Seattle CEO who set firm's minimum wage to $70G says he has hit hard times
Now Playing Donald Trump on why he scares the GOP establishment
Dan Price, 31, tells the New York Times that things have gotten so bad he’s been forced to rent out his house.
Only three months ago Price was generating headlines—and accusations of being a socialist -- when he announced the new salary minimum for all 120 employees at his Gravity Payments credit card processing firm. Price said he was doing it, and slashing his $1 million pay package to pay for it, to address the wealth gap.
“I’m working as hard as I ever worked to make it work,” he told the Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”
The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.
“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” Gravity financial manager Maisey McMaster, 26, told the paper.
She said when she talked to Price about it, he treated her as if she was being selfish and only thinking about herself.
“That really hurt me,” she said. “I was talking about not only me, but about everyone in my position.”
Approaching burnout, she quit.
Grant Moran, 29, also quit, saying the new pay-scale was disconcerting
“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”
Price said McMaster and Moran, or even critic Rush Limbaugh, the talk show host, were not wrong.
“There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs,” he said.
The Times said customers who left were dismayed at what Price did, viewing it as a political statement. Others left fearful Gravity would soon hike fees to pay for salary increases.
Brian Canlis, co-owner of a family restaurant, already worried about how to deal with Seattle’s new minimum wage, told Price the pay raise at Gravity “makes it harder for the rest of us.”
“It pains me to hear Brian Canlis say that,” Price said. “The last think I would ever want to do is make a client feel uncomfortable.”
The Times said Price has dozens of new clients inspired by his move but those accounts won’t start generating profits for at least another year.
Making matters worse for Price is a lawsuit his older brother filed two weeks after the pay hike announcement.
There
are times when Dan Price feels as if he stumbled into the middle of the
street with a flag and found himself at the head of a parade.
Three months ago, Mr. Price, 31, announced he was setting a new minimum salary of $70,000 at his Seattle credit card processing firm, Gravity Payments,
and slashing his own million-dollar pay package to do it. He wasn’t
thinking about the current political clamor over low wages or the
growing gap between rich and poor, he said. He was just thinking of the
120 people who worked for him and, let’s be honest, a bit of free
publicity. The idea struck him when a friend shared her worries about
paying both her rent and student loans on a $40,000 salary. He realized a
lot of his own employees earned that or less.
Yet
almost overnight, a decision by one small-business man in the
northwestern corner of the country became a swashbuckling blow against
income inequality.
The
move drew attention from around the world — including from some
outspoken skeptics and conservatives like Rush Limbaugh, who smelled a
socialist agenda — but most were enthusiastic. Talk show hosts lined up
to interview Mr. Price. Job seekers by the thousands sent in résumés. He
was called a “thought leader.” Harvard business professors flew out to
conduct a case study. Third graders wrote him thank-you notes. Single
women wanted to date him.
What
few outsiders realized, however, was how much turmoil all the hoopla
was causing at the company itself. To begin with, Gravity was simply
unprepared for the onslaught of emails, Facebook posts and phone calls.
The attention was thrilling, but it was also exhausting and distracting.
And with so many eyes focused on the firm, some hoping to witness
failure, the pressure has been intense.
More
troubling, a few customers, dismayed by what they viewed as a political
statement, withdrew their business. Others, anticipating a fee increase
— despite repeated assurances to the contrary — also left. While dozens
of new clients, inspired by Mr. Price’s announcement, were signing up,
those accounts will not start paying off for at least another year. To
handle the flood, he has already had to hire a dozen additional
employees — now at a significantly higher cost — and is struggling to
figure out whether more are needed without knowing for certain how long
the bonanza will last.
Two
of Mr. Price’s most valued employees quit, spurred in part by their
view that it was unfair to double the pay of some new hires while the
longest-serving staff members got small or no raises. Some friends and
associates in Seattle’s close-knit entrepreneurial network were also
piqued that Mr. Price’s action made them look stingy in front of their
own employees.
Then
potentially the worst blow of all: Less than two weeks after the
announcement, Mr. Price’s older brother and Gravity co-founder, Lucas
Price, citing longstanding differences, filed a lawsuit
that potentially threatened the company’s very existence. With legal
bills quickly mounting and most of his own paycheck and last year’s $2.2
million in profits plowed into the salary increases, Dan Price said,
“We don’t have a margin of error to pay those legal fees.”
As
Mr. Price spoke in the Gravity conference room, he could see a handful
of employees setting up beach chairs in the parking lot for an impromptu
meeting. The office is in Ballard, a fast-gentrifying neighborhood of
Seattle that reflects the wealth gap that Mr. Price says he wants to
address. Downstairs is a yoga studio, and across the street is a coffee
bar where customers can sip velvet soy lattes on Adirondack-style
chairs. But around the corner, beneath the elevated roadway, a homeless
woman silently appeals to drivers stopped at the red light with a
cardboard sign: “Plz Help.”
In his own way, Mr. Price is trying to respond to that request.
“Income
inequality has been racing in the wrong direction,” he said. “I want to
fight for the idea that if someone is intelligent, hard-working and
does a good job, then they are entitled to live a middle-class
lifestyle.”
The
reaction to his salary pledge has led him to think that if his business
continues to prosper, his actions could have far-reaching consequences.
“The cause has expanded,” he said. “Whether I like it or not, the
stakes are higher.”
On
a recent weekday evening, Mr. Price confidently threaded his way
through clumps of tourists and past the rows of flowers and fruits that
line Pike Place Market
in downtown Seattle. About 70 percent of the businesses that occupy
this nearly century-old marketplace use Gravity to process their credit
card payments, Mr. Price said. He started courting customers there more
than 11 years ago, while still attending Seattle Pacific University, a
small Christian college. He would go from stall to stall, shaking hands,
scribbling down phone numbers. Early on, he signed up Pure Food Fish.
The shop was a backdrop in the film “Sleepless in Seattle,” but more
important, it was run by the 86-year-old Solly Amon, who inherited the
pocket store from his father and is lovingly known as the “cod father.”
When other merchants heard Mr. Amon trusted Dan, they did too.
“They
give us tremendous service,” Mr. Amon said. He remembered an incident
years ago when Mr. Price had a new credit card machine up and running
within three hours after his old one died.
In
addition to providing the devices and software that merchants use when a
customer whips out a credit card, Gravity makes sure the money shifts
securely and quickly among buyer, bank and business. In an industry
dominated by global banking giants and mammoth processors, the company
last year processed $6.5 billion in sales for 12,000 clients, most of
them small and medium-size businesses.
Was
Mr. Amon bothered by Mr. Price’s new payroll policy? “He takes care of
his business, and I’ll take care of my business,” he declared.
Brian Canlis, a co-owner of his family-named restaurant,
is also a client. He said he was fond of Mr. Price, but was more
discomfited by his actions. Mr. Canlis is already worried about how to
deal with Seattle’s new minimum wage, which rose to $11 an hour in April and is scheduled to reach $15 an hour for small businesses within five years.
The pay raise at Gravity, Mr. Canlis told Mr. Price, “makes it harder for the rest of us.”
Mr.
Price winced. “It pains me to hear Brian Canlis say that,” he said
later. “The last thing I would ever want to do is make a client feel
uncomfortable.”
But
any plan that has the potential, as Mr. Price has put it, to “set the
world on fire,” is bound to make some people squirm. Leah Brajcich, who
oversees sales at Gravity, fielded complaints from several customers who
accused her boss of communist or socialist sympathies that would drive
up their own employees’ wages and others who felt it was a public
relations stunt. A few were worried that fees would rise or service
would fall off. “What’s their incentive to hustle if you pay them so
much?” Ms. Brajcich said they asked. Putting in 80-hour weeks after the
announcement, she called the mistrustful clients, stopping by their
offices or stores, and invited them to visit Gravity to see for
themselves the employees’ dedication. She said she eventually lured most
back.
As
for other business leaders in Mr. Price’s social circle, they were
split on whether he was a brilliant strategist or simply nuts. As much
as they respected him, they were also disturbed. “I worry how that’s
going to impact other businesses,” said Steve Duffield, the chief executive of the DACO Corporation, who met Mr. Price through the Entrepreneurs’ Organization
in Seattle. “We can’t afford to do that. For most businesses, employees
are the biggest expense and they need to manage those costs in order to
survive.”
Roger
Reynolds, a co-owner of a wealth management company, said his
discussion of the pay plan with Mr. Price got heated. “My wife and I got
so frustrated with him at a cocktail party, we literally left,” said
Mr. Reynolds, who complained that Mr. Price unfairly accused him of
measuring his self-worth solely in terms of money and trying to hold
somebody else down. Everyone may have equal rights, but not equal talent
or motivation, Mr. Reynolds said. “I think he’s trying to bring in some
political and aspirational beliefs into the compensation structure of
the workplace.”
If
there was a 19th-century thinker Mr. Price drew inspiration from, it
would be not Karl Marx, but Russell Conwell, the Baptist minister and
Temple University founder, whose famed “Acres of Diamonds”
speech fused Christianity and capitalism. “To make money honestly is to
preach the Gospel,” Mr. Conwell exhorted his listeners. To get rich “is
our Christian and godly duty.”
Growing up in rural southwestern Idaho, Mr. Price frequently listened to a recording of the speech on tape.
Every
day he and his four brothers and one sister rose as early as 5 a.m. to
recite a proverb, a psalm, a Gospel chapter and an excerpt from the Old
and New Testaments. Home-schooled until he was 12 and taught to accept
the Bible as the literal truth, Mr. Price also listened to the Rush
Limbaugh show for three hours a day — never imagining he would one day
be the subject of a rant by the host. Then it was time to help his
mother with organic gardening, composting and recycling.
Like
his siblings, Dan was fiercely competitive, said his father, Ron Price,
and hard on himself if he didn’t come in first at Bible memorization
contests, backyard football or board games like Life and Monopoly. “Dan
has always been a deal maker,” said his father, who is now a management
consultant.
The
isolation did not prepare Mr. Price for the complex social interactions
of junior high school. He was awkward, out of place. He remembered
joining in when a group of children started laughing, only to later
realize that he had been the target of their ridicule.
His
experiences did reinforce an independent, contrarian streak even as he
made a place for himself in the teenagers’ terrain. He formed a rock
band and got a girlfriend. After their first hug at 17, her conservative
Christian father demanded to know his intentions. The two were engaged,
and they married four years later. (They divorced amicably in 2011.)
His
parents instilled a sense of purpose. “We had a family mission” to
glorify God, he said. The household was run as a “family business” with
jobs and responsibilities carefully set out in charts and diagrams. “All
my siblings hated it, but I thought it was cool,” Mr. Price said with a
laugh.
Mr.
Price is no longer so religious, but the values and faith he grew up on
are “in my DNA,” he said. “It’s just something that’s part of me.”
He
transferred that zeal to his credit card processing business, which he
started out of his dorm room in 2004 with his brother Lucas, five years
his senior.
He
preached Main Street capitalism that promised to deliver good value,
low prices and individual service. His success won him a shelf full of
local business awards and even a chance to meet President Obama during National Small Business Week
when he was just 25. Though he now has the shoulder-length hair and
beard of a hipster, back then he looked like a baby-faced Donny Osmond
and sounded like Alex P. Keaton, the eager beaver Republican played by
Michael J. Fox on the 1980s sitcom “Family Ties.” He did not actively
oppose Seattle’s minimum-wage increase, but a reason he urges other
business owners to follow his lead on pay is to avoid more government
regulation.
Mr.
Price’s drive to succeed, fierce commitment to help small businesses
and exacting standards attracted other business-minded idealists. Some
even took pay cuts to work at Gravity. Keeping an existing client is
more important than getting a new one, he decreed. Never make a caller
hear more than two rings before picking up.
Nydelis
Ortiz, 25, a former Peace Corps volunteer in Peru (not to mention the
2010 Miss Vermont), said she was drawn to his passion and community
volunteer projects. Emery Wager, 30, a Stanford engineering graduate and
a former Marine, decided to forgo applying to Harvard Business School
so he could work closely with Mr. Price. (He felt vindicated when a
Harvard friend who had ridiculed his decision told him Gravity’s pay
scale was discussed in class.)
Maisey
McMaster was also one of the believers. Now 26, she joined the company
five years ago and worked her way up to financial manager, putting in
long hours that left little time for her husband and extended family.
“There’s a special culture,” where people “work hard and play hard,” she
said. “I love everyone there.”
She
helped calculate whether the firm could afford to gradually raise
everyone’s salary to $70,000 over a three-year period, and was initially
swept up in the excitement. But the more she thought about it, the more
the details gnawed at her.
“He
gave raises to people who have the least skills and are the least
equipped to do the job, and the ones who were taking on the most didn’t
get much of a bump,” she said. To her, a fairer proposal would have been
to give smaller increases with the opportunity to earn a future raise
with more experience.
A couple of days after the announcement, she decided to talk to Mr. Price.
“He
treated me as if I was being selfish and only thinking about myself,”
she said. “That really hurt me. I was talking about not only me, but
about everyone in my position.”
Already approaching burnout from the relentless pace, she decided to quit.
The
new pay scale also helped push Grant Moran, 29, Gravity’s web
developer, to leave. “I had a lot of mixed emotions,” he said. His own
salary was bumped up to $50,000 from $41,000 (the first stage of the
raise), but the policy was nevertheless disconcerting. “Now the people
who were just clocking in and out were making the same as me,” he
complained. “It shackles high performers to less motivated team
members.”
Mr.
Moran also fretted that the extra money could over time become too
enticing to give up, keeping him from his primary goal of further
developing his web skills and moving to a digital company.
And
the attention was vexing. “I was kind of uncomfortable and didn’t like
having my wage advertised so publicly and so blatantly,” he said,
echoing a sentiment of several Gravity staff members. “It changed
perspectives and expectations of you, whether it’s the amount you tip on
a cup of coffee that day or family and friends now calling you for a
loan.”
Several
employees who stayed, while exhilarated by the raises, say they now
feel a lot of pressure. “Am I doing my job well enough to deserve this?”
said Stephanie Brooks, 23, who joined Gravity as an administrative
assistant two months before the wage increase. “I didn’t earn it.”
When Mr. Price chose $70,000 as the eventual salary floor, he was influenced by research showing that this annual income could make an enormous difference in someone’s emotional well-being by easing nagging financial stress.
He
might have also considered the parable of the workers in the vineyard
from the Gospel of St. Matthew, where the laborers hired at sunup were
upset that their pay was the same as those who showed up right before
quitting time. Early adopters and latecomers may be equally welcomed in
the Kingdom of Heaven, but not necessarily in the earthly realm, where
rewards are generally bestowed in paycheck form.
As
for the raw feelings of friends or staff members, Mr. Price readily
admits that he can be contentious, even censorious. A disagreement often
comes across as a personal attack. “It’s just as painful for me as
anyone else,” he said.
Mr.
Price, who extolled Ms. McMaster’s talents, said he didn’t think she,
Mr. Moran or even Rush Limbaugh was wrong. “There’s no perfect way to do
this and no way to handle complex workplace issues that doesn’t have
any downsides or trade-offs,” he said. When other entrepreneurs
suggested that stock options or profit-sharing would have been a better
approach, he said that’s the way capitalism works: Everyone tries to
invent the best mousetrap. “I came up with the best solution I could.”
And
the publicity surrounding it has generated tangible benefits. Three
months before the announcement, the firm had been adding 200 clients a
month. In June, 350 signed up.
That
new business won’t start paying off for 12 to 18 months, however, Mr.
Price said, and in the meantime, he is contending with the lawsuit
brought by his brother. Lucas Price owns about 30 percent of their
company, although he has not actively been involved in day-to-day
operations for several years. There had been tensions between the two
long before the new pay plan, and Lucas is demanding that Dan buy him
out for an unspecified amount, plus damages.
Lucas,
who lives in Seattle, declined to be interviewed but wrote in an email:
“Dan has taken millions of dollars out of the company for himself while
denying me the benefits of the ownership of my shares, and otherwise
favoring his own interests as the majority shareholder over my
interests.” He said his complaints predated the pay raises.
Even
so, they clearly are critical to the outcome. With profits, at least in
the short term, shifted to salaries, there is little left over to buy
out his brother, let alone pay the legal bills or make longer-term
capital improvements in the company, Dan said.
Flabbergasted
when the suit arrived, Dan said he was puzzled by the accusations,
saying that Lucas agreed to his $1.1 million salary and bonus package,
instituted for 2012.
Family
fighting over a business can be ugly and is often about more than just
money. Dan conceded he may have previously given short shrift to Lucas’s
contributions. “Who knows if I would have had the opportunity to build
the company without him helping me out in the first couple of years?” he
said.
Lucas
was the best man at his wedding, and the two, close friends, often
hiked, surfed and attended ballgames together. By the end, “being in
business together was the worst thing for our relationship,” Dan said.
After the lawsuit was filed, he said he called the rest of his family
and told them to offer “unconditional love and support” to both Lucas
and him. (Their younger brother Alex, 23, also works at the company.)
While
it is upsetting to see two of his sons at odds, Ron Price said, “their
mother and me don’t lose sleep over it. I think they’ll get it sorted
out.”
Dan
Price, who estimated his current net worth, including his home, at
about $3 million, said he had offered to “give up everything I have
personally and everything I’ll have for years to come.” A court date has
been set for May.
For
now, at least, Mr. Price has undoubtedly made an immediate difference
in the lives of many of his employees. José Garcia, 30, who supervises
an equipment team, was able to afford to move into the city and replace
the worn tires on his car. Ms. Ortiz, who was briefly homeless as a
child, can now visit her family in Burlington, Vt. Cody Boorman, 22, who
handles operations out of his eastern Washington home, said he and his
wife finally felt financially secure enough to start a family.
There
have been other ripples. Mario Zahariev, who runs Pop’s Pizza &
Pasta, switched to Gravity after seeing Mr. Price on the news. When he
learned his monthly processing fees would drop to $900 from $1,700, Mr.
Zahariev decided, “I was not going to keep the difference for myself.”
He used the savings to raise the salaries of his eight employees.
Pop’s Pizza aside, Mr. Price’s plan is not easily replicated, said Nick Hanauer,
a Seattle venture capitalist and an early promoter of the city’s $15
minimum wage law. Still, he noted, “These individual acts can create a
new kind of perception of what’s possible and what’s righteous.” After
all, he said, two years ago, no one would ever have guessed higher
minimum wage laws would be catching fire in cities around the country.
“Who can tell what that last thing is that catalyzes big change?”
In
that sense, Mr. Price’s foray into the public debate on wages is not
unlike his newfound passion of wake surfing. Cruising atop the curl of a
wave created by a motorboat isn’t easy. Lean too far ahead of the swell
or drift behind it and you wipe out. For the moment, he is balancing on
the crest, enjoying the ride and doing his best to keep from falling
off.
Lucas Price, who owns 30 percent of the company, accuses his brother
of taking millions of dollars out of the company while denying him the
benefits of his minority ownership.The lawsuit has forced Gravity to pay mounting legal fees at a time when the new salary scale is being eaten up by profits.
“We don’t have a margin of error to pay those legal fees,” Dan Price said.
Seattle: Another Democrat-Governed City with a Gun-Crime Epidemic
On July 24, The Seattle Times ran a column highlighting the surging gun violence in Seattle and suggested the sound of gunfire has become so commonplace in the city that it is now considered “mere background noise.”
According to The Seattle Times, there were “227 shootings so far this year in the city, through Monday, July 20.” That represents a “24 percent” increase over 2014 and a “40 percent” increase over 2013.Police indicate “they get so many shots-fired calls that they don’t even report most of them on their public-outreach site.” Some of the victims of the shootings have been innocent bystanders sitting in their cars at intersections, while numerous others have simply been pedestrians.
The Capitol Hill Seattle Blog reports that a mom driving three kids home from Fourth of July fireworks was on Massachusetts heading toward I-90 when she pulled over to call a friend who had been following her but had taken a wrong turn. As she talked on the phone “someone from a group of people celebrating the 4th across the street starting shooting at her car.”
Her car was “peppered by bullets.”
And right now, The Seattle Times reports there is a “serial shooter with a Nazi gun… on the loose” in the city. His gun has been linked to “seven shootings this summer, including three of the five involving bystanders.”
It is interesting to note that Seattle Mayor Ed Murray is a Democrat, and according to Seattle.gov, the four mayors before Murray—starting in 1990—were all Democrat too. On July 9, Breitbart News reported on five other cities—Baltimore, Chicago, Milwaukee, New Orleans, and St. Louis—which Democrats have controlled for decades and which are also facing soaring levels of gun crime.
Follow AWR Hawkins on Twitter: @AWRHawkins. Reach him directly at awrhawkins@breitbart.com.
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This is amazing. When Seattle raised their minimum wage to $15 I predicted, along with many other conservatives, that there would be lost jobs and raised prices on goods and services. But I don’t think any of us would predict that workers would ask for fewer hours of employment just to keep their welfare benefits!!
Watch below:
That is just remarkable. Keep in mind that the arguments the liberal douchebag commie crowd makes for $15 an hour is that people shouldn’t have to live under poverty and work full time. But these people are literally choosing poverty rather than work full time! LOL!
More from Fox Orlando:
Seattle’s $15 minimum wage law is supposed to lift workers out of poverty and move them off public assistance. But there may be a hitch in the plan.As disgusting as I find this development, we can use this to destroy idiotic liberal arguments on the minimum wage and how to defeat poverty. And here’s clear evidence that many who are poor love being poor much more than they do actually being independent.
Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.
Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
The twist is just one apparent side effect of the controversial — yet trendsetting — minimum wage law in Seattle, which is being copied in several other cities despite concerns over prices rising and businesses struggling to keep up.
The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.
Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.
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