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.
I think most people are over-looking the nature of the business that this guy is in. This is a business with huge economies of scale in a very fragmented industry. He has now paid a couple of million for a massive amount of publicity, PR and goodwill. Even if Price is in the business for the long run, he can set his marketing guys loose and grow dramatically over the next couple of years, his margins will increase dramatically.
Henry Ford did a similar thing way back when IIRC. He raised wages ostensibly so that his workers could afford to buy his cars. It was a massive marketing success - with the added bonus of building loyalty and identity in a emerging business.
I'm a contractor. About one in ten of my customers asks me if they can pay with a credit card. I tell them, "No, because the processing companies want 3% of the total transaction."
As a for-instance, I would have been hit for almost $50 in processing fees today, if my customer had paid with his credit card. With profit margins being as slim as they are in the trades today, there's no way in hell I'm gonna eat that.
The same things you’re saying of this man’s company were said when Henry Ford doubled wages for everyone working for him.
I’m curious, why are you so adamantly opposed to what this guy has done with his own money and his own company? That’s what’s really getting to me on this topic is the venomous reaction of so many FReepers to someone running his business the way he wants.
I thought that was something we celebrated on FR?
True. But I live in Los Angeles and could very easily live on half of that. I'm just not a spender by nature.
I’m not opposed to what this guy does, it doesn’t affect me in any way. I just think he’s stupid. His reasons for doing this is because he read an article about some study that people are most happy when they make $75,000 a year. And maybe for publicity. But his employees can’t really produce more to justify (to me at least) the added expense. They take credit card fees.
Henry Ford raised wages for publicity, but also so his workers could afford to buy the product. And free marketing as more people drive them around. With a less diverse economy, and an actual product, it worked more in his favor as employees will work harder and actually produce more. It affected his bottom line and greatly increased production. While if I was Ford I probably wouldn’t have doubled wages, 20/20 shows that it worked. This may work out well for Gravity, and if so, good for him. I just doubt that it will.
You must be single and own your home with no debt if you can figure out how to live in Los Angeles on $35000. My wife and I own home, vehicles etc. with no debt and we still can’t live on that in Eastern South Carolina and we are FAR from being “spenders by nature”. If a young man wanted to buy a home on a mortgage, get married and have his wife stay home and raise kids as people used to do he would have a struggle on a hundred thousand a year. If they wanted to have six kids and send them to school, even just through high school, as people used to do, a hundred grand would not suffice unless they home schooled and even then it would be very tough, sending them to public school is NOT an option and private schools are very expensive. Dental and medical would eat up an incredible sum.
Single and divorced, kids grown and gone, renting a small place, 3K in credit card debt, 10K car loan. Dental discount plan, Obamacare (there is no other option for me, thanks to him).
Please elaborate. I'm curious to know.
They’ll never find a job elsewhere at anywhere near that salary, so they have no choice but to do what the boss wants, including things like padding invoices, treating underlings badly, bribing customers, etc.
It’s great so long as you can figure out what it is that ‘makes the boss happy’ - problem is he would NEVER tell you what that was. If you were fortunate enough to find some activity that ‘pleased’ him, you were good. Rock the boat, and you would be instantly marginalized and ultimately fired.
Thanks.
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