Gravity Payments CEO exploded the minimum wage...and is ruining his company.
WASHINGTON, August 4, 2015 – Last April, Dan Price, the Brad Pitt-looking CEO of Seattle-based Gravity Payments – a credit card processing company – announced he would set the new minimum annual wage for his employees at $70,000.
Patrick R. Rogers, associate professor of strategic management at the School of Business and Economics at North Carolina A&T State University, told the New York Times, “The sad thing is that Mr. Price probably thinks happy workers are productive workers. However, there’s just no evidence that this is true. So, he’ll improve happiness, only in the short term, and will not improve productivity.”
The Times recounts the time Price got into a heated argument with wealth-management company co-owner Roger Reynolds on the issue of economic equality. Price “unfairly accused him [Reynolds] 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,” said the Times of Reynolds’ position.
In a campaign speech, Democratic presidential candidate Hillary Clinton said, “Hard-working Americans deserve to benefit from the record corporate earnings they helped produce… profit-sharing that gives everyone a stake in a company’s success can boost productivity and put money directly into employees’ pockets. It’s a win-win.”
She was short on details, leaving it to CEOs like Dan Price to work out the particulars.
Lucas Price, brother of Dan and co-founder of the company, is suing because his sibling “was paying himself nearly $1 million a year before announcing he would cut his pay to $70,000 over the next three years… Court documents show that among other remedies, Lucas Price is asking the court to order Gravity to repurchase his shares and to provide a complete accounting of its transactions, financial affairs and financial records,” said the Seattle Times.
In other words, Lucas Price has done the math and sees most of the company’s profits going toward sustaining its new minimum-wage initiative at the expense of expansion and technological innovation.
So Lucas Price wants a judge to force his brother to buy his stake in Gravity before his sibling runs the company he co-founded into the ground, throwing Gravity’s 120 employees, now earning a cushy $70,000 a year, into the street.
In Ayn Rand’s novel “Atlas Shrugged,” the young inheritors of the Twentieth Century Motor Co. institute a new, forward-looking policy: From each according to his ability, to each according to his need.
“This is a crucial moment in the history of mankind!” says Gerald Starnes, one of the company’s young owners. “Remember that none of us may now leave this place, for each of us belongs to all the others by the moral law which we all accept!”
“I don’t,” says a young company engineer. “He stood like a man who knew that he was right. ‘I will put an end to this, once and for all,’ he said. His voice was clear and without any feeling. That was all he said and started to walk out. He walked down the length of the place, in the white light, not hurrying and not noticing any of us. Nobody moved to stop him. Gerald Starnes cried suddenly after him, ‘How?’ He turned and answered, ‘I will stop the motor of the world.’ Then he walked out. We never saw him again.”
The 6,000 stunned auto workers, standing in silent witness to one man’s refusal to be a collective slave, coined a catch phrase that swept Ayn Rand’s fictional and dying America.
“Who is John Galt?”
Maisey McMasters, who joined Gravity five years ago, worked her way up the corporate ladder to the position of financial manager. It required working long hours away from her family.
“He [Dan Price] 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 told the New York Times. “He treated me as if I was being selfish and only thinking about myself. That really hurt me. I was talking about not only me, but about everyone in my position.”
McMasters, whose massive workload brought her to the brink of burnout, quit Gravity rather than allow less productive employees to benefit at her expense.
You see, the Fixed Cake theory only works in reverse.
Gravity Payments of Seattle, whose employees enjoy a $70,000 annual salary – whether they perform or not – might someday ask, as they file out the doors of their bankrupt company for the last time:
“Who is Maisey McMasters and what happened to the motor of the world?”Click here for reuse options!
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