now feel secure enough financially to start families.

• EXPECTANT FATHER:

  He's due on october 12th, and he's a male, a boy, yes!

• JOHN LARSON:

  Typically the company had one or two employee pregnancies each year, Now? Seven or eight.

• GRAVITY PAYMENTS EMPLOYEE:

  Our daughter, Laylee Rose, she's 11-weeks-old today.

• JOHN LARSON:

  Some proclaimed Price "The Best Boss in America," but in protest of the minimum wage policy, some higher paid employees quit, and a few clients dropped the company's service. Conservative talk show host Rush Limbaugh predicted Price's downfall.

• RUSH LIMBAUGH:

  This is pure, unadulterated socialism, which has never worked. That's why I hope this company is a case study in M.B.A. programs on how socialism doesn't work, because it's going to fail.

• JOHN LARSON:

  Turns out, Harvard Business School did study Price for class discussion. It found the 70-thousand dollar minimum wage announcement generated not only a flood of job applicants, but many new clients. And, as for Limbaugh's prediction about Price's company?

• PROF. MICHAEL WHEELER:

  He still has to hold his breath, because it hasn't failed, I think on balance it's prospered.

• JOHN LARSON:

  In fact, Gravity Payments now reports company revenue has grown by 75 percent, and its number of new clients has risen 67 percent.

• PROF. MICHAEL WHEELER:

  Some of their success might be attributed to increased productivity on the part of the workers, who feel respected and understand they are going to have a hard time finding another job that pays so well, but it also has generated a lot of publicity, and that has been good in terms of pulling in business.

• TOM OSBORN:

  Mangoes, peaches, nectarines, cherries, yes, ma'am?

• JOHN LARSON:

  Clients like Sosios Produce in Seattle's Pike Place Market predict as long as Gravity Payments offers good service and low cost, clients won't care about their high minimum wage.

• TOM OSBORN:

  To me, if they're running their business in a way that their staff feel better about being part of the company, work harder with their customers, to me as a vendor, that's a good thing.

• JOHN LARSON:

  And if you get a sense that these higher wages somehow raise your bill?

• TOM OSBORN:

  Then we'll have a conversation.

• PROF. MICHAEL WHEELER:

  Well, there was a colleague of mine years ago who taught that our mission at the Harvard Business School ought to be to teach people to make a decent profit decently. There are lots of forces in the world that may overpower that or may make it difficult, but it's nice to see these examples of people who can swim against that tide.

• JOHN LARSON:

  Which may be one reason why Price's employees agreed to buy him a gift.

• ALYSSA O’NEAL:

  We had tried to think of a way that we could thank Dan for what he's done for us.

• JOHN LARSON:

  A little payback?

• ALYSSA O’NEAL:

  A little payback, yeah.

• JOHN LARSON:

  Customer support representative Alyssa O'Neal got the idea rolling.

• ALYSSA O’NEAL:

  We have one more gift for you. It's outside though.

• JOHN LARSON:

  She convinced the other employees to all chip in and in July they bought him a Tesla Model S worth almost 90-thousand dollars.

• DAN PRICE:

  Are you kidding me?

• ALYSSA O’NEAL:

  When it happened, it was like it was meant to be.

• DAN PRICE:

  Oh my gosh!

• ALYSSA O’NEAL:

  I was really surprised by his reaction.

• DAN PRICE:

  Thank you!

• ALYSSA O’NEAL:

  He said, 'I don't want to even see the car, I want to see you guys.' And he turned around and hugged everybody and made sure he hugged everybody first before getting in the car and touching it.

• JOHN LARSON:

  So you had sort of a crush on this car for a long time and never thought you'd have one?

• DAN PRICE:

  I thought I'd have one one day, but you ever have one of those goals where you say it's three years or two years, but it never becomes one year, it's always three years? And three years goes by, and it's still three years? It was kind of one of those deals.

• JOHN LARSON:

  Since his promise of a 70-thousand dollar a year minimum wage, higher profile companies like Starbucks and Wal-Mart have raised their minimum wage too, though none nearly as much.

• JOHN LARSON:

  If there is an ethic, what is it?

• DAN PRICE:

  I think it's 'what's your purpose? And business is really missing its potential, if it sees its purpose as creating money. It should have some larger purpose. I think it's a recipe for a better life and more success in business.

• JOHN LARSON:

  Price says for now he wants to live modestly, grow his company for his clients and employees and see to what degree other companies follow suit.

• DAN PRICE:

  The truth is I'm still trying to figure all this out.

• JOHN LARSON:

  And, we are sitting inside a Tesla

• DAN PRICE:

  And we are sitting inside a Tesla, and I'm doing my best to try to deconstruct what I think here as a 32-year-old guy who has a lot more to learn.

• Chasing the Dream:

  Poverty and Opportunity in America is a multi-platform public media initiative that provides a deeper understanding of the impact of poverty on American society. Major funding for this initiative is provided by The JPB Foundation. Additional funding is provided by Ford Foundation.