Gravity Payments founder and CEO, Dan Price.
Posted on 04/15/2015 9:20:39 AM PDT by SeekAndFind
In a jaw-dropping move Monday afternoon, Dan Price, the 30-year-old founder of Gravity Payments, a credit card processing company in Seattle, Washington, announced to his 120-person staff that over the next three years, every single employee — even the lowest paid clerk — will be paid a minimum annual salary of $70,000. And he wasn't joking.
"My jaw just dropped," Phillip Akhavan, 29, who earns $43,000 working on the company's merchant relations team, said in an interview with The New York Times. "This is going to make a difference to everyone around me."
The announcement stunned the staff and triggered a wave of clapping and whooping that surprised even Price, said the Times.
"Is anyone else freaking out right now?" he asked, after the celebration had lapsed into a few moments of silence. "I'm kind of freaking out."
With the average salary at Gravity standing at $48,000, the new minimum wage is expected to increase the paychecks of about 70 employees and ultimately double the salaries of about 30 of them, according to company spokesman Ryan Pirkle.
The Christian Post reached out to Price at Gravity Payments for comment Tuesday but he was unavailable.
One of his staffers, a customer operations associate, identified as Kevin, told CP that his colleagues were still glowing from the announcement.
"I was there at the meeting. … Honestly, I could not believe what I heard, and I think that's what a lot of people felt. I kinda felt that we needed to get that repeated," he said.
And, when Price repeated the news, it finally sunk in.
"It was pretty clear, there was no confusion afterwards," said Kevin.
Price, who started his company in 2004 when he was just 19, explained that he got the idea after reading a study on happiness which shows that emotional well-being rises with incomes up to an amount of $75,000 annually.
"Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being," notes the article.
Beyond the article, Jamie June of Gravity Payments' marketing department, told CP that Price is just "an incredible" person.
"Dan is just an incredible man in general. He has a really amazing moral compass. And so that's not only with his employees but the customers," she said.
June said she wasn't aware of him being affiliated with any kind of religious institution, "but I cannot speak for him."
In discussing his decision with the Times, Price said the disparity between his market rate compensation and that of his workers is "absurd." The average chief executive earns nearly 300 times that of the average worker in America. And this disparity is one of the largest gaps in the world, and well higher than the 20-to-1 ratio gap recommended by Gilded Age magnates like J. Pierpont Morgan and the 20th century management visionary Peter Drucker, according to the Times.
"The market rate for me as a CEO compared to a regular person is ridiculous, it's absurd," Price, who drives a 12-year-old Audi, told the Times. He said his main extravagances are snowboarding and picking up the bar bill.
"As much as I'm a capitalist, there is nothing in the market that is making me do it," he said, referring to paying his staff the annual $70,000 minimum wage.
To pay for the increased staff wages, Price will cut his almost $1 million salary to $70,000 and combine that with about 75 to 80 percent of his company's $2.2 million expected in profits this year. Last year, according to the Idaho Statesman, the company was forecasted to complete $6 billion in transactions and end the year with about $15 million in revenue.
He’s making a mistake. Keep the salaries the same. Give them a share of the profits.
Gravity Payments will soon be bankrupt, bet on it.
If I knew anything about the credit card processing business I’d start a company in Seattle and undercut the competition. No was Gravity can compete with that kind of overhead.
He makes his money with stock options.
Bankrupt in a few years. When the company starts struggling will he ask for the money back to keep it going? lol
Agreed. Many folks spending increases to match their earnings. After three years, if these folks have their salaries “cut” to market rates, many will be in trouble financially.
I agree because they may work harder.
Yeah, the gods of the copybook headings will have the final say in this.
Paying someone a salary “just because” instead of because they provide more value to the business
is a predetermined losing position.
Prediction: When this socialist experiment fails, you will not find stories of it from the same people who reported it.
Its his money.
If he finds it makes his employees happier, more productive and makes his business better - then good for him.
That is very generous of him, and it is his money to do with as he wishes. But what happens when if/when the company goes under, and that receptionist making $70k has to go back to making $20k? Because you know all of these people will buy houses and cars based on what they are making, not based on what their job is actually worth on the open market...
Well he’s putting his money where his mouth is. I just wonder if he ran this by his CPAs and if they did some financial forecasts for him, to see if this works long term. I also didn’t know that credit card processing could be so profitable.
I disagree. Paying people a significant amount over a prevailing wage all but guarantees a drastic reduction in turnover and training costs. The company is also going to benefit as the depth of the collective knowledge and experience of the firm grows over the years.
Variations on this same strategy have worked just fine for Google, Genentech, and Ford Motor Company - whose founder Henry Ford created this innovation in using wages to improve employee conditions and then to improve retention and productivity.
Normally I would agree, however, this is not necessarily a "socialist experiment". No gov't is involved - it's not something that's being mandated - this is of his own free will, and I approve. I WILL, however, be very interested in seeing how it all pans out. I'd be willing to bet that those that were already @ the $70k mark, due to education, experience, etc. would be pretty upset. I'm holding judgement to see the results.
“I also didn’t know that credit card processing could be so profitable.”
Legalized money laundering, and you get to keep a slice.
> He’s making a mistake. Keep the salaries the same. Give them a share of the profits.
I agree. He will be bankrupt in no time. Its a nice gesture or PR move but unless he has plenty of reserves the reality of his error in judgment for the sake of notoriety is going to be a swift kick in the a$$
Didn’t Ben and Garry pull some stunt like this? As I recall they were bragging about making the same as their employees or something like that. Ends up they had bottomless expense accounts and incredible benifits.
Well certainly they did, that stuff isn’t taxed.
Liberals aren’t necessarily stupid, just greedy.
Just like Hillary’s $300 grand for a 45 minute speech goes to the CGI rather than being taxed as income.
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