A chief executive at a Seattle start-up has introduced a minimum wage of $70,000 (£47,000, €66,000)a year at his company, credit card processor Gravity Payments.

To fund the move, Dan Price is cutting his $1m annual salary to the same level as the company's lowest-paid worker. He will also help raise funds by taking up to 80% of the company's annual profit, expected to be $2.2m.

The new policy will be introduced over three years and is expected to raise the salaries of around 70 staff. The average salary at the company, which Price founded in 2004, is currently $48,000 a year.

Price told the New York Times that wage inequality between senior management and other staff had grown to ridiculous levels. Chief executives in the United States earn as much as 300 times the salaries of an average employee, according to some economists.

"The market rate for me as a CEO compared to a regular person is ridiculous, it's absurd," Price told the Times. "As much as I'm a capitalist, there is nothing in the market that is making me do it."

Price was inspired after he read an article on happiness, which showed that extra money made a major difference to people earning less than $70,000 a year. He also acted after hearing stories from friends.

"They were walking me through the math of making 40 grand a year," he told the Times. "I hear that every single week ... that just eats me inside," he added.