Good People Doing Good Things – Dan Price

“It’s not about making money; it’s about making a difference.” – Dan Price, CEO Gravity Payments

Many times in the past few years, I have commented, snarkily, about the notorious 1% … the group of wealthy magnates who, though they account for only 1% of the population, control more than 90% of the wealth of the nation.  It is what we have come to think of as the ‘income divide’ or the ‘income gap’.  It is a vicious circle.  Rich people buy companies, the companies make money, the rich people who own the companies take that money and use it to buy more companies that make more money … Meanwhile, they balk at raising the federal minimum wage above $7.25 an hour, or about $15,000 per year.

The following came onto my radar through one of the sources I typically troll in search of ‘good people doing good things’, and as soon as I read the first paragraph, I knew I had found my good-person-of-the-week!  I almost backtracked, as I came upon some controversy & critique, but after reading everything I could find, considering the sources of the criticism, I concluded that this guy is the real deal and worthy of this post.  Allow me to introduce you to Mr. Dan Price, the CEO of Gravity Payments, a credit card processing company on the west coast.

Dan-Price-1

In March 2015, Dan Price was hiking with a friend, Valerie Molina, who lamented about being about being able to make ends meet on her $40,000 annual salary.  Listening to her was a bit of a wake-up call for Price, as many of his own 120 employees earned even less than his friend.  Then, he says, he recalled a paper by Nobel prize winners Daniel Kahneman and Angus Deaton, who found that people’s emotional well-being improves as their earnings rise, until their pay reaches about $75,000 a year, beyond which any additional earnings do nothing to increase happiness. Dan’s mind was made up that day, and he told his hiker-friend, “I’m going to pay all my employees minimum $70,000. I’m not sure exactly how I’m going to do it, I need to run the numbers, but I am. Is that crazy?”

And that is exactly what he did.  But that, in itself, is not the best part of the story in my view.  The best part is that he did it by reducing his own salary from $1.1 million annually to around $77,000 in order to cover the increases for his employees.  For the remainder, he has committed up to 80% of the company profits. According to Mr. Price, “That was the happiest I’ve ever felt. For me, it was the best money I’ve ever spent.”

But the road was not a smooth one, as he had his share of detractors, some disgruntled employees, and was even sued by his own brother!  Former Idiot of the Week, Rush Limbaugh:

“He is a good liberal, and he’s read that people are happy at 70 grand. What he doesn’t understand is, happiness does not equal productive. Happiness equals comfort. “Seventy grand, well, I can stop working hard,” is what it means.

Anyway, he’s not tying this to anything other than employment. He’s not tying it to performance. He’s not tying it to sales. This is pure, unadulterated socialism, which has never worked. That’s why I hope this company is a case study in MBA programs on how socialism does not work, because it’s gonna fail. My guess is that just like when Solyndra went south, there will not be a story on Gravity Payments succumbing to gravity and going under.”

Limbaugh wrote a very long-winded and critical piece on Mr. Price, the gist of which was that he is a socialist and his employees will become lazy and useless.  He has since been proven wrong, but remember … there is a reason he was Idiot of the Week last August.

Others were critical as well, saying he had an ulterior motive, or was doing it only for publicity.  Other entrepreneurs in the area were not happy, saying Price’s decision made them appear ‘stingy’.  And his brother, Lucas, who owned 30% of the company, filed a lawsuit claiming that Dan had “worked against his brother’s interest as a minority shareholder”.  Last July, a judge ruled in Dan’s favour, but nonetheless there is a rift now between the brothers.

Two employees resigned shortly after the announcement, saying that in their view it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. There is some validity to that argument, but I still applaud what Mr. Price did, and perhaps if the employees had stayed, a compromise could have been reached.

The company’s success speaks for itself:  employee turnover is drastically reduced, business is booming, and net profits nearly doubled between 2014 and 2016.  While measuring happiness is not an exact science, the employees appear to be happy … so happy, in fact, that they all pitched in to buy Mr. Price a brand new Tesla automobile!

And perhaps even more important than what Mr. Price did for his own company is the ripple effect it has had, expanding to other companies who followed Price’s example:

  • Josh Ledbetter of Ledbetter, Inc., cut his own salary by 82% and used it to give his three employees substantial raises.

  • Tony Tran of Third and Loom was so inspired by Price that he raised the wages of all his employees in the U.S. and his factory workers in Vietnam to $70,000.

  • Mario Zahariev of Pop’s Pizza saved $7,000 annually in credit card fees when he became a customer of Gravity Payments.  He used it to give raises to all eight of his employees.

  • Andrew Green of Green Solutions gave all his employees raises beteen 35% – 50%, which doubled the pay of his lowest paid workers.

Megan Driscoll, chief executive of biopharmaceutical recruiting firm PharmaLogics Recruiting also took a page from Dan Price’s book after hearing him speak, and increased her employee’s salaries from $37,500 to $50,000 … with commissions they will be earning $70,000 or more.  She says the results are remarkable … employee turnover has reduced, revenue has more than doubled, and the profit margin is steady.

No one person is going to reduce the disparity in incomes in the U.S., but it seems to me that Dan Price has, despite some overwhelming odds, done his fair share.  “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.”

Dan Price – a man who cares more about people than money.

If you are interested in reading more about Dan Price, his decision, and his company:

Interview on Today Show

About Gravity Payments

The Gravity of $70k

29 thoughts on “Good People Doing Good Things – Dan Price

  1. Dear Jill,

    Who would I want to work for Dan Price or the likes of a Rush Lindbaugh? A salary of $70,000 per year in this economy does not make someone rich but it does allow someone to provide for his/ her family while maintaining a level of dignity.
    I am tired to reading about peoples working full time jobs having to be on government food stamps to make ends meet.

    Hugs, Gronda

    Liked by 1 person

    • Interestingly, Dan Price’s company received an avalanche of resumes immediately following the announcement of his decision! Heck yes, I’d go to work for him. As you said, $70k won’t make a person rich ala Bill Gates, but it certainly makes it easier to take care of a family. A person who works hard should not have to rely on government assistance or a second job to merely put food on the table.

      Hugs!!!

      Liked by 1 person

  2. Jill, this is a terrific piece. I applaud his altering of his own salary to find the money to increase others. It does show that the saying in HR is true, “No good deed goes unpunished,” with some resigning that everyone got the same.

    He may have been better served if he offered some performance differential, while rising the tide for all. At the end of the day, everyone thinks they are better than average employees, when that cannot be true. While I applaud the concept of raising the floor like he did, he may drive some undesired complacency and drive off some better performers who like to be distinguished. Keith

    Liked by 1 person

    • Thanks Keith! Yes, I was most impressed by the fact that he gave up the bulk of his own salary. It is easy to give away somebody else’s money, but a bit harder and I think more meaningful when it comes out of your own pocket.

      I agree that there is value to performance-based increases. The last few years I worked at Standard Publishing, everybody got the same % increase, whether it was 2% or 6%, and I always thought that removed the incentive to go above and beyond the call of duty. I and a few others still did give our 110% of effort, for that was just the way we were, but some did slack, because they knew they would get their increase anyway. But … I still consider what Price did to be exemplary, though admittedly it might have been implemented in such a way as to provide incentive. But from what I read, his employees are, for the most part, stepping up to the plate out of gratitude. Be interesting to take a look at the company 5 years, 10 years down the road.

      Liked by 1 person

      • I am delighted folks are stepping up to the plate. I would like to see the results in five years. Did they lose some good people would be a question to ask? When the budgeted salary increase falls, the better performers tend to get squeezed and they leave when the chance is provided.

        Like

  3. It should be a no brainer. Happy employees make a more productive workplace. You really know this when you work in a place where people aren’t happy and don’t care any more. And really – when you earn millions of dollars (or more) why do you need more? Why??? Especially when you decide to get more by taking from those who have less. I’ll stop now because I am getting angry. But this guy? This guy is amazing!!

    Liked by 1 person

    • Yep, it SHOULD be a no-brainer, but apparently greed gets in the way of coherent thought processes. There are some really great companies to work for, companies that remember their most valuable asset is not that big piece of equipment, but their employees. But we both know they are few and far between, getting fewer and farther in this day and age. The bigger companies, the multi-million dollar corporations, will never be as humanitarian as some of these smaller companies … they cannot, for they answer to greedy shareholders. Sigh.

      Liked by 1 person

  4. I cannot say I am surprised that a man steeped in the poison and malice such as Limbaugh would not recognise the quality of gratitude.
    In the meantime all the best to Dan Price a shining example. Yes that is socialism!…Boo! It’s coming to get you.
    And applauses to those who were inspired by his example.
    Thanks for the share Jill

    Liked by 1 person

    • Don’t you sometimes wonder why some people are generous and caring about others, while others think only of themselves? But yes, this guy impressed me, and if this is socialism, sign me up now. But then I have always been somewhat of a socialist. I believe that those of us who have enough should share with those who don’t. I mean, one can only use so much … what is the difference, if you have $10 million … giving away $1 million is not going to cause you to lose your home or go without food! Sigh. I’m rather glad I am not rich … perhaps I would be greedy also. 🙃

      Liked by 1 person

  5. What a good man.It would be nice if some of your billionaires followed suit with their capital.$1m should do me nicely to buy a house and get a lie n carer and cleaner. I’d pay that for someone to do my ironing.
    xxx Cwtch xxx

    Liked by 1 person

    • 😀 😀 😀 Yes, he IS a man with a heart, and I notice that those who were inspired by him and did similar good works were small business owners … I don’t look for those uber-billionaires to follow suit anytime soon. That is one thing I like about people like Bill Gates … he has made millions but he is generous and believes in helping others. Ironing??? You iron??? I gave that up when I retired and no longer needed crisp starched shirts! 🙂

      xxx Many huge hugs, David! xxx

      Liked by 1 person

I would like to hear your opinion, so please comment if you feel so inclined.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s