Gravity Payments doing well! (that 70K minimum wage guy)

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  • #15056
    missing_kskd
    Participant

    http://www.inc.com/magazine/201511/paul-keegan/does-more-pay-mean-more-growth.html#insideArticleFlexiblePortrait0

    […]

    Then the inevitable backlash came. Price has been pilloried on Fox News and trashed by the multimillionaire Limbaugh (“I hope this company is a case study in MBA programs on how socialism does not work, because it’s gonna fail”). A Times story in July was so laden with quotes from disgruntled customers and staff that Price’s worried friends called to say he always has a place to stay if things don’t work out. Others accused Price of orchestrating a clever publicity stunt.

    […]

    The plan will eventually double the salaries of 30 workers and give raises to 40 more making less than $70,000. Phased in over three years, this will cost $1.8 million. The minimum jumped to $50,000 immediately and will climb by $10,000 in each of the next two years; those who earn $50,000 to $70,000 will get $5,000 raises. Price has vowed not to raise prices, lay off staff, or cut executive pay. More than half the cost will be offset by Price’s pay cut. Unless revenue grows, the rest will be covered by that $2.2 million profit, leaving little margin for error.

    […]

    Six months after Price’s announcement, Gravity has defied doubters. Revenue is growing at double the previous rate. Profits have also doubled. Gravity did lose a few customers: Some objected to what seemed like a political statement that put pressure on them to raise their own wages; others feared price hikes or service cutbacks. But media reports suggesting that panicked customers were fleeing have proved false. In fact, Gravity’s customer retention rate rose from 91 to 95 percent in the second quarter. Only two employees quit — a nonevent. Jason Haley isn’t one of them. He is still an employee, and a better paid one.

    #15057
    Vitalogy
    Participant

    I had heard that they lost customers due to politics and those customers wanting to “teach him a lesson” on business. I hope he succeeds.

    #15070
    missing_kskd
    Participant

    Yes, there was some of that as well as a couple of employees.

    No real long term impact.

    #15071
    edselehr
    Participant

    It’s true – you get what you pay for. If you want high quality work, pay high quality wages.

    #15106
    missing_kskd
    Participant

    Indeed!

    The other good effect is other people wanting to do business with those who are making sure their people make it OK out there. Of course, it’s not always easy to do that, and people do make bad choices.

    But, it’s totally worth making sure they’ve got something meaningful to work with.

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