Dan Price raises minimum wage at his company to $70,000 a year

[Ford]

Whether or not this is charity depends on whether or not he expects that the additional money he is paying out in salaries will be brought back in with increased productivity and profits. Does he?

Do you think it will?

The article makes it pretty clear its coming at the expense of profits and his salary which for a proprietor is essentially the same as profits.

Well when it comes down to brass tacks, every dollar you spend comes "at the expense of profits." Even if this guy paid his employees the absolute bare minimum required by the law, it would come at the expense of profits.


At issue is whether maximizing profits to the exclusion of all else is good business. Does your company thrive if you begrudge every single dollar you pay your employees? Or does it work better if the CEO takes a pay cut in order to redistribute the profits to the people who make the company profitable in the first place?

 

[dismal]

The article makes it pretty clear its coming at the expense of profits and his salary which for a proprietor is essentially the same as profits.

Well when it comes down to brass tacks, every dollar you spend comes "at the expense of profits." Even if this guy paid his employees the absolute bare minimum required by the law, it would come at the expense of profits.


At issue is whether maximizing profits to the exclusion of all else is good business. Does your company thrive if you begrudge every single dollar you pay your employees? Or does it work better if the CEO takes a pay cut in order to redistribute the profits to the people who make the company profitable in the first place?

Maybe you should read the article. By doing this, he expects profits to go down not up. He does not expect his super duper happy workers to offset the additional costs by working harder and/or smarter.

 

[Ford]

Well when it comes down to brass tacks, every dollar you spend comes "at the expense of profits." Even if this guy paid his employees the absolute bare minimum required by the law, it would come at the expense of profits.


At issue is whether maximizing profits to the exclusion of all else is good business. Does your company thrive if you begrudge every single dollar you pay your employees? Or does it work better if the CEO takes a pay cut in order to redistribute the profits to the people who make the company profitable in the first place?

Maybe you should read the article. By doing this, he expects profits to go down not up. He does not expect his super duper happy workers to offset the additional costs by working harder and/or smarter.

I get it. You think that maximum profit is the goal, and anyone who doesn't squeeze every last dollar out of their employees is a communist.


Maybe you should reconsider your priorities.

 

[dismal]

Maybe you should read the article. By doing this, he expects profits to go down not up. He does not expect his super duper happy workers to offset the additional costs by working harder and/or smarter.

I get it. You think that maximum profit is the goal, and anyone who doesn't squeeze every last dollar out of their employees is a communist.


Maybe you should reconsider your priorities.

Maybe you should read the thread to follow the conversation.

 

[Jolly_Penguin]

Maybe you should read the article. By doing this, he expects profits to go down not up. He does not expect his super duper happy workers to offset the additional costs by working harder and/or smarter.

I get it. You think that maximum profit is the goal, and anyone who doesn't squeeze every last dollar out of their employees is a communist.


Maybe you should reconsider your priorities.

If maximum long term profit is not his goal, then he is being a nice guy and helping people out... this is charity in that case. Nothing wrong with that, but that's what it is. On the other hand, if he DOES think this will increase overall profit, due to public goodwill, free advertising, increased productivity of happy workers, less cost in hiring due to turnaround, etc, then it would be a business investment.

 

[DBT]

Acknowledging and doing away with shameless exploitation of human labour when it is in his power to do so is not charity. It is basic decency.

 

[barbos]

Acknowledging and doing away with shameless exploitation of human labour when it is in his power to do so is not charity. It is basic decency.

What if he decided to pay $470k?
And in this particular case this a credit-card related business, you know, the one which overcharge people many of which are way way below $70k/year income.
So decency and credit-card business don't exactly go together.

 

[Ford]

I get it. You think that maximum profit is the goal, and anyone who doesn't squeeze every last dollar out of their employees is a communist.


Maybe you should reconsider your priorities.

Maybe you should read the thread to follow the conversation.

Maybe you should start your own company where you can freely fuck over your employees and lord over us when you turn an epic profit as a result?

 

[bigfield]

Do you have something against an employer paying their employees what they think they are worth?

I don't even have an objection to an employer paying his employees vastly more than he thinks they are worth. With his own money.

Price expects to get his money's worth.

And with the most motivated staff in his industry, he will probably get it.

 

[WAB]

Acknowledging and doing away with shameless exploitation of human labour when it is in his power to do so is not charity. It is basic decency.

DBT deserves a gigantic and extra sparkly rep-jewel for this fine and truthful post.



And a colossal glass of beer.

 

[dismal]

Maybe you should read the thread to follow the conversation.

Maybe you should start your own company where you can freely fuck over your employees and lord over us when you turn an epic profit as a result?

Yeah and then we could have a thread about me. Which this thread isn't.

 

[Will Wiley]

The guy is 29. He is no doubt reasonably wealthy. At 29 having made some wealth before most do he probably likes the idea of helping others be happy. He pursued a dream and got wealthy doing it.
He might not be jaded by life

 

[DBT]

Acknowledging and doing away with shameless exploitation of human labour when it is in his power to do so is not charity. It is basic decency.

What if he decided to pay $470k?
And in this particular case this a credit-card related business, you know, the one which overcharge people many of which are way way below $70k/year income.
So decency and credit-card business don't exactly go together.

Perhaps our whole way of doing business needs a rethink. Including how we value life and environment. Which as a matter of routine practice within our current way of 'doing business' mercilessly exploits peoples lives (for the enrichment of the few) and the environment. The OP is just a small, but not trivial, example of what is possible.

 

[RavenSky]

Maybe you should read the article. By doing this, he expects profits to go down not up. He does not expect his super duper happy workers to offset the additional costs by working harder and/or smarter.

I get it. You think that maximum profit is the goal, and anyone who doesn't squeeze every last dollar out of their employees is a communist.


Maybe you should reconsider your priorities.

Maybe he should also read a little more about Dan Price and what Dan Price actually thinks about his own plan:

Mr. Price says the questions focused on capitalism and whether his plan to increase pay will be seen as a smart business decision. But if the early days are any indication, some of those fears may be short-lived. Fact is, new clients are lining up to do business with the firm.

“Our clients came to us and said we’re so happy to be a part of this,” said Mr. Price. “We’ve had businesses all over the country say, we want to do business with you because of this type of policy.”

http://blogs.wsj.com/moneybeat/2015/04/16/dan-price-takes-bite-out-of-minimum-wage-pay-gap/

Price said [his] salary cut is just temporary, until the company makes back the profit lost to the higher wages.

“I think the team is going to do a great job and make that up,” he said.
“This is an investment, not charity, and it isn’t any more than what these folks deserve.”

Although he wants to pay employees well, he said it’s also important to pay a CEO a market rate, so that if something were to happen to him, the company could afford to hire his replacement.
“I’m a capitalist,” he said.

Price said he’s been overwhelmed by emails of support from other businesses. He’s especially grateful for the support from his customers, who have applauded the move.
“We’ve literally had hundreds of businesses reach out to us and say that they’d like to do business with us,” he said.

http://www.thestar.com/news/canada/...ts-ceo-dan-price-sets-70k-happiness-wage.html

Gravity's prices and the quality of its service are what will determine its competitiveness. Neither of those variables have been altered. And as it stands, Gravity is doing quite well against its competitors: The company's anticipated profits for 2015 were $2.2 million before it used most of that for the wage hike, and Price appears confident Gravity can get back to that profit level even with the new wage scale.

In fact, Gravity will still have at least $440,000 in profits in 2015, which means it could drop its prices a bit more, keep the new wage structure, and still remain in the black.

http://theweek.com/articles/550205/why-gravity-payments-could-setting-business-model-future (I highly recommend this article for it's other points too)

"I think people were a little nervous for me, to be honest,'' he said. "Taking that big of a pay cut, first of all. Secondly, creating these expectations. I heard from a lot of people, can you do this? Can you pull this off? Are you going to go out of business from this? It is a risk, I think in the short term, but I have 100 percent confidence in the medium and long term. It's gonna be great for the company, and even more importantly, great for all of the independent businesses we serve."

http://www.today.com/money/gravity-payments-ceo-dan-price-raising-minimum-pay-70k-t15246

So the bottom line here is that Gravity is still profitable, and that Dan Price does expect profits to go up long-term, and he does expect his "super duper happy workers to offset the additional costs by working harder and/or smarter", and that his socially conscious business model will increase his client base.

 

[barbos]

What if he decided to pay $470k?
And in this particular case this a credit-card related business, you know, the one which overcharge people many of which are way way below $70k/year income.
So decency and credit-card business don't exactly go together.

Perhaps our whole way of doing business needs a rethink. Including how we value life and environment. Which as a matter of routine practice within our current way of 'doing business' mercilessly exploits peoples lives (for the enrichment of the few) and the environment. The OP is just a small, but not trivial, example of what is possible.

You did not answer my question. As for OP I am really starting to think this is a cheap publicity stunt.

 

[RavenSky]

What if he decided to pay $470k?
And in this particular case this a credit-card related business, you know, the one which overcharge people many of which are way way below $70k/year income.
So decency and credit-card business don't exactly go together.

Perhaps our whole way of doing business needs a rethink. Including how we value life and environment. Which as a matter of routine practice within our current way of 'doing business' mercilessly exploits peoples lives (for the enrichment of the few) and the environment. The OP is just a small, but not trivial, example of what is possible.

Barbos is yet another person (along with Dismal) who should really really really read more about the issue before posting.

Mr. Price started the company... in his dorm room at Seattle Pacific University with seed money from his older brother. The idea struck him a few years earlier when he was playing in a rock band at a local coffee shop. The owner started having trouble with the company that was processing credit card payments and felt ground down by the large fees charged.

When Mr. Price looked into it for her, he realized he could do it more cheaply and efficiently with better customer service.

http://www.nytimes.com/2015/04/14/b...ing-a-new-minimum-wage-70000-a-year.html?_r=0

Gravity Payments works with small business owners to lower the credit card processing fee that business owners wrestle with in between customer payments and working to eventually make a profit.

He was naturally tech savvy and helped out with everything from IT needs to cash register credit card processing. This is when he discovered there was an unnecessary evil occurring behind the scenes that small business owners were unfortunately all too familiar with.

Price says:

I found the [credit card processing] industry to be unfair. The fees were way too high, and the service seemed to be lacking, so I started [my business] almost out of necessity to help these people.

By the time Price had his freshman year at Seattle Pacific University under his belt, he was operating Gravity Payments out of his dorm room.

http://elitedaily.com/news/business/dan-price-minimum-wage/1004252/

His company processes the credit card transactions for the businesses (and is doing so cheaper and with better customer service than his competitors). Gravity is not a collection agency

Apparently, this is not the first time Dan Price has done something like this. From Wiki:  Gravity Payments CEO, Dan Price, elected to give his employees a 2% raise in response to the 2013 two-percent payroll tax reduction lapse. The day after the nation’s lawmakers let the tax reduction lapse, Price took action. He decided all Gravity Payments employees earning less than $100,000 — the vast majority — would get a 2-percent pay bump to offset the payroll tax increase.

I find it *amusing* to see how hard some people are trying to tear this guy down

 

[barbos]

I see, the guy apparently managed to compete with VISA/MasterCard. I did not know it was even possible, good for him. But this explains why he is doing so well, this whole business is based on overcharging businesses (actually card owners indirectly), so charging slightly less can get you a lot of clients. And again I don't understand how it's possible.
Also, you people do realize that there is much more simple solution to this problem? All you need is to make card owners to pay for the service and the whole business with its $70k clerks will collapse overnight.

 

[Loren Pechtel]

I wonder how this will turn out in the long run.

As others have said, his money, his choice. It's an interesting experiment.


One potential problem does come to mind, though: He's set up a situation with a major manager-abuse risk. If you're a low-level person working at his place you'll be far better off working there than elsewhere. "You want me to hire you? You'll need to sleep with me first." or "If you want to work here you'll pay me $10k/yr. You'll still be making more here than elsewhere."

 

[Ford]

Maybe you should start your own company where you can freely fuck over your employees and lord over us when you turn an epic profit as a result?

Yeah and then we could have a thread about me. Which this thread isn't.

Yes, this thread is about Dan Price. A CEO of a successful company. A guy who (according to the article linked just above) had a salary just under a million dollars a year. A guy who despite not having reached 30 years old, was named "Entrepreneur of the Year" and is using his success to undertake an interesting experiment.

Of course it remains to be seen how the experiment will work out, but you (and a few others) have spent the thread acting as if your own business acumen is superior to that of Dan Price, millionaire, entrepreneur, and CEO of his own company.

Now I'll admit my above comment was snarky, but the underlying premise is true. If Price were such a horrible businessman, he wouldn't be in a position to employ anyone at all, let alone decide to share the profits of his company with them. And unless you've been hiding your status as a far more successful CEO that has applied "free market" principles to build a larger and more profitable company than Price's, you're not exactly in a position to claim he doesn't know shit from shinola.

 

[barbos]

I wonder how this will turn out in the long run.

As others have said, his money, his choice. It's an interesting experiment.


One potential problem does come to mind, though: He's set up a situation with a major manager-abuse risk. If you're a low-level person working at his place you'll be far better off working there than elsewhere. "You want me to hire you? You'll need to sleep with me first." or "If you want to work here you'll pay me $10k/yr. You'll still be making more here than elsewhere."

Considering that managers are not getting (much of a) raise this is a real possibility.