Remember Gravity? The company that established a “minimum wage” of 70,000 a year, to the hoots and derision of more “serious” business experts?
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.)
The company is doing so well that it has hired an extra ten people to handle the additional business. The only person who isn’t doing so well, evidently, is Price himself–at least, not in the short term.
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.)
How this will all play out over the long term is anyone’s guess, of course. Which approach will prove to be better business practice over the long haul–Price’s insistence on paying all employees a wage that allows them to live well, or the Walmart /McDonald’s belief that paying below-subsistence wages (and letting taxpayers make up the difference via food stamps and other social welfare programs) will continue to be best for the bottom line?
I think we already know which approach is more likely to sustain consumer demand and generate economic growth.