Seventy thousand reasons to be less unhappy
April 13, 2015 8:31 PM   Subscribe

Entrepreneur sets $70,000 year minimum wage for all his employees Dan Price, the owner of a credit card processing company, came across an article showing that making much less than $75,000/yr. greatly diminished the emotional well-being of earners, and decided to do something about it. He's embarked on a three year plan to increase the salaries of all employees making under $70,000, which for some of them will be double their current wages.
posted by xigxag (131 comments total) 57 users marked this as a favorite
 
I guess I'm in a sappy and sentimental mood but this story nearly brought a tear to my eye. Combine this with Walmart's new $10/hr. base wage and Seattle's new $15/hr. minimum wage law, and of course Fight for 15, and it is starting to feel as though something's in the air, some kind of concrete pushback against years of class warfare.
posted by xigxag at 8:38 PM on April 13, 2015 [22 favorites]


This is great.
posted by alms at 8:44 PM on April 13, 2015 [1 favorite]


So much Awesome. Let's hope it's contagious.
posted by Johnny Wallflower at 8:45 PM on April 13, 2015 [3 favorites]


You can still be miserable and earn $74,999.
posted by miyabo at 8:52 PM on April 13, 2015 [3 favorites]


These things are interesting, but I guess I'm basically suspicious. There's a lot of wiggle room here in pledging to make sure that your *employees* all make $70k a year. That doesn't mean "your workers". The person who scrubs the toilets every night, is that person an employee, or are they a contractor, maybe paid minimum wage by a service to do that job? It's a good step on some level, but the people who most need the help tend to be the most likely to be forgotten. The cleaners, the clerical temps, whatever. This guy's really into marketing and being motivational, he knows this is a feel-good story, he knows it's publicity. I don't know. Maybe I'm just a cynic, but it's not that hard to operate a company such that you only actually employ the people who you can justify paying $70k/year to, and then have all the other work done through 1099ed independent contractors.
posted by Sequence at 8:52 PM on April 13, 2015 [56 favorites]


Entrepreneur Price, you 'da real MVP.

Or good guy boss, whatever, pick your meme.

On a semi-serious sidenote, I wonder how many Republican family/friends he's lost on facebook since announcing this tidbit.
posted by RolandOfEld at 8:52 PM on April 13, 2015 [2 favorites]


Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

I respect that. And what's profit for if it's not to enrich the people making it possible?
posted by asperity at 8:52 PM on April 13, 2015 [67 favorites]


I wonder how US companies can go about switching their CC processing over to Gravity...
posted by You Should See the Other Guy at 8:53 PM on April 13, 2015 [7 favorites]


Maybe I'm just a cynic,

Hey, me too, or pessimist or whatever you want to call it but I don't think it's fair to make the perfect the enemy of the good here by holding this guy to some sort of ideal-capitalist litmus test. Seriously, I don't think it's fair for folks, unless this does turn out to be just an egregiously trumped up media event, to judge him inadequate for not fixing all the woes of the working class in the country.

I mean damn, that's harsh.
posted by RolandOfEld at 8:56 PM on April 13, 2015 [74 favorites]


I don't know. Maybe I'm just a cynic, but it's not that hard to operate a company such that you only actually employ the people who you can justify paying $70k/year to, and then have all the other work done through 1099ed independent contractors.

Did you bother to read the article? He's cutting his own pay from $1M to 70k so he can afford to do it.

MeFites can always find something to complain about.
posted by You Should See the Other Guy at 8:57 PM on April 13, 2015 [130 favorites]


It's a good step on some level, but the people who most need the help tend to be the most likely to be forgotten.

Wow, you're right. It's no use improving the lives of the only people whose pay you can control. Everybody must get 70k or it's just marketing bullshit. You truly have a gimlet eye.
posted by Johnny Wallflower at 9:02 PM on April 13, 2015 [23 favorites]


This is great news. It's so refreshingly odd to see a CEO willing to spread the profits to the people who helped produce them.
posted by DoctorFedora at 9:04 PM on April 13, 2015 [13 favorites]


And therefore I'm going to double your salary and see about that health issue.
I like a good ending.
posted by clavdivs at 9:12 PM on April 13, 2015 [5 favorites]


My solution? Fire everyone making under $70,000
posted by zippy at 9:20 PM on April 13, 2015 [10 favorites]


The "people he can justify paying $70k/year to" includes customer service reps. It was a long time ago, but I don't remember pulling 70k as a CSR.
posted by cotton dress sock at 9:21 PM on April 13, 2015 [10 favorites]


Yeah, he's paying all of his employees 70K, but they still have to work there. Why isn't he doing his part to abolish all work on earth? Ugh, the fight against imperialism never ends.
posted by oceanjesse at 9:24 PM on April 13, 2015 [84 favorites]


MeFites can always find something to complain about.

I have a mental benchmark of 8 +/- 2 posts before someone shits on the kitten that just learned to surf because it's not curing world hunger or whatever.
posted by Sebmojo at 9:26 PM on April 13, 2015 [110 favorites]


This is a great example of how the current conception of the duty to shareholders creates incentives misaligned with the overall good of society. This wouldn't even be on the table with a public company. I doubt this would be possible if they took VC money, either, and I can't find any evidence that they have. I wish them luck.
posted by feloniousmonk at 9:30 PM on April 13, 2015 [22 favorites]


In sequence's defense - an awful lot of companies hire temps as long-term open-ended temps instead of hiring them outright, as part of their business plan. That's how I ended up spending 6 years working for a bank without being employed by that bank on paper - they got my work,,but they didn't pay my health Insurance or any other benefits.

And there were a LOT of other temps like me in the same boat.

Not saying that's the case here, but I inderstand why sequence is cynical.
posted by EmpressCallipygos at 9:34 PM on April 13, 2015 [25 favorites]


It's no use improving the lives of the only people whose pay you can control.

Why isn't he doing his part to abolish all work on earth? Ugh, the fight against imperialism never ends.

I'm not saying this guy isn't doing a nice thing, but to treat him like he's some kind of saint, seriously? Like he doesn't have control over what the cleaning staff makes? Of course he has control over that. Any business owner is perfectly capable of hiring their own janitors and paying them whatever they want. But it's like, it talks about clerks, about customer service, but how much of that are they actually doing? It doesn't quote clerical workers. The fact that the author of the piece assumes they have these people on staff doesn't actually mean they do. A $40k employee working in "merchant relations" is not what most people would understand to mean "customer service", but seems like the closest they get. 30 employees are doubling, but there's zero mention of anybody currently making less than $35k. I guess it depends how much you believe that this guy is already paying a janitor $35k.

But you can't simultaneously celebrate someone as some kind of a saint for the workers by doing this, and then turn around and say that oh, well, it's totally reasonable that they outsource some stuff because it's cheaper, there's no helping that. There's a lot of helping that. If you celebrate what a great boss somebody is, I think you have to ask how many people think of him as their boss who don't get all the perks. Pardon me for believing that a ten-year-old Seattle payment processing company that's privately held and employs only a little over a hundred people is not my top candidate for just going on faith that their business practices are even 75% ethical, much less 100%. I'm not unwilling to believe it with evidence! But this isn't evidence, this is a puff piece. It's great for those 70 people, but it is not a sign of "concrete pushback against class warfare".
posted by Sequence at 9:37 PM on April 13, 2015 [16 favorites]


Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19, said he would pay for the wage increases by cutting his own salary from nearly $1 million to $70,000 and using 75 to 80 percent of the company’s anticipated $2.2 million in profit this year.

My first question was "Where are the raises coming from?" and this is a great answer. This isn't even a left-vs-right issue: nobody's forcing him to raise wages, he's doing it because he wants to and it's a good thing to do. Even if this turns out to be unsustainable, it's worth a try.
posted by Rangi at 9:46 PM on April 13, 2015 [3 favorites]


I guess it depends how much you believe that this guy is already paying a janitor $35k.

Having been a long-term temp working among Real Employees at several companies, I definitely understand the cynicism, but it does seem like this company's mostly doing it right, from what's in the article.

That said, the janitors are almost certainly not even 1099 contractors -- they're W-2 employees of an entirely different company that's contracted to clean that building and probably a few others, depending on size. Or if they are 1099ers, it's for the real estate management company that owns the building that this company's leasing space in. It's seldom necessary to go to the trouble of hiring your own cleaners, even as temps (and most low-level temp gigs are W-2, not 1099). I find it very easy to believe there's nobody employed (even as a contractor) by that company making less than $35k/yr.
posted by asperity at 9:46 PM on April 13, 2015 [11 favorites]


It's great for those 70 people, but it is not a sign of "concrete pushback against class warfare".

Exactly; "pushback against class warfare" is when entities who are less altruistic than Dan Price are made to smell the glove, not when a nice person does so voluntarily. This incident has little to do with the excellent, important things being done by e.g. Fight for 15 or with the broad problem of grotesque income inequality (even assuming it passes Sequence's reasonable tests). To be fair, the OP didn't frame it as such, either.

In fact, if I were a cynical right-wing manipulator of opinion, I'd love Dan Price: look at the altruism of this badass Job Creator! Who needs things like a mandatory living wage when the Dan Prices of the world pay their employees fairly without having to be told!
posted by busted_crayons at 9:49 PM on April 13, 2015 [8 favorites]


It's making the radical statement that values other than profit even can direct the distribution of resources.

Here's Gravity Payment's careers page with descriptions of the CSR and sales roles. Sales reps can expect "Paid time off (unlimited after one year!)".

And what's profit for if it's not to enrich the people making it possible?

Ah you know, snacks, stuff for the house.
posted by cotton dress sock at 9:54 PM on April 13, 2015 [3 favorites]


It's no use improving the lives of the only people whose pay you can control.

I agree that he's mostly doing the right thing, and I'm especially impressed that he's cutting his own salary. But I also think he can control the salaries of all his workers, including those who are the employees of subcontractors. The way to do it would be to put it in the next contract renewal that all people working on his contract must make $70k (possible pro-rated to the time spent at his company vs. others if workers do multiple contracts). The contracting company will say "well, if that's what you want, then we'll have to up the charge to you to $XX" and that's the price they would put in the contract.

Lots of people hiring subcontractors already put in all sorts of conditions about employees working on the contract. Hell, even standard home renovation contracts can include conditions related to employees. Doesn't the federal government also have all sorts of such conditions?

So yeah, great what he's doing and he could totally do it for all his workers and it would be awesome if he did.
posted by If only I had a penguin... at 9:54 PM on April 13, 2015 [3 favorites]


WHat does paid time off unlimited after one year mean? After you've worked there for a year you can just basically retire and they'll keep paying you your $70K/year?

Also, will this make him not the highest paid employee in his own company? Presumably he'll have to hire some people making more than $70k. That must be weird.
posted by If only I had a penguin... at 9:56 PM on April 13, 2015 [2 favorites]


It could be weird, but then on the other hand his own $70K salary is by choice (and he might value someone else as an addition to the company as being more worth enticing than himself, since he doesn't exactly have to make a point of convincing himself to work for himself)
posted by DoctorFedora at 10:08 PM on April 13, 2015


Well, but it sounds like he also owns the company outright. Isn't it fairly common (or at least not-unheard-of) for people in that situation to pay themself a token salary and expect most of their long-term gain to come from rising value of the company itself?

(I actually kind of live under a rock when it comes to stuff like this, so it is possible I'm talking out of my ass…)
posted by nebulawindphone at 10:11 PM on April 13, 2015 [2 favorites]


Also, will this make him not the highest paid employee in his own company? Presumably he'll have to hire some people making more than $70k. That must be weird.

This was probably part of what made me consider it a bit much and therefore suspect, and so I just poked at the numbers more. If he's the sole owner of the company, then how much he receives in salary matters virtually not at all, except in terms of his self-employment tax. The company's profits are all his. He might not own all the equity, but it's not inconceivable, and if he does, if he cuts his salary and uses 75% of $2.2 million in profits to pay employees more, then... he's still making over $600k a year. He's just calling only $70k of it "salary", and doing so actually has the potential to get him tax breaks. Not in an amount which totally offsets what he's paying out, clearly! But in a way that seems much less like he's made himself one of them. Most people clearly read "salary" as meaning "income". Salary is income for the working classes. Salary is only a tiny part of income, if it's there at all, for the investment class.
posted by Sequence at 10:13 PM on April 13, 2015 [6 favorites]


Metafilter: someone shits on the kitten
posted by special agent conrad uno at 10:22 PM on April 13, 2015 [18 favorites]


But what are you suspecting, Sequence? Price (eponysterical?) himself isn't saying he's not a capitalist: "He said he planned to keep his own salary low until the company earned back the profit it had before the new wage scale went into effect." He's not a legislator, either. More likely, he's taking after Henry Ford (or I don't know, Warren Buffett? Maybe? Somebody). But I think it's fair to say that within his scope, he's done a basically good thing, and it's still an argument for a living wage (as well as 70 living wages).
posted by cotton dress sock at 10:50 PM on April 13, 2015 [7 favorites]


According to the article he was making $1,000,000/yr. before PLUS the $2.2 million in profit which for now we're going to say is his to freely spend with no risk to his business. So that's 3.2 million a year, whittled down to $620K. In other words, around $2.5 million that he's giving away to 70 employees. Approximately a $38,000 raise per employee, on average.

People are free to characterize that as some kind of self-serving publicity stunt. Maybe it is. But regardless of his motives, his actions will result in an average $38,000/yr. raise for 70 of his employees. About an $18.00/hr. increase. Which will not only result in tangible immediate gains but will also to some tiny extent exert upward pressure on the prevailing wages in his industry. Why would a really great credit card processor go work for $50K when they can get $80K from this guy? Other companies, if they want to retain their best employees, may be forced to offer more competitive salaries. What's more, he himself will find it difficult to drop his salaries back down to what they were before. His employees will have seen for themselves they can get a fair wage even while he maintains a $600k/yr. in profits. In other words, it doesn't even matter if he's an angel or not. This is a positive thing irrespective of whether he is operating from a genuine spirit of altruism, or whether true altruism even exists.

I guess I'm finding it hard to see how people can seriously spin this as if it's somehow bad and sneaky. "Finding it hard to see" is my bad and sneaky way of saying y'all are tripping.
posted by xigxag at 10:52 PM on April 13, 2015 [60 favorites]


WHat does paid time off unlimited after one year mean? After you've worked there for a year you can just basically retire and they'll keep paying you your $70K/year?

Untracked vacation is kind of a thing these days. It theoretically is okay for people who are in relatively distinct salaried positions, because there's an element of 'you must get all your work done, and if you can do it and still take 5 weeks to backpack Thailand, feel free'. It works less well if you're an hourly wage slave working a phone bank, because somebody has to cover the phones, you know?

The reality of it is a bit iffier. People who have a vacation allowance will (usually) use it up. People who don't have a set vacation allowance feel pressure to not take more than other people take and it may actually depress the amount of vacation that's taken, because people are uncertain how much they can get away with taking.
posted by jacquilynne at 10:56 PM on April 13, 2015 [11 favorites]


If you replaced MetaFilter with a parody of MetaFilter I don't even know if I'd notice any more.
posted by markr at 11:11 PM on April 13, 2015 [52 favorites]


If you replaced MetaFilter with a parody of MetaFilter I don't even know if I'd notice any more.

maybe it already happened
posted by Sebmojo at 11:26 PM on April 13, 2015 [11 favorites]


Yeah, but what's he going to do about the rain in Seattle?
posted by el io at 12:03 AM on April 14, 2015 [4 favorites]


It's really interesting, actually. If you believe in market efficiency, you do get what you pay for. A tiny bit like the dividend irrelevance theory - for which M-M won a Nobel prize for, in which he somehow assumes a world with no taxes, sorry for the derail, but it makes me laugh the same way physicist solutions can start with the assumption the elephant is a perfect sphere. He's going to try and see how much more productive people can be if he pays them more. A reasonable experiment to run if he's flush with cash anyway with nowhere to spend it - presumably it's not one where he's interested or able in growing the operation quickly at this time.

His behavior isn't entirely unexpected, as the assumption that businesses - and their leaders - are profit maximizers all the time - is pretty much known to be untrue. People run businesses for many reasons, and their decisions mostly aren't concerned with profit. Power, prestige, and ego is a huge factor. It's one reason why larger companies use an external board of directors to guide their decisions rather than have management make business decisions, because the shareholders need the assurance that the company is run in such a manner as to return a good yield on their investment, rather than spending it on frivolous projects feeding the director's ego. (like this one?) Or possibly, like in this case, trying to make the world a better place.

Henry Ford wasn't a philantropist, and his success almost certainly had nothing to do with his workers being rich enough to buy his cars. He was facing turnover issues: he had just invented a radical new manufacturing method that was causing high turnover (boredom). Turnover hurt him particularly badly since he couldn't go out and just hire another worker who knew his unique system: he had train each one from scratch. The equation seemed straightforward: use the efficiencies gained from the production line to pay workers more and reduce the turnover rate, reducing costs even further. Many doubted him but his profits doubled after two years.

There's certainly an optimal level to pay workers though. Henry doubled worker pay from $2.50 per day to $5.00 a day. But hypothetically if he doubled it again (from $5.00 to $10.00) I don't think he would have seen anywhere near the scale of improvement he saw with the first doubling. There was clearly a problem at $2.50 - which was mostly fixed by it going to $5.00. If there's no problem at $5.00, moving to $10.00 yields no benefit.

We'd assume nowadays that most companies have through trial and error found the optimal salary to pay a person, but that would probably be what people assumed in 1914. We've not proven to be very smart as a species!
posted by xdvesper at 12:06 AM on April 14, 2015 [8 favorites]


And just an added detail, the reason for the high turnover was not just that the work was repetitive (what work isn't, generally) but that because it was so specialized (fitting one part on the assembly line over and over) workers were uncertain about their long term prospects in that job because those skills weren't transferable. You need to really overpay people for them for them to take the risk of staying with the company long term, because if the company ever fires them, they have nowhere else to take their skills. This culture actually became entrenched in the auto industry for years as I understand it, with assembly line workers being paid much higher than usual, unions protecting their benefits - until everything came crashing down in 2007.
posted by xdvesper at 12:15 AM on April 14, 2015 [4 favorites]


I used to work in a warehouse where they'd give you 1/2 an hour less time per week than would be required to be counted as full time and receive the benefits that full time accorded.

This guy is doing good things.
posted by dazed_one at 12:30 AM on April 14, 2015 [5 favorites]


I wonder how many Republican family/friends he's lost on facebook since announcing this tidbit.

There's actually a significant fraction of conservative business owners who believe in treating their employees well, as long as it isn't under any sort of mandate, either government regulation or labor contract. Our local billionaire, Diane Hendricks, who whispered into Scott Walker's ear "When are we going to do something about these unions, and become a completely right-to-work state?" tends to get high marks from the employees of her various companies (for the most part, they operate non-union) and there are ESOPs and the like that have made many a long-term worker for these companies fairly comfortable. Then there is her community philanthropy. Combine all that and you get hordes of fiercely loyal acolytes who could never aspire to billionairehood but will happily volunteer to defend her. Meanwhile, if you're a public employee like my mother was, you get shat on, shunted aside, and shoved under the bus, because who likes paying taxes? I think the key to this psychology is similar to the wealthy who object to paying taxes to give things to the poor because they would rather keep their money to give away to charities to give it away to the poor.

I suppose one could relate this to Keynes, who to oversimplify, was concerned that rampant capitalism might lead to mass revolt; at a lesser level of concern, some business owners seem keen to not be seen as sharks.

In short, I don't think it's black and white or at least not in most cases the situation that business owners are stereotypical, cartoonish fat cats thinking up new ways to grift their workforce.
posted by dhartung at 12:31 AM on April 14, 2015 [11 favorites]


Healthy cynicism is fine; it's when it's taken to unhealthy levels with a dash of an unwillingness to actually investigate what you're being cynical about that it becomes a major problem.
posted by flatluigi at 12:36 AM on April 14, 2015 [4 favorites]


This must be a Seattle area thing, because Costco has a similar idea... to forstall significant union organizing, they pay even their most basic task employees quite well (my recollection is >$20/hr), offer benefits and family leave to part-timers, have strong retention policies and hire management from within the company. While they're not a worker's paradise, everyone I know who has worked for them has been content with the experience, rather than cursing the day the founders were born, such as a certain online bookseller-turned-retail-behemoth or the Waltons.
posted by Dreidl at 12:45 AM on April 14, 2015 [7 favorites]


If you pay people well, they stay loyal to you, and you eventually end up with a bunch of highly-trained staff, and by extension, a highly capable company.

You'd be crazy not to hold all of them to high standards for their roles, though.
posted by mantecol at 1:17 AM on April 14, 2015 [1 favorite]


But what are you expecting, Sequence?

I suspect Sequence was expecting that suddenly a lot of the people who are now employees would find themselves "contractors", working the same hours but paid by a different entity and therefore ineligible for the $70k salary.

Doesn't seem like it, but it's something that IS happening in a lot of companies boasting about sudden new boons to its employees.
posted by EmpressCallipygos at 3:35 AM on April 14, 2015 [5 favorites]


It's great for those 70 people, but it is not a sign of "concrete pushback against class warfare".

I'm pretty happy for those seventy people though.
posted by A Terrible Llama at 4:06 AM on April 14, 2015 [2 favorites]


Well yeah that (I said suspecting, though, hmm), and engaging in a shell game, and being driven by PR / impure motives that don't include addressing structural issues - I just think it's mostly misplaced, since Price it seems wants happy employees. Even if that's in pursuit of the long game, I don't think it matters inasmuch as it is still saying 40k or 48k or whatever it was is not enough.
posted by cotton dress sock at 4:06 AM on April 14, 2015


As someone in Seattle right now, who grew up here... You guys really nailed a seattle response with the eye roll, suspicion, and general attitude.

You should all move up here, you'd fit right in. It's like reading the stranger comments section.
posted by emptythought at 4:14 AM on April 14, 2015 [8 favorites]


This sounds great, and I wish Price all the best, but I wonder how long it will take the Oligarchy to notice his efforts and crush him.
posted by Kirth Gerson at 4:22 AM on April 14, 2015


It's also interesting from an employee retention standpoint. If you are paying someone double the wage they'd make anywhere else at a similar job, you've priced them out of the market because they can't walk up to a different company and ask for more. So I assume there will also be fewer costs from new employee recruiting, hiring and onboarding.
posted by C'est la D.C. at 4:40 AM on April 14, 2015 [4 favorites]


Yeah, I'll join team cranky Seattle kitten-shitter here. Though it's a nice gesture for him to give this, anything given can be taken back. I would honest to Glob, despite how kitten-shitty it is for me to say this, be much more excited to read stories about employers inviting unions in or otherwise ceding control of decision-making processes to workers. "Capitalists who care" is just a fluffy human interest story; capitalists who submit, though, that's news.
posted by You Can't Tip a Buick at 4:45 AM on April 14, 2015 [11 favorites]


Oh, I agree that this guy sounds genuine. But can you see why so many other companies who are making these kind of boasts for PR's sake, and then quietly screwing their employees over by tweaking their schedules so they are just short of "full time" hours by, like, an hour, have lead to some people being skeptical?

Like I said, I trust this guy, but I also understand why others would be skeptical about him - it's not because "MeFites like to shit on things", it's because "WalMart is evil".
posted by EmpressCallipygos at 4:47 AM on April 14, 2015 [3 favorites]


Mr. Price, who started the Seattle-based credit-card payment processing firm in 2004 at the age of 19

Wtf, how? How in the world does this happen? You know what I knew how to do at 19? Nothing. I knew nothing.
posted by Steely-eyed Missile Man at 5:13 AM on April 14, 2015 [25 favorites]


Complain all you want, but I would work there in a minute if I had the opportunity because the places I work or have worked would never ever consider that as even a PR talking point.

I can see it being genuine because if you hold out that kind of carrot and then don't deliver, you're going to get mass dissatisfaction in the ranks which will bite you in the end.
posted by mightshould at 5:14 AM on April 14, 2015 [5 favorites]


Price's story is certainly a refreshing contrast to this FPP
posted by TedW at 6:17 AM on April 14, 2015 [1 favorite]


Many responses in here seem sure that this will irritate Republicans or draw the ire of the oligarchy, but you guys have that all backwards. Those people will love this story.

The politically useful conservative narrative is: There are a few dozen people in Seattle who are making good money at their private-sector non-union jobs. Therefore the market works, minimum wage laws are unnecessary, and unions are the only reason so many other jobs are relatively unsatisfactory. Dan Price is paid the same as his employees; the wealth gap is obviously a liberal myth, in the same way that the existence of snow disproves global warming.
posted by Western Infidels at 6:40 AM on April 14, 2015 [15 favorites]


> I'm not saying this guy isn't doing a nice thing, but to treat him like he's some kind of saint, seriously? ... But you can't simultaneously celebrate someone as some kind of a saint for the workers by doing this

Literally nobody here is saying he's a saint, and frankly I doubt anybody anywhere is saying he's a saint. You just made that up to justify being cranky about it. People are saying this is a good thing. You appear to disagree, which is fine, we all have a right to our opinions, but don't try to dress it up by claiming you're the only clear-sighted person in a room full of fools who are bowing down and kissing the hem of this guy's garment.
posted by languagehat at 7:03 AM on April 14, 2015 [21 favorites]


It will be interesting to see whether the company thrives under this model and if so whether other employers follow suit.
posted by echocollate at 7:08 AM on April 14, 2015 [1 favorite]


Yesterday my daughter cleaned up her room all by herself and excitedly asked me to come look at it. Wow, did that ever piss me off. "What kind of a cynical play is this?" I said. "What, do you want me think you are some kind of oh so wonderful kid because you did one good thing? What about your brother's room? That's still a big mess. And there are some weeds in the yard that need to be pulled. Don't go thinking you're some kind of hero because you tidied up one little room in our house."

This morning I noticed her room was a disaster.
posted by Pater Aletheias at 7:13 AM on April 14, 2015 [40 favorites]


The article doesn't go into his family much, but if you've ever hung out at the business section of a used bookstore, you may have seen books by his dad, Ron Price, who is a motivational/Christian/business speaker.
posted by mittens at 7:14 AM on April 14, 2015


This morning I noticed her room was a disaster.

As the rep for Local 272 (Roomcleaners, Garbage Take-Outers & Longshoremen) I am here to inform you that this strike action is condoned by the union due to unfair wages, hostile work environments and not allowing your employees stay up and play video games even though they seriously just have like five minutes until they can save their game.
posted by griphus at 7:32 AM on April 14, 2015 [14 favorites]


If only I had a penguin...: "WHat does paid time off unlimited after one year mean? After you've worked there for a year you can just basically retire and they'll keep paying you your $70K/year?"

It means when you quit, they don't have to pay you for all the accrued vacation you didn't use.
posted by pwnguin at 7:36 AM on April 14, 2015 [6 favorites]


Don't get me wrong; I think this is a fantastic idea. But, dude, your business is credit cards. If everyone makes at least $70K, your product will be in greatly lower demand and you'll have to lay off a large number of your employees. I can only guess that he is so altruistic that he's fine with that and believes that others will follow suit so that those he lays off will find other <$70K jobs in more productive industries.

Now, if you're making cars doing this would make sense from a Henry-Ford-esque perspective: pay your employees enough to afford your product.
posted by Mental Wimp at 7:44 AM on April 14, 2015


Let me just say - good for him, it's the right thing to do. But...

The company's profits are all his. He might not own all the equity, but it's not inconceivable, and if he does, if he cuts his salary and uses 75% of $2.2 million in profits to pay employees more, then... he's still making over $600k a year. He's just calling only $70k of it "salary", and doing so actually has the potential to get him tax breaks

So I was still a little skeptical about the numbers; I don't think they work out how the Times has implied. If we assume the 50 (or so) workers making above $70k are making $70001, and that his income is rounded up to a cool million, and that the $2.2M is the top limit, then:

his=1000000 # his old salary
profit=2200000 # profit
funds=his_old_sal-70000-profit # how much they're plausibly funding this thing with
tote=120 # total employees
lpe=70 # low paid employees - i.e. the 70 getting raises.
aas=70001 # minimum money the 50 >$70k salaried employees are making on average
alpe=aas * lpe/tote = 40833.91 # highest plausible average for the 70 low paid employees
gap = lpe * alpe = 2858373.70 # lowest plausible amount you can need for raises
pct = gap/funds = 0.91 # quite a bit above the estimate in the article
profit_left = profit * (1-pct) = 190960.00

So yeah, not hurting, but if this goes exactly as good as the soft, roundish numbers they're implying can be, he's pulling down $260960. If the real profit winds up being a cool $2M and he's actually only making $900k before this, he's in the hole next year for $39k.

There's also the issue of the large minority of the company that believe themselves to be better paid top performers, who were averaging (*ahem*) $70001 and were making roughly $30k more than their poor-performing coworkers.

So anyway, he's doing a good thing, but I suspect he's not doing it very well.
posted by atbash at 7:44 AM on April 14, 2015


Mental Wimp: "If everyone makes at least $70K, your product will be in greatly lower demand and you'll have to lay off a large number of your employees."

His business is payment processing, not revolving consumer credit. The more money you have, the more you spend, and the more you spend the more Gravity makes, in some abstract world where this token effort drives the karma train full circle.
posted by pwnguin at 7:52 AM on April 14, 2015 [6 favorites]


This is not a suggestion that he's not doing the right thing. Just an interesting note about a possible unintended consequence: So say I'm a CSR making 70K/year. There's not a lot of room to move up. Maybe i get to be the phone bank team leader or the person to whom calls are escalated or the trainer and make $70K/year. Then that's as far as you move up without going to another company and another job, probably.

People who are CSRs and want to move up typically do that. They either take their skills to another company and another line of work or they move up a little in the same company and then take their skills to another company or another line of work. But now you're a CSR making 70K/year. Do you want to get a marginally better job with more possibility of upward mobility at another company for $50K? A $20K pay loss would be a lot to swallow, especially once you have your $70K based mortgage. So you stay...but then you never really build the skills or experience to get a job that would pay $70k (or more) at market rates. So is that it? Either take a giant pay cut or be a $70K CSR forever?

Serious question, does this have a downside for the long-term mobility of employees at the bottom? Again, asking in full recognition that it has a huge upside for them right now and I don't intend to downplay that or to suggest that because of this possible downside this guy shouldn't do this. I think it's great that he's doing this. Just wondering how it will play out.
posted by If only I had a penguin... at 7:54 AM on April 14, 2015 [1 favorite]


> So yeah, not hurting, but if this goes exactly as good as the soft, roundish numbers they're implying can be, he's pulling down $197960. If the real profit winds up being a cool $2M and he's actually only making $900k before this, he's in the hole next year for $110k.

If I'm reading your analysis right, you're assuming that he's taking 100% of the profit in a distribution, and not reinvesting it in the company, hiring new employees, giving raises or bonuses to employees not included in the sub-$70k pool, or making any capital expenditures on equipment, R&D, etc.

Based on the NYT story it sounds like he wants to grow the business, not keep it as-is, and I imagine the rest of his team isn't expecting stagnant wages because the folks on the bottom got a raise. In other words, I don't dispute your math as a snapshot of the current state, but I think there's a larger story to the business, so I agree that "he's doing a good thing" but disagree that "he's not doing it very well."

I would also expect the company to earn a lot of new customers starting today.
posted by ben242 at 7:57 AM on April 14, 2015


If only I had a penguin...: "Serious question, does this have a downside for the long-term mobility of employees at the bottom?"

Yes, these are totally golden handcuffs, especially useful in a sector prone to high turnover. On the other hand, the median US household income in 2014 was 52k. So the downside for employees at the bottom is that they're stuck making far more salary than peers in other companies. Such is their plight...
posted by pwnguin at 7:58 AM on April 14, 2015


But, dude, your business is credit cards. If everyone makes at least $70K, your product will be in greatly lower demand and you'll have to lay off a large number of your employees.

If they're doing credit card processing, that means they're collecting from vendors using their services, not consumers using credit cards. The company issuing the card makes money when people rack up interest and fees, but processing companies make money any time a credit card (or debit card) is used. And I don't really know anyone who makes significant purchases with straight cash unless it's under-the-table stuff.
posted by griphus at 8:06 AM on April 14, 2015 [3 favorites]


An anti-capitalist MeFite is watching his grandchild playing on the beach when a huge wave comes and takes her out to sea. He pleads, "Please God, save my only granddaughter. I beg of you, bring her back." And a big wave comes and washes the girl back onto the beach, good as new. He looks up to heaven and says: "She had a hat!"
posted by Johnny Wallflower at 8:09 AM on April 14, 2015 [13 favorites]


Also, one other thing about credit card processing is that it currently seems to be a boom industry. Thanks to smartphones and tablets, and portable credit card scanners that plug into those devices, basically anyone can take a credit card for anything without having to set up a complex POS/processing system. In NYC in Union Square there's small shops that set up around the holidays to sell crafts and presents and stuff. Less than five years ago, maybe one of the particularly well-set-up vendors would have a credit card processing machine. Last year, just about every single vendor had a tablet hooked up to a little credit card processor, and the credit card processing companies are taking 3-5% off each purchase.
posted by griphus at 8:18 AM on April 14, 2015 [3 favorites]


Yeah, so some of the over-the-top parodies about "why the skeptics are evil nasty bad people who are wrong wrong wrongity wrong" are actually getting kind of annoying.
posted by EmpressCallipygos at 8:29 AM on April 14, 2015 [3 favorites]


If I'm reading your analysis right, you're assuming that he's taking 100% of the profit in a distribution, and not reinvesting it in the company, hiring new employees, giving raises or bonuses to employees not included in the sub-$70k pool, or making any capital expenditures on equipment, R&D, etc.

That's true - my goal there was to find the limit of plausibility in the one direction, to find the constraints implied by the numbers in the article. I.e.: how much can he possibly still be taking home and is the percentage they ballparked reasonable (it isn't), and that means using the profit for nothing but this. If he wants to reinvest profit on the business, then either a) it's coming out before the "profit" number in the article, or b) he's taking home less than the number I came to. Also note that the other implied limit for that to be true was that all the employees currently making >$70k are, on average, making $70001. I doubt this to be the case; a reasonable estimate must be higher, but that's the lower limit established by the article. If it's higher than that, he's taking home less money, or the profit percentage hit is even higher than the 91% I came to.

(Also you copy-pasted from before my very very quick edit where I re-computed his final take-home with a salary of $70k instead of $7k.)
posted by atbash at 8:30 AM on April 14, 2015


People who are CSRs and want to move up typically do that. They either take their skills to another company and another line of work or they move up a little in the same company and then take their skills to another company or another line of work
Imagine a CSR with 10 years of experience, the skills to stave off competition for their 70k a year job and the desire to keep improving and fresh.
That would be a fucking legendary customer service experience.
posted by fullerine at 8:51 AM on April 14, 2015 [3 favorites]


His business is payment processing, not revolving consumer credit. The more money you have, the more you spend, and the more you spend the more Gravity makes, in some abstract world where this token effort drives the karma train full circle.

I understand that, but doesn't the industry make most of its money from the people who don't pay off their cards every month or who pay late fees? If so, making people economically sound will reduce the business, including his end of it.
posted by Mental Wimp at 8:52 AM on April 14, 2015


Metafilter: someone shits on the kitten

For the world to be truly free we cannot shout down someone just because their lifestyle choice includes the deliberate intersection of defecation, gravity and prepubescent domesticated fauna. Besides, there's no documented evidence that harm is the inevitable result; hell, I wouldn't be surprised if some of them actually enjoy it.

It's Socialism run amuck if someone thinks they can tell me when I can or can't drop a big ol' steamer on Mr Boopsies.
posted by CynicalKnight at 8:54 AM on April 14, 2015 [1 favorite]


Serious question, does this have a downside for the long-term mobility of employees at the bottom? Again, asking in full recognition that it has a huge upside for them right now and I don't intend to downplay that or to suggest that because of this possible downside this guy shouldn't do this. I think it's great that he's doing this. Just wondering how it will play out.


Upward mobility and maximizing salary are not number one priorities for everyone. There are a not-insignificant number of people who want to go to work, do their job, get paid and go home. I like my job now, but having worked for some really messed-up employers in the past, I was definitely willing to take a pay or mobility cut if it meant I worked for someone who I knew respected me, valued my contribution and paid me enough to live on with some left over. Quality of life is too often overlooked when looking at jobs. Work to live, not the opposite way around.
posted by triggerfinger at 9:01 AM on April 14, 2015 [7 favorites]


Mod note: Also you copy-pasted from before my very very quick edit... Quick mod reminder: please do not change content in edits. Use for typos only, and otherwise just post a follow up comment clarifying the mistake.
posted by taz (staff) at 9:02 AM on April 14, 2015


It means when you quit, they don't have to pay you for all the accrued vacation you didn't use.

[eyes open wiiide]

I honestly never realized this, even after working for an employer with an infinite PTO policy, but looking back ... you're right, no accrued PTO paid out at the end.
posted by zippy at 9:04 AM on April 14, 2015 [1 favorite]


atbash, I could be misunderstanding your variables but I believe you've made a mistake in that calculation:

gap = lpe * alpe = 2858373.70 # lowest plausible amount you can need for raises

should be:

gap = lpe * (70000 - alpe) = 2041626 # lowest plausible amount you can need for raises

Additionally, in the article he mentions that he's phasing in the increases over three years. I'm assuming based upon the past growth of his company that he anticipates making substantially more in profit three years from now so that he won't be at risk of running into the red when the full increase kicks in.
posted by xigxag at 9:26 AM on April 14, 2015 [1 favorite]


Literally nobody here is saying he's a saint, and frankly I doubt anybody anywhere is saying he's a saint. You just made that up to justify being cranky about it.

Okay, actual quotes:

concrete pushback against years of class warfare
Entrepreneur Price, you 'da real MVP.
So much Awesome. Let's hope it's contagious.

Not to mention the number of people who seem to regard any criticism of this notion as equivalent to trash-talking kittens who learned to surf. Kittens! Surfing!

The response was not, to start off with, particularly moderate in its praise, and some people are still clearly very vested in not criticizing it. At all. As one would with religious personages of some variety. I'm not, conversely, trying to claim that he's a monster. Just that there's no reason to think this is an unalloyed good on the basis of one article that doesn't seem to have approached the subject with any sort of skepticism. I honestly did not expect that to get so much pushback.
posted by Sequence at 9:31 AM on April 14, 2015 [3 favorites]


gap = lpe * alpe = 2858373.70 # lowest plausible amount you can need for raises

should be:

gap = lpe * (70000 - alpe) = 2041626 # lowest plausible amount you can need for raises


Yeah, you're right (and I also had a typo "-" instead of "+" at the top of the post, but not when actually doing the numbers), and it makes a pretty big difference; basically changes it from 91% to 65%, or $770k in profit plus his $70k salary, making a very nice clean $777k he can take home, reinvest, raise wages for the other employees, or whatever.

So that's a lot better than I thought, and basically means you can use this technique for a similarly proportioned company up to about a third larger than his (minus some buffer) if it's about a third less efficient to start with (i.e. bringing in the same kind of profit numbers despite being bigger.) I sit corrected - thanks for the double-check!

I'm still wondering where they got "75 to 80 percent".

Sorry about the edit thing, taz; in my mind that was effectively typographical. Won't happen again.
posted by atbash at 9:40 AM on April 14, 2015


Mental Wimp: I understand that, but doesn't the industry make most of its money from the people who don't pay off their cards every month or who pay late fees? If so, making people economically sound will reduce the business, including his end of it.

I think it's safe to assume people will continue to make poor financial decisions regardless of actual income levels. I think it's also safe to assume that even if there are major changes in the credit card industry there will still need to be payments processing.

But such hypotheticals about industry changes when everybody makes $70k seem a bit silly but also missing larger cultural effects. For one, the amount people will need to earn for it to have an effect on happiness will go up significantly and we'll have to start all over.
posted by mountmccabe at 9:43 AM on April 14, 2015


I was just impressed that he went to a PNAS paper to help inform his thinking.
posted by ZeusHumms at 9:52 AM on April 14, 2015


My favorite thing about the analogies was how they flipped around power relations; like, if we could ground employers, we wouldn't be having this discussion (and we'd have much higher wages...). In reality, they're the ones with the power to treat grown-ass people as if we were children.

I've worked in low-skill relatively-high-wage anti-union jobs before, and in the end didn't like it a bit. In my case the job was high wage not because of noblesse oblige, not exactly, but because the owner of the company was friends with someone deep in Microsoft and could point a fraction of the never ending Microsoft money fountain into massive consulting contracts to do what as far as I could tell was nothing useful for anyone. Apparently, paying the likes of me a heap of money to reformat internal PowerPoint documents was part of a scheme to extract even more money from Microsoft for the consulting firm.

And the thing is - wait, let me think about this a bit, make sure I'm not talking crap... Yeah, I actually believe this -- the thing is I'd take 50k and a strong union over 70k and noblesse oblige. Workplaces where workers have representation and a modicum of power are just better.

Kshama Sawant is a hero. This guy, though? he's just some guy.
posted by You Can't Tip a Buick at 9:52 AM on April 14, 2015 [5 favorites]


The United States has one of the world’s largest pay gaps, with chief executives earning nearly 300 times what the average worker makes, according to some economists’ estimates.

Dan Price may be great and all that, and hurrah if he can implement this and maximize the well-being of everyone at Gravity Payments, but shitting on kittehs aside, the Gray Lady buried the lede.
posted by blucevalo at 9:54 AM on April 14, 2015 [2 favorites]


Raising salaries should been seen as a perfectly valid goal. Rather than raising profits being the only thing a business should ever try to do, which basically just means skinning everyone possible.
posted by yonega at 10:20 AM on April 14, 2015 [1 favorite]


This is unequivocally a good thing, for both the employees and the community.
posted by Potomac Avenue at 10:25 AM on April 14, 2015 [1 favorite]


chief executives earning nearly 300 times what the average worker makes

And I guess it used to be 20 x more, in the 60s. I am edging of my depth here, but it seems to me Price is advocating for a movement to something like benign (or possibly ethical ?) capitalism (is that a thing) that takes a long view of business, and away from the short-term-minded/pathological/bloodsucking/racing to the bottom version that has seemed inevitable lately.

Related news (to me):
- the Securities and Exchange Commission recently proposed a rule that companies disclose the ratio of pay between CEOs and workers, and it's still up in the air.
- Hilary Clinton has taken up the issue as part of her campaign.
posted by cotton dress sock at 10:27 AM on April 14, 2015


You can still be miserable and earn $74,999.

That's ...a risk I'm willing to take?

I mean really, what is the meat of this criticism? That unless he pays them the full 75K there's no way that would improve their lives? That unless he solves their existential angst too there's no point in paying them good wages? That paying people good wages at all is pointless because souls or something?

There has to be some meat to it, right? It isn't just saying "neener neener you're still going to be miserable" to a group of people who finally got a HUGE MOTHERFUCKING BREAK that they probably deserve, right?
posted by We put our faith in Blast Hardcheese at 10:30 AM on April 14, 2015 [2 favorites]


Sequence, you're mischaracterizing my position. It's true that this story, along with other recent good news, makes me feel that a pushback is starting to happen. But it's not that Price personally is creating the pushback. The way I see it, he, like Walmart, which I also mentioned, is reacting to it. If we're entering an age where increasing numbers of companies are reconsidering the maximally greedy position: "It is our right and obligation to pay our employees the absolute lowest amount we can get away with," then that, in my opinion, is a good thing. In order for it to become legally untenable for companies to financially abuse their employees, it has to first become morally untenable.

Furthermore, you're playing the talking point game that any degree of praise is tantamount to deification when that's not true at all. A couple years back my neighbor found returned my wallet that I had dropped. I praised him wholeheartedly. I have no idea if he's a cad or mountebank in his personal life and I don't make any claims as to his overall virtue. But I'd be an ass to say, "I'll withhold judgment on whether it was a good thing for him to return my wallet until I find out whether or not he is pulling the wings from ladybugs in his spare time."
posted by xigxag at 10:46 AM on April 14, 2015 [4 favorites]


But such hypotheticals about industry changes when everybody makes $70k seem a bit silly but also missing larger cultural effects. For one, the amount people will need to earn for it to have an effect on happiness will go up significantly and we'll have to start all over.

You misunderstood. I wasn't criticizing the action. I very much applaud it. I've thought for years that the minimum wage should be around $22/hour, i.e., above 200% of poverty. So I really do think all people should be paid a lot more than what they're getting and $70K/year would be fantastic as a floor. I was just speculating on perhaps the even bigger altruism of an owner whose decision to pay so much might directly undercut the industry he or she was in.

Regarding whether that is, in fact, a potential effect, I'm not sure that the amount of money to be made from payment processing is indifferent to the profits of those entities paying for that processing. If credit card profits are proportional to the number of people dependent upon making minimum payments each month (and as I understand it, low-income people are more likely to do so that those of higher incomes), then I'm not so sure the impact on this business can be easily dismissed. It's irrelevant to the underlying value of raising employees wages, but I thought it was an interesting side note. YMMV.
posted by Mental Wimp at 11:14 AM on April 14, 2015


I misunderstood some other things as well.

mountmccabe: For one, the amount people will need to earn for it to have an effect on happiness will go up significantly and we'll have to start all over.

After reviewing the linked study this is at least incorrectly worded and probably nonsense.

The idea from the study is not that on average one needs to earn $70k for it to cause a positive effect on happiness but that the slope of the happiness curves change around there; both the positive affect and blue affect from salary nearly level off at around $70k. (The stress curve changes around $40k and peaks at $70k so let's be glad he didn't take inspiration from that one!)
posted by mountmccabe at 11:31 AM on April 14, 2015


To be clear in my recent comment my first statement was in reference to what Mental Wimp wrote and then I was quoting and replying to my own earlier (linked) comment.
posted by mountmccabe at 11:33 AM on April 14, 2015


Is it OK to be proud he graduated from my alama mater? Because I am.
posted by Tevin at 12:41 PM on April 14, 2015 [1 favorite]


If credit card profits are proportional to the number of people dependent upon making minimum payments each month...then I'm not so sure the impact on this business can be easily dismissed.

Price make money by processing payments. If anything, his business should increase as more people are able to buy more things.
posted by Johnny Wallflower at 1:20 PM on April 14, 2015


To make it really clear: credit card processors are the middleman between the consumer and the retailer. The retailer needs some kind of assistance to take credit and debit card payments, so contracts with a processor, who takes a small percentage off the top of every transaction. (The processor doesn't know or care whether the consumer's running a balance on the card or not, so long as the credit card company/bank doesn't decline the transaction.) The consumer benefits by not having to carry cash everywhere for everything, and the retailer benefits by being able to sell to consumers who aren't carrying cash. The processor benefits by being able to get vast quantities of money for setting up and maintaining this system. I gotta say I wish I'd gotten into that business at 19.

And given how much money's involved, and how integrated into our economy credit card payments are, I wonder if we should have some sort of public option for card processing, or else (stronger?) regulatory limits on how high a percentage card processors may charge.
posted by asperity at 2:31 PM on April 14, 2015


I guarantee somebody will pass a law within a week to get this made illegal somehow.
posted by turbid dahlia at 2:55 PM on April 14, 2015


emptythought: You should all move up here, you'd fit right in. It's like reading the stranger comments section.

The Stranger's comment section has more right-wing trolls.
posted by vibratory manner of working at 3:28 PM on April 14, 2015


I mean really, what is the meat of this criticism?

Just making fun of the idea that there's a hard cutoff.
posted by miyabo at 4:11 PM on April 14, 2015


First of all, gentle reminder that Price is not a socialist so he's not doing this in an effort to solve for macroeconomic issues that fall outside his scope of influence. He is running an experiment; the hypotheses appears to be that if his employees are happier (as a result of increased financial security), his company can remain profitable and sustainable and potentially do even better. The immediate beneficiaries of this experiment are his employees and I hope we all agree that it's nice to see them happy, at least temporarily.

The experiment does not have to succeed. Worst case, revenues take a major dive and Price miscalculated how long he could sustain the business with this heavy increase in operational costs, and he has to fire people. Less awful: he could reduce salaries. In either case, my hope is that he's shared this possibility with his employees for transparency's sake: they should understand that they are part of this experiment.

If this story demonstrates anything, it is that Dan Price has guts. He's shown that he has faith in his employees and his business model, and while this might be a risky move it's largely his money on the line.
posted by krippledkonscious at 4:29 PM on April 14, 2015 [4 favorites]


A small aspect of this that is potentially very meaningful to the employees: It (presumably) obliterates wage secrecy or gender-related pay gaps.
posted by GrammarMoses at 4:41 PM on April 14, 2015


It (presumably) obliterates wage secrecy or gender-related pay gaps.

How? He's paying everyone at least $70 000 (not necessarily exactly $70 000), which is different from giving everyone good information about what everyone else makes, and which doesn't stop him from e.g. systematically paying men more.
posted by busted_crayons at 4:50 PM on April 14, 2015 [1 favorite]


(Not that there is any reason to believe that there are systematic gender pay gaps at this business, but the change in salaries described in the article is orthogonal to that issue.)
posted by busted_crayons at 4:53 PM on April 14, 2015


Related news (to me):
- the Securities and Exchange Commission recently proposed a rule that companies disclose the ratio of pay between CEOs and workers, and it's still up in the air.
- Hilary Clinton has taken up the issue as part of her campaign.


Also possibly related, I just heard (on either the radio or a podcast) that CA has a newish law which requires reporting on companies that have 100 or more employees on public benefits [i.e. Medi-Cal]:

SECTION 1. (a) The Legislature finds and declares all of the following:
(1) Public benefit programs are essential to provide Californians with access to fresh, healthy food, quality health coverage, basic needs, cash assistance, child care, and income supports, among other benefits.
(2) The state needs to preserve and expand public benefit programs to ensure that no Californian has to go hungry or forego medical care because he or she cannot afford these basic life necessities.
(3) In 2013, California had the highest number of working poor families in the country. More than one-third of the state’s working families are low income, making less than 200 percent of the federal poverty line.
(4) When low wages and a lack of benefits leave workers unable to make ends meet, they turn to public assistance programs for health care, food, and other basic necessities.
(5) Employers that pay low wages and offer no benefits shift the costs of doing business onto taxpayers.
(6) Large, profitable employers should pay wages and benefits that do not impoverish workers or shift costs onto taxpayers.
(7) Employers that shift the costs of their business expenses onto taxpayers put responsible employers at a competitive disadvantage, creating an unfair playing field for business in the state.
(8) To promote a deeper understanding of the causes and sources of underemployment, poverty wages, and the economic impacts on Californians, business, and the state budget, it is appropriate for policymakers to possess a broader set of empirical data with which to make informed decisions.
(b) Therefore, it is the intent of the Legislature to do all of the following:
(1) Produce a report on employers that have employees enrolled in public assistance programs and on the cost to the state of providing those benefits.
(2) Use the report described in paragraph (1), along with other studies related to labor trends, to analyze practices within industry sectors detrimental to economic competitiveness in the marketplace.
(3) Ensure that all Californians have access to public benefit programs that safeguard their identity and privacy and ensure that receipt of public benefits never is the cause of workplace discrimination.
(4) Develop policies to decrease the number of working poor in California by increasing the quality of jobs and employment opportunities and informed employment and training programs.
(5) Use the data contained within the report to promote sound and reasonable policies to ensure that employers do not shift the responsibility for providing health care and basic necessities for their workers onto taxpayers through the use of the data contained within the report to develop reasonable and sound policies.
(6) Ensure that no worker is discriminated or retaliated against for the reason of being enrolled in a public benefit program.

This is the first I'd heard of something like this, so I have no idea how meaningful it is.
posted by triggerfinger at 5:00 PM on April 14, 2015 [1 favorite]


Let's see where this goes. I remain optimistic.
posted by ostranenie at 5:01 PM on April 14, 2015 [1 favorite]


Let's see where this goes. I remain optimistic.

What about, exactly? I'm definitely optimistic that certain things will be considerably better for Dan Price's employees as long as his present whim persists. Beyond that, what? We're just a few years past the calculated repression and dismantling of a mass social movement centered on income/wealth inequality by the powers that be and I'm not aware of evidence of any broad reversal of the trend toward increased inequality. Do you work for Gravity or something?
posted by busted_crayons at 5:17 PM on April 14, 2015 [1 favorite]


I have nothing substantive to add other than comments upthread made me think of the phrase 'kitten-shitting shitmittens' which made me laugh pretty hard to myself.
posted by stavrosthewonderchicken at 5:24 PM on April 14, 2015 [1 favorite]


I understand that, but doesn't the industry make most of its money from the people who don't pay off their cards every month or who pay late fees?

This is not true for this particular business. This business makes money by charging either a flat fee or a percentage for each transaction a merchant processes on their network. This is a Henry Ford situation in that the more money his employees have the more money they're going to spend and more payment transactions mean more revenue for Gravity. (However, it is true that there's no particular reason those transactions would be on the Gravity network.) They have some value-adds/up-sells but transaction processing is likely their core business. It's a private company which I have no first hand insight into, but I've worked with many like them. The card issuers/banks make money on outstanding balances but this is lower down the food chain.
posted by feloniousmonk at 5:49 PM on April 14, 2015


busted_crayons, I hope you're being sarcastic and making fun of all the "NOT ENOUGH!"s and "BUT THE WORLD IS STILL SO FUCKED UP IT'LL NEVER EVER IMPROVE GRAWRRR!"s. I can't tell.

If it inspires anyone else to be a better boss, and I hope it does, then we'll all be better off. This is the first time I've heard of anything like this happening on this sort of scale. I was glad to read it. Now let's see if it actually happens.
posted by ostranenie at 6:33 PM on April 14, 2015


im going to hang out on U A W freeway here in Flint with a sign:

"Will work for Gravity"
posted by clavdivs at 6:46 PM on April 14, 2015


If it inspires anyone else to be a better boss, and I hope it does, then we'll all be better off.

Maybe, maybe not; I don't even know what "we'll all be better off" means. In my earlier comment, I was completely serious. This decision by Dan Price looks, so far, like it worked out well for the employees of Gravity. That's genuinely excellent, and I'm happy about that, but the very first comment was about how this fits into larger structural issues. The correct answer is that it's unrelated, except for a few possible basically minor positive (e.g. a few other random business owners being inspired to do something nice) or basically minor negative (Dan Price becomes a right-wing talking point about the superfluity of robust labour protection given how nice the job creators are, just look at Dan Price) consequences. I therefore literally do not understand what it is that you are optimistic about.
posted by busted_crayons at 7:06 PM on April 14, 2015


I read about this over at CNN Money, a different link. And it caused my brain to completely shut down because I didn't understand it. Either the CNN Money article has sloppy writing or I'm not comprehending what is occurring here.

Here is the quote from the article:

make sure all of his staffers make at least $70,000 annually in the next three years.

Ok, I think I understand that. The link in this post makes the same claim. Everyone will be at or above $70k, right?

Then I see this in the article:

Price told employees of the new pay policy at a meeting Monday. For several moments there was stunned silence before people broke into applause and high fives said Phillip Akhavan, a merchants relations worker whose $43,000 salary immediately jumped 16% to $50,000.

Uhh, wtf? Sounds to me like this guy is getting a 7k raise to 50k, not 70k.

The family had struggled with homelessness after they moved to the states from Puerto Rico when she was a girl, and Ortiz, who also is now paid $50,000 said she now makes more than both her parents combined.
"My mom cried when I told her," she said. Her $36,000 salary was one of the lowest in the company.


50k is not 70k.

Is the writer just nuts or am I missing something?
posted by dios at 7:27 PM on April 14, 2015


Dios: You're missing the words "in the next 3 years" and "immediately." So it will be $70K within 3 years and it's $50K now.
posted by If only I had a penguin... at 7:38 PM on April 14, 2015 [1 favorite]


Ahh, there it is. Thanks. I was reading "in the next 3 years" as "for the next three years", like he was promising them a 70k salary for each of the next three years regardless of anything. That understanding made the 50k confusing. I don't know why my brain completely locked down on that, but I think an eye started to twitch as the gears were stuck.
posted by dios at 7:46 PM on April 14, 2015


I'm calling bullshit on this. This is a bullshit PR move and will never happen. Wait for the articles explaining "it wasn't feasible."
posted by jayder at 7:26 AM on April 15, 2015 [1 favorite]


> I'm calling bullshit on this. This is a bullshit PR move and will never happen. Wait for the articles explaining "it wasn't feasible."

Wow, you are literally shitting on something nice because you are so convinced that it's impossible and you want to be able to come back and say "See, I told you so." I just hope you're equally willing to come back and eat crow if/when it turns out that it does happen.
posted by languagehat at 7:37 AM on April 15, 2015 [6 favorites]


> I therefore literally do not understand what it is that you are optimistic about

I hope he follows through with it and that it inspires other bosses to be better. I am optimistic about Things In General getting better because of this one Particular Thing. What's not to understand?
posted by ostranenie at 11:44 AM on April 15, 2015


To make it really clear: credit card processors are the middleman between the consumer and the retailer. The retailer needs some kind of assistance to take credit and debit card payments, so contracts with a processor, who takes a small percentage off the top of every transaction. (The processor doesn't know or care whether the consumer's running a balance on the card or not, so long as the credit card company/bank doesn't decline the transaction.)

My premise is that the processor' ability to make money is dependent upon the profits of the credit card companies that pay for their services. Less profit on the part of the issuer means less profit to share with the processor. So unless you believe that the processing prices are inelastic, then the processor should care about the issuer's solvency. But you might be right that they don't care, but they would be bad business people if they don't.
posted by Mental Wimp at 12:28 PM on April 15, 2015


Just remember that the charge card market wasn't created with revolving credit in mind, and the entire debit card system functions without it.
posted by pwnguin at 11:56 PM on April 15, 2015


Just remember that the charge card market wasn't created with revolving credit in mind, and the entire debit card system functions without it.

But interest and penalties are large part of the profits generated, and reducing them radically would reduce profits radically. The credit card companies would not have as much money to spend on processing, so it stands to reason that revenue in that part of the industry would also decline proportionately. Note, too, that the annual fees would have to rise, leading fewer people to use them.
posted by Mental Wimp at 6:54 AM on April 16, 2015


The credit card companies would not have as much money to spend on processing

The credit card companies aren't Gravity's clients, the retailers who want to take cards for payments are. Processors like Gravity compete with each other by offering lower rates and better customer service, and retailers are generally free to choose what processor they want to work with.

The reason the retailers don't ditch the processors entirely is that they think their businesses will suffer if they can't accept payments for their services or products by credit card, and they're probably right.
posted by asperity at 8:22 AM on April 16, 2015


The reason the retailers don't ditch the processors entirely is that they think their businesses will suffer if they can't accept payments for their services or products by credit card, and they're probably right.

Again, I never implied processors would go away. To clearly restate my assertion: If people make more money, they will be less likely to pay credit card interest and late fees. This will lead to a decline in per capita profit for credit card issuers. This will lead to increased downward pressure on the processors' prices, leading to lower profitability.

I'm not sure I'm saying anything too radical or speculative here, and your arguments about how processors business is totally immune to the profitability of the credit card business are unconvincing to me, as you seem to be saying that regardless of credit card profitability, they won't go away and thus processors won't go away. I certainly agree that's true, but it doesn't address what I'm arguing.

Perhaps you could say more that would illuminate why this particular service industry's profits, unlike any other I know of, are immune to the profitability of the business customers they serve.
posted by Mental Wimp at 9:37 AM on April 16, 2015


Perhaps you could say more that would illuminate why this particular service industry's profits, unlike any other I know of, are immune to the profitability of the business customers they serve.

What I'm trying to say is that the business customers they serve aren't the credit card issuers. As far as I know, credit card processors are paid entirely by retailers, via a percentage fee for each transaction.
posted by asperity at 9:57 AM on April 16, 2015


you seem to be saying that regardless of credit card profitability, they won't go away and thus processors won't go away

As long as there are network-based payment methods, there will be businesses whose role is to act as an intermediary between consumers and those payment networks on behalf of merchants. Profitability is tied to transaction volume, not the overall health of the consumer credit market. They don't care whether you're paying Amazon with your Visa debit card out of your flush checking account or your nearly-maxed Visa credit card. Processors do not serve the credit card companies, they are their business partners. It's merchants who pay the processors, not those banks. This is why you see things like cash discounts at gas stations.

In fact, processors such as Gravity exist in large part as a means of mitigating the risk inherent in a non-cash transaction due to default and fraud, etc., so if credit account balances were to decrease, default risks would decrease also, meaning the payment processor business becomes even more profitable.
posted by feloniousmonk at 10:04 AM on April 16, 2015


I do think we're going to see the market for credit card processors growing for the next few years, but for reasons pretty much unrelated to whether anyone's incurring debt or fees on their credit cards. Processors have been able to expand their market significantly due to people's adoption of smartphones and tablets. One of the big expenses of accepting credit cards from the retailer's perspective was paying for the specialized equipment and phone line (and before that, for the carbon paper slide device and supply of tear-off slips, and expense and hassle of submitting them to the processor). Now anybody who wants to take credit card payments can buy or rent a card-swipe widget to attach to their smartphone. We've got a while before that new market for processors' services is glutted.

Though if the newer payment systems where there's no card involved take off (Apple Pay, etc) the processors might have a problem, since I don't think those involve the credit card payment network at all, do they?
posted by asperity at 10:23 AM on April 16, 2015


I meant to say "reversal and fraud" there. Whoops.

It'll definitely be interesting to see what happens in this industry if/when Apple Pay or Google Wallet takes off. Presumably there is some level of scale where they'd hit the same walls that resulted in the processor industry in the first place.
posted by feloniousmonk at 11:56 AM on April 16, 2015 [1 favorite]


What I'm trying to say is that the business customers they serve aren't the credit card issuers. As far as I know, credit card processors are paid entirely by retailers, via a percentage fee for each transaction.

This I didn't understand. If the merchant businesses are paying for all of the processing fees as well as the interchange fee, then profits of the processors would depend more on the number of transactions and not on the profits of the credit card companies. I would have to say that the impact of credit card issuers profits would be way less than I was imagining. Obviously, some impact of reduced profits leading to reduced marketing of cards would reduce the number of cards in circulation, but it would probably have little impact on the number of transactions, since people might hold just two cards instead of four, for example. I also agree that other forms of non-cash, non-check payment systems will continue to grow and also need processors and assuming they are also paid for by the merchant increased incomes shouldn't negatively affect the volume of processing at all. So I stand totally corrected.

And I guess I'm glad that his altruism will not adversely affect his business. And I hope more smart business people follow his lead. More equitable sharing of profits is good for business, good for the economy, and good for society.
posted by Mental Wimp at 9:32 PM on April 16, 2015 [1 favorite]


"But what are you suspecting, Sequence?" posted by cotton dress sock

I'm sorry if this was covered after, but I really want to comment in defense of Sequence's argument.

There are many examples of manipulations of employee--employer relationships which have developed only in the past 20 years. These manipulations distort public perception (e.g. business reporting), make financial sense, and do not serve the general long-term welfare of employees.

Some examples include, part-time minimum-wage employment where employee's income is so low they qualify for Social Services such as food stamps, and thus create a situation where the Social Safety Net indirectly benefits employers (e.g. it becomes possible for employees to survive on the offered wages).

And, company boards align CEOs pay with stockholder's interests by changing their compensation from salary to salary & stock; therefore, increasing the incentive for CEOs to make short-term stock-price-increasing decisions.

And finally Sequence's concern, corporations transfer their employee relationships from employee-expense to contractor-expense, influencing stock prices. I'm not completely sure about the financial mechanism which changes the financial statement here, but this is how the manipulation was described to me. There is certainly the benefits that contractor-employee jobs can be eliminated more quickly when their "contracts" are with another company, wage negotiations are with the management company and not with the employees, and eliminating contractors (as far as I've noticed) just doesn't register in the press (e.g. Job cut reporting never breaks down contract and contractor numbers). It's a win-win for management companies and corporate clients, because these agencies do little more than provide paycheck services (which is also a business expense).

Thank you to Sequence for using the term Puff Piece--I think its a good example of a feel good piece lacking critical perspectives. (Seems to me the Drank the Cool-Aid kittens appear to develop rabid behavior before death.)

This story highlights the conflict between government intervention on the one hand (i.e. NY Mayor De Blasio's Progressive Stumping in Ohio putting Hilary Clinton's feet to the fire to develop her Income Inequality platform.) and the Business sector response to these pressures (highlighted by You Can't Tip a Buick & busted_crayons above).
posted by xtian at 5:57 AM on April 17, 2015 [1 favorite]


There are many examples of manipulations of employee--employer relationships which have developed only in the past 20 years.

To your examples I would add converting from defined benefit to defined contribution retirement plans, and one I've experienced twice, paying wages in arrears and covering that switch by a change in frequency of payment (i.e., from fortnightly to semimonthly). The link provides an example of how the employer tries to make that seem like a good thing when, in fact, they get to keep your money longer and it is the primary reason for doing it.
posted by Mental Wimp at 9:03 AM on April 17, 2015 [1 favorite]


I am amused at some of the reactions to this story elsewhere:

Perhaps the most prominent attacker was Rush Limbaugh, the right-wing radio host, who labeled the move "pure, unadulterated socialism, which has never worked."
posted by asperity at 2:17 PM on April 24, 2015


Wow, so either Limbaugh is out of step or the new right-wing position is an unashamed "Fuck you, working class scum, you deserve nothing! NOTHING!!"

Kinda refreshing to see it out in the open like that. They must be so relieved that they don't have to hide their true feelings anymore.
posted by Johnny Wallflower at 2:28 PM on April 24, 2015 [2 favorites]


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