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The story opens with Gravity Payments' surprise decision to raise the company's minimum salary to $70,000. It explains how Dan Price funded the change by cutting his own pay and why he believed the move was necessary.
Speaker A
Gravity Payments, this is Corrine.
Speaker B
About a year and a half ago, life changed for the 100 employees of Gravity Payments in Seattle when their boss, Dan Price, announced the company's minimum wage would jump to $70,000 a year, effective immediately.
Speaker C
We're going to put a scaled policy into place and we're going to have a minimum $70,000 pay rate for everyone that works here.
Speaker B
The hikes would be phased in.A $50,000 a year minimum wage took effect immediately and would rise to 60,000 by the end of 2016 and 70,000 in 2017.
Price said he'd help pay for the increases by slashing his own million dollar a year compensation by more than 90% to 70,000.
Speaker C
Curious if anyone has any questions,
Speaker B
Stories of his announcement went Everyone is getting a raise at a Seattle based company.One boss just changed the lives of his employees.One of six kids homeschooled in an evangelical family in Idaho, Price was a member of a local Christian rock band until he was 16.And that's when, with assistance from his dad, he helped a local coffee house owner with her credit card, processing the fees charged by banks and credit card companies.Each time her customers used a card,
Speaker C
I was able to get her costs lowered and it was a good experience for her.All of a sudden I had a reference.
Speaker B
Price parlayed that reference and a passion for helping small businesses into hundreds of clients and created his company.By his early 20s, he was getting rich but growing increasingly troubled by what he called extreme income inequality in the United States.
Speaker C
Frankly, the reality was disturbing.But the trend was even more disturbing.
Speaker B
According to the Washington center for Equitable Growth, the average income of the nation's top 1% of families last year was about $1.4 million, while the average income of the bottom 99% of families was $49,000 a year.
Speaker C
When you create a society that has so much inequality, where the rich and the poor have a divide that's hundreds of times over to me, the way we were going, everybody was going to be hurt.
Speaker B
All this was happening at a time when the cost of living here in Seattle was skyrocketing.The cost of housing, especially rent, was going up so fast that many medium and lower income families couldn't afford it.
Two years ago, Seattle voters approved gradually raising the local minimum wage from 10 to $15 an hour, the first major American city to do so.A study published in July by the University of Washington found the city's lowest paid workers experienced a significant increase in wages, which is precisely the effect Price wanted for his Staff and then some.
This section traces Price's background, from his upbringing and early work helping small businesses to the growth of Gravity Payments. It also connects his views on inequality with the rising cost of living in Seattle and the impact on employees.
Speaker A
Gravity Payments.This is Alyssa.
Speaker B
Alyssa O', Neal, a single mom, used to make $21,000 a year before coming to Gravity Payments.
Now she makes almost 60,000 a year as a customer support representative.She's paid off her car loan, credit card debt and moved into a better home.
Speaker A
It's something I never could have imagined.Let me see if I can find that for you.
Speaker B
Corinne Ward in Customer Support used to have a long commute.
Now she can afford to live close enough to walk to work.
Speaker A
And I'm able to afford the cost of living in Seattle, which is incredible.
Speaker B
Many employees told me they now feel secure enough for financially to start families.He's due on October 12th.
Speaker D
And he's a male.
Speaker C
A boy.
Speaker A
Yes.
Speaker B
Typically, the company had one or two employee pregnancies each year.Now seven or eight.Our daughter, Layli Rose, she's 11 weeks old today.
Some proclaim Price the best boss in America.
The transcript shifts to the backlash against Price's policy and the predictions that his company would fail. It then shows how Gravity Payments actually grew, attracting more applicants and clients while benefiting from publicity and stronger employee morale.
Speaker B
But in protest of the minimum wage policy, some higher paid employees quit and a few clients dropped the company's service.Conservative talk show host Rush Limbaugh predicted Price's downfall.This is pure unadulterated socialism, which has never worked.
Speaker E
That's why I hope this company is
Speaker B
a case study in MBA programs on how socialism does not work because it's going to fail.Turns out Harvard Business School did study Price for class discussion.It found the $70,000 minimum wage announcement generated not only a flood of job applicants, but but many new clients.And as for Limbaugh's prediction about Price's
Speaker D
company, he still has to hold his breath because it hasn't failed.I think on balance, it's prospered.
Speaker B
In fact, Gravity Payments now reports company revenue has grown by 75% and its number of new clients has risen 67%.
Speaker D
Some of their success might be attributed to increased productivity on the part of the workers now who feel respected and understand that they're going to have a hard time finding another job that pays so well.But it also has generated a lot of publicity and that has been good in terms of pulling in business.
Speaker E
Mangoes, peaches, nectarines, cherries.Yes, ma'.Am.
Speaker B
Clients like Socios Produce in Seattle's Pike Place Market predict as long as Gravity Payments offers good service and low cost, clients won't care about their high minimum wage.
Speaker E
To me, if they're running their business in a way that they're cut that their staff feel better about being part of the company, work harder with their customers.To me, as a vendor, that's a good thing.
Speaker B
And if you Get a sense that these higher wages somehow raise your bill,
Speaker E
then we'll have a conversation.
Speaker D
Well, there was a colleague of mine years ago who taught that our mission at the Harvard Business School ought to be to teach people to make a decent profit.There are lots of forces in the world that may overpower that or may make it difficult.But it's nice to see these examples of people who can swim against that tide.
Employees decide to thank Price for the wage increase by pooling money to buy him a Tesla. The chapter focuses on the gift reveal and Price's emotional reaction to their gesture.
Speaker B
Which may be one reason why Price's employees agreed to buy him a gift.
Speaker A
We had tried to think of a way that we could thank Dan for what he's done for us and little payback.Little payback, yeah.
Speaker B
Customer support Representative Alyssa o' Neill got the idea.Rolling.
Speaker A
We have one more gift for you.
Speaker C
All right.
Speaker A
It's outside, though.
Speaker C
Okay.
Speaker B
She convinced the other employees to all chip in.And in July, they bought him a Tesla Model s worth almost $90,000.Are you kidding me?
Speaker A
No.When it happened, it was like it was meant to be.
Speaker B
Oh, my gosh.
Speaker A
I'm really surprised by his reaction.
Speaker B
Thank you.
Speaker A
He said, I don't even want to see the car.I want to see you guys and turn around.And he hugged everybody.And we made sure he hugged everybody first before getting in the car and touching it.
The closing section reflects on Price's long-held dream of owning a Tesla and broadens into a discussion of business purpose. Price considers how companies can pursue more than profit while inspiring others to raise wages.
Speaker B
So you had had sort of a crush on this car for a long time and never thought you'd have one?
Speaker C
I thought I would have one one day.But you ever have one of those goals where you say like three years or two years, but it never becomes one year.It's always three years.And three years goes by and it's still three years.It was kind of one of those deals.
Speaker B
Since his promise of a $70,000 a year minimum wage, higher profile companies like Starbucks and Walmart have raised their minimum wage too, though none nearly as much.If there is an ethic, what is it?
Speaker C
I think it's what's your purpose?And a business is really missing its potential.
If it sees its purpose as creating money, it should have some larger purpose.I think it's a recipe for a better life and more success.
Speaker B
Business Price says for now he wants to live modestly, grow his company for his clients and employees, and see to what degree other companies follow suit.
Speaker C
The truth is, I'm still trying to figure all this out.
Speaker B
Yeah.
And we're sitting inside of Tesla.
Speaker C
And we're sitting inside of Tesla, and I'm doing my best to try to deconstruct what I think here as a 32 year old guy who has a lot more to learn.