The $70,000 minimum wage is paying off for that Seattle company

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**Goliath**

Contrary to the previous discussion here, it looks like that Seattle company that promised a $70,000 wage for all employees is actually doing fairly well at the moment.

Source can be found HERE

MarketWatch wrote:The $70,000 minimum wage is paying off for that Seattle company

Gravity Payments, that Seattle credit-card-payments processing company that said all its employees would earn at least $70,000 in three years, is defying the doomsayers.

Revenue is growing at twice the rate it was before Chief Executive Dan Price made his announcement this spring, according to a report on Inc.com. Profits have doubled. Customer retention is up, despite some who left because they disagreed with the decision or feared service would suffer. (Price said he’d make up the extra cost by cutting his own $1.1 million pay.)

Barely any employees have left — although some outsiders, including some commenting on a MarketWatch article about the decision earlier this year, warned that employees could start putting in less effort because everyone is being paid the same regardless.

Perhaps not surprisingly, plenty of people want to work for Gravity. One who now works there is a former Yahoo executive who says she took an 80%-to-85% pay cut to take the job, according to Inc.

The company has hired an extra 10 people to handle the anticipated new business, Gravity’s vice president of operations, Maria Haley, told Inc.

Price, meanwhile, has invested another $3 million in the company after selling all his stocks, emptying his retirement accounts and taking out mortgages on two homes, according to Inc. (He told the New York Times three months ago that he was “renting out my house right now to try to make ends meet.)

“Having to depend on modest pay is not a bad thing,” he told the magazine, speaking about himself. “It will help me stay focused.”

Still hanging over him is a lawsuit filed by his brother, a Gravity co-founder and minority shareholder, that alleges Dan Price had previously paid himself “excessive compensation.” Lucas Price’s lawsuit isn’t related to the pay increases, Inc. said, citing Lucas Price’s lawyer.

So yeah, opinions? thoughts? incoherent ramblings regarding the minimum wage? (both for and against, before I get accused of picking sides)

**cincydooley**

The third to last paragraph would seem to indicate they're not doing as well as the rest would lead you to believe.

**LordofHats**

Well good for them. Too bad the thread is likely to fail to go beyond;

Heaven forbid a business owner try to find a way to maintain profitability while paying the lowest rungs of the employment ladder a generous wage. I mean, clearly this guy is some kind of monster for running his own company in the manner he feels is right.

**kronk**

He can run his company however he wishes. Good for him!

"Price, meanwhile, has invested another $3 million in the company after selling all his stocks, emptying his retirement accounts and taking out mortgages on two homes, according to Inc. (He told the New York Times three months ago that he was “renting out my house right now to try to make ends meet.)"

If I were an employee, I'd be dusting off my resume.

**Col. Dash**

It it was really doing as well as the article makes it out then he wouldn't have had to gut his personal finances to keep it going. No good deed goes unpunished. There's a reason you cannot mix emotion and finance on a large scale. I wish him luck in the long term but I wouldn't bet on his longevity.

**Breotan**

Col. Dash wrote:
It it was really doing as well as the article makes it out then he wouldn't have had to gut his personal finances to keep it going.

I suppose that all depends on his lifestyle prior to the change. If he was mortgaging a McMansion or something like that then I can see how the change would hurt him more than the company. Still, investing three mil of your own money while selling all your stock does sound a bit off.

**Grey Templar**

Col. Dash wrote:
It it was really doing as well as the article makes it out then he wouldn't have had to gut his personal finances to keep it going. No good deed goes unpunished. There's a reason you cannot mix emotion and finance on a large scale. I wish him luck in the long term but I wouldn't bet on his longevity.

Indeed. It sounds more like he has had to put the company on life support to maintain the payouts.

**Peregrine**

Grey Templar wrote:
Indeed. It sounds more like he has had to put the company on life support to maintain the payouts.

Not necessarily. It could be that he's investing money to expand the company for reasons unrelated to salary expenses. If revenue has doubled then it probably means a lot more work to get done, and that means investing in more office space, more computers, etc.

**Grey Templar**

Peregrine wrote:
Grey Templar wrote:
Indeed. It sounds more like he has had to put the company on life support to maintain the payouts.

Not necessarily. It could be that he's investing money to expand the company for reasons unrelated to salary expenses. If revenue has doubled then it probably means a lot more work to get done, and that means investing in more office space, more computers, etc.

I could believe that if he only sold off his stocks, but also emptying his retirement and mortgaging both his homes? I think he could easily find investors before he needed to dump all my personal assets, especially if they are indeed doing as well as is claimed.

If you don't have to take out new mortgages and empty your retirement early you do not do it. If he was doing well thats not something you do.

Besides if Revenue was up he could reinvest the profits. He wouldn't need his personal assets to do that.

**insaniak**

Col. Dash wrote:
It it was really doing as well as the article makes it out then he wouldn't have had to gut his personal finances to keep it going. No good deed goes unpunished. There's a reason you cannot mix emotion and finance on a large scale. I wish him luck in the long term but I wouldn't bet on his longevity.

From the original story, he slashed his own personal salary to use that money and the company's previous profits to fund the increased wages. Presumably he would have been betting on the company picking up the slack down the track.

So not an indication of how well the company is doing... just what happens when you go from a million dollar salary to something considerably smaller overnight.

**paulson games**

I've read a couple articles where people making $40-$50k a year in Seattle are being forced to live out of their cars. Cost of living there is so high that even a salary of $70k doesn't seem like much.

**Breotan**

paulson games wrote:
I've read a couple articles where people making $40-$50k a year in Seattle are being forced to live out of their cars. Cost of living there is so high that even a salary of $70k doesn't seem like much.

"Forced to" is a load of bunk. More like choose to. I was pulling in 45-50,000 a year for a good while and was able to live fine in Seattle. Hell, I was even able to afford Warhammer on that.

**Frazzled**

I was pulling in 45-50,000 a year for a good while and was able to live fine in Seattle. Hell, I was even able to afford Warhammer on that.

A man has to have priorities.

Note: Part of my job is looking at a Company's cash flows to see if they are strong enough to handle large loans-projects, M&A, working capital, etc. While I wish him success, it is clear they are having cash flow problems, and they are not able to find new equity providers. A lack of new equity providers means either the business is not viewed as viable, or its cash flows are not viewed as going to grow sufficiently to support a tech investment.

**Ahtman**

Breotan wrote:
Hell, I was even able to afford Warhammer on that.

I DON'T BELIEVE YOU

**Sarouan**

Good. This is a long term experience, so it's obvious short term will not tell everything.

If it's really a success, then we will have the proof we can have business working in a different way. Doomsayers probably don't want this to happen - because that would mean they could have been wrong from the very beginning.

I wish them luck!

**Dreadclaw69**

kronk wrote:
He can run his company however he wishes. Good for him!

"Price, meanwhile, has invested another $3 million in the company after selling all his stocks, emptying his retirement accounts and taking out mortgages on two homes, according to Inc. (He told the New York Times three months ago that he was “renting out my house right now to try to make ends meet.)"

If I were an employee, I'd be dusting off my resume.

Those are not great indicators of success for the company.

**Sigvatr**

If you have to invest several /millions/ of your own money into your company including emptying retirement accounts and taking mortgages, to keep going, your company flat out sucks.

**agnosto**

Well of course he sold off all of his stock, emptied accounts and mortgaged houses, he's being sued; basic strategy when being sued for millions of dollars, make yourself poor.

**Sigvatr**

agnosto wrote:
Well of course he sold off all of his stock, emptied accounts and mortgaged houses, he's being sued; basic strategy when being sued for millions of dollars, make yourself poor.

That's now how making yourself "poor" works

**Scrabb**

Don't small companies often get killed by growing too quickly without proper planning? This could be him riding out the initial storm knowing he has enough business to make it.

**DarkLink**

Sigvatr wrote:
agnosto wrote:
Well of course he sold off all of his stock, emptied accounts and mortgaged houses, he's being sued; basic strategy when being sued for millions of dollars, make yourself poor.

That's now how making yourself "poor" works

It doesn't sound like he did it because he cut his own pay, it sounds like he did it because the company needed the cash. That's a pretty significant distinction.

**agnosto**

Meh, it could also mean that his attorney is asininely expensive.

**DarkLink**

I feel like it's worth noting that in high skill industries, high starting wages are not uncommon. I work at an engineering firm that practically starts people at 70,000 a year for most positions, we're a decent sized company that turns a solid profit. And, interestingly enough, the whole 1%/99% income inequality is apparently almost entirely the fault of major financial companies, if you look at the rest of the USA outside of wall street and the like income inequality is much lower. It's not that CEOs make a bazillion times as much as their employees, it's that bank CEOs make a billion times as much as everyone else.

Just some quasi related thoughts I had.

**Grey Templar**

Breotan wrote:
paulson games wrote:
I've read a couple articles where people making $40-$50k a year in Seattle are being forced to live out of their cars. Cost of living there is so high that even a salary of $70k doesn't seem like much.

"Forced to" is a load of bunk. More like choose to. I was pulling in 45-50,000 a year for a good while and was able to live fine in Seattle. Hell, I was even able to afford Warhammer on that.

Depends. If you are single I can see that. But if you have a family then it could get a lot tighter.