Is $70,000 the new minimum wage?

For many Americans, minimum wage means $7.25 per hour – that’s the federal minimum wage in the U.S. But the founder of Gravity Payments, Dan Price, wants to change that, starting with his own company, reports the New York Times.

Price announced to the 120 employees of his credit card processing company that he will raise the minimum wage at his company to $70,000 a year. He decided on the plan after he read a study on happiness that extra money makes a big difference for earners who make less than $70,000.

He told his company that even the lowest earners at his company, where the average salary is $48,000, will see their salaries increase to $70,000 in the next three years. The Times reported that Price said to his employees,“Is anyone else freaking out right now? I’m kind of freaking out,” as they clapped and cheered.

Where will this money come from? For starters, it will cut into Price’s own salary: He’s lowering his salary from nearly $1 million to $70,000. He will use 75 to 80 percent of the company’s anticipated $2.2 million profit this year.

The increase will affect 70 of Gravity’s employees who were earning less than $70,000. Thirty employees will see their salaries double.

The study that inspired Price to increase his own company’s minimum wage found that emotional well-being rises with income, but plateaus at $75,000 a year.