19 ms·

The boss who put everyone on 70K

537 points by orjan 7y ago

anonsivalley652 7y ago
Note: I heard this story around 2015-2016. https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=9371854 I'm not sure which is more applicable: 1. Hurray, decency. 2. Shouldn't getting excited about what would've been middle-class income 70 years ago be a sign how far workers' pay has fallen?
- travbrack 7y ago
  Huh? Inflation calculator says 70k in 1950 is worth 754k today. Edit: I did the calculation backwards. Thanks to everyone who pointed that out.
  - zelphirkalt 7y ago
    You have it the wrong way around. You should calculate what historical wage would be 70k today. GP is probably also relating to what you can buy using 70k.
  - opan 7y ago
    Wouldn't you instead want to see what 70k today is equivalent to back then, then check how that pay compares to the average?
  - eru 7y ago
    I think you'd need to do the opposite: take 70k today, and figure out what the inflation calculator suggests about it's value in 1950 dollars. Just using your numbers, that would be about 6.5k. Now compare with median annual incomes in 1950. Asking Google about '1950 median american income' gives 'Average family income in 1950 was $3,300.' Not quite what I wanted to know, but close enough. (We are looking at per worker income, and would probably be more interested in median than average.)
    - mzi 7y ago
      I found this link[0] that tells us that the median income - adjusted for inflation - seems to be rising since 1967. https://www.davemanuel.com/median-household-income.php https://www.davemanuel.com/median-household-income.php
      - nbp160130 7y ago
        This is measuring household income, not individual income. Real household income isn't increasing because wages are rising, it's increasing because more people in a household are working.
        eru 7y ago
        On the other hand, household sizes have decreased. (Though not sure about workers per household.) > [...] it's increasing because more people in a household are working. More people are working outside the house and participating in the market economy. Women worked before, domestic chores don't show up in these statistics. Presumably they produce a lot more working outside the house: to estimate a monetary value of what they did before compare with the prevailing wages for nannies and housekeepers.
  - primitivesuave 7y ago
    By the other interpretation of $6500 dollars in 1950 (roughly equivalent to 70k today), it would be much higher than the average family income of 1950 of $3,300 and put you in the top 10-20% of earners, which is probably not as far as 70k gets you today.
    - eru 7y ago
      Of course, fewer people were middle class back then.. But yeah, the original comment we are replying to doesn't have much going for it.
    - bencoder 7y ago
      The true inflation rate is probably a lot higher than CPI which is what most calculators use. Somewhere between 7-13% [0] (for example) [0] https://www.businessinsider.com/if-people-knew-the-actual-inflation-rate-it-would-crash-the-economy-2016-8?r=US&IR=T https://www.businessinsider.com/if-people-knew-the-actual-in...
      - eru 7y ago
        Serious economists mostly suspect that the CPI overstates inflation. See eg https://www.schroders.com/en/sysglobalassets/digital/insights/pdfs/2016/ih5_is-inflation-overstated.pdf https://www.schroders.com/en/sysglobalassets/digital/insight... or do some Google searches. In any case, I agree that inflation (or more precisely, the price level) is a finicky statistic to agree on. So if you are making an argument, it's better if you can avoid inflation. Eg people like to argue whether median real income has stagnated or not. And that crucially hinges on inflation. But what they actually want to talk about seems to be whether workers get 'exploited' more. So we can instead look at the labour share of GDP over time. No inflation adjustment necessary. The article you linked to is somewhat hilarious. It suggests eg China is cooperating with the US in massaging American inflation numbers. (See point 2 in their list.)
    - luckylion 7y ago
      Comparing family income 1950 with a single income in 2020 though. Have two incomes of that size in a family, and you'll be at 140k, which will put you in in that range.
  - deleted 7y ago
    [deleted]
- eru 7y ago
  Where do you get that 'middle-class income' from? The standard of living that 70k USD buys today is vastly better than what the median income bought in 1950. (Of course, Seattle is rather expensive. The 70k USD would go much further in a city that didn't restrict residential construction so much.)
  - TomMckenny 7y ago
    You can not even buy a house built on the 1950s on 70k a year. And while most quality claims (which usually lack actual numbers) certainly look subjective, the quality of a dirt lot or vial of insulin has obviously not changed while their adjusted inflation price has sky rocketed. At any rate, the claim that "stuff" is more expensive because it is better implies that decades of technical improvements have resulted in no efficiency gains. At best, it implies the value per man hour has essentially remained flat. And since the option of buying lower priced versions of items has dispersed, we can never know if the higher quality item is fairly priced.
    - eru 7y ago
      Dirt has become enormously more expensive. The more dignified term to use here is 'land prices have increased.' One could argue that the quality of the dirt has improved a lot; or at least the quality of its location. The US in 2020 is a much richer place than the US in 1950; so we'd expect land to cost more. (But in addition, there are those restrictions on housing supply that I already mentioned.) You are right about insulin probably not having gotten much better. There's a few other goods like that as well. Some of those problems are self-inflicted. Eg education is much more costly these days, too. Who claimed that stuff is more expensive because it's better? Taking hedonic adjustments into account when producing inflation numbers is the proper thing to do. Productivity improvements would then show up by decreases in the price level measured like that. We can see that for eg computers. A good enough desktop computer today costs less in nominal dollars than in the early 90s, despite being enormously more powerful. Yes, you are right that we can not buy many of the crappier things any more. That's partially down to regulation, but also down to there just not being enough demand for lots of crappy stuff to keep production at scale running. So that makes calculating the price level harder. The usual work-around is to only look at adjustments from one year to the next, and chain them. Another workaround is to go with the Big Mac index. (https://en.wikipedia.org/wiki/Big_Mac_Index https://en.wikipedia.org/wiki/Big_Mac_Index) That index is a bit of a joke, since it just measure the price of a Big Mac. But it's surprisingly useful for what it is.
cyberferret 7y ago
Just to clarify - the article mentions that he put everyone in the company on a minimum salary of $70K. I would think that high level technical staff on $100K+ would have been more than a little upset to have their salary slashed. Junior staff members are the winners here!
- nbp160130 7y ago
  I can't find any mention of technical staff having their salary slashed. The only mention of pay cuts is the one the CEO took. Would you mind sharing a source where this is stated?
  - jsty 7y ago
    I think they mean that if the headline is taken as written it implies everyone in the company being moved onto 70k - even if their salary was originally higher, not that the article actually states that this happened.
  - chrisseaton 7y ago
    > Would you mind sharing a source where this is stated? It’s in the title. ‘Everyone on 70k’ is a pay cut if you were in more than 70k, as any professional would be. It’s clearly wrong as it doesn’t make any sense, but that’s the source they were referring to.
    - jpxw 7y ago
      I mean technically it can be true that everyone is on 70k, and some people are on more.
      - chrisseaton 7y ago
        How's that? It can be true that everyone is on at least 70k, and some people are on more. It can't be true that everyone is on 70k, and some people are on more. If you're on 80k then you aren't on 70k are you?
bufferoverflow 7y ago
This is very nice of the owner, but extremely inefficient economically. Which means most companies can't afford to do something like that. Only if your profit margins are huge.
- mister_hn 7y ago
  Like Amazon, Facebook, Google, Apple or Microsoft?
  - luckylion 7y ago
    Amazon has huge profit margins because they don't do this. If they paid their warehouse staff, drivers etc a minimum of $70k a year, their retail margins would look very different. For Facebook, Google, Apple and Microsoft, not much would change, they don't employ that many people below the threshold, I think, unless you count the outsourced contractors that do moderation, annotation etc. This company's policy doesn't extend to the company they outsource the cleaning of their office to either, so that wouldn't be a fair comparison.
- fsloth 7y ago
  Ineffficient? It would depend on the total value add of each employee. As stated, the performance of the company increased. The capability of individual employees increased. Now, without exact numbers, I can't say economically this or that. But effectively this was not a zero sum game. The company was not paying more for the same outcome, they were paying more for more output. The output of the company increased. This is how investments are usually supposed to work, you put money in, and reap profits. What makes this a bit more difficult to gauge that it's likely the increased performance does not come from individual output, but from a better cohesion of the team which generally makes things always easier and efficient. What people often get wrong is that they think about wages atomically - I pay this guy this much and he delivers this. Whereas when you are having a team of workers (whose job is not to be a mindless drone) and whose output depends on the co-operationnof the individuals, often the second order effects are more important. For example: rewards. You give a huge reward to the single top performer in your company. What happens? Everybody becomes jealous of him, and some will feel cheated since they contributed heavily to the projects the individual participated in. Future collaboration will likely suffer. In fields were output is purely of individual performance (some sales jobs, logging, etc) this calculus is of course different. In these situations the atomic cost analysis probably works.
atlasunshrugged 7y ago
I think it's important to mention some other sides of this story, namely that the raise came right around the time his brother filed a lawsuit for him overpaying himself and domestic abuse allegations. I don't remember the articles exactly but there were some rumors that this change was a PR stunt and shield for him Some articles that talk about the other side: https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric... https://www.hundredeightydegrees.com/investigation/2018/2/27/70k-ceo-makes-a-mint-tortures-ex-wife-advises-on-metoo https://www.hundredeightydegrees.com/investigation/2018/2/27...
- eru 7y ago
  Btw, I think Google could already either pay 70k+ to every employee or is pretty close. They just need to make sure that all the janitors and baristas are employed by subcontractors.
  - DyslexicAtheist 7y ago
    what would a barista or janitor get paid at Google today? I always thought that they did use subcontractors for these roles? I must misunderstand, are you implying that employment via a subcontractor would increase their salary?
    - jshevek 7y ago
      > I must misunderstand, are you implying that employment via a subcontractor would increase their salary? Subcontracted workers are technically not employees of Google, therefore can be disregarded when making claims about the min salary of employees.
    - grouchoboy 7y ago
      I understand that if the low salary workers are employed via a subcontractor, that workers salary is irrelevant for the average salary you are paying.
    - eru 7y ago
deleted 7y ago
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WalterBright 7y ago
Since it's working for Dan and his company, great! > in Seattle that wasn't enough to afford a decent home. Because the population in Seattle has grown by leaps and bounds, if everyone could afford one of the supply of homes, the prices would go up until demand equals supply.
- eru 7y ago
  Well, they could also build more homes. But Seattle has somehow decided they don't want that.
  - draugadrotten 7y ago
    when building homes, you also need to build roads, sewers, power plants, hospitals, schools... it's not just about a few houses.
    - clarry 7y ago
      You always needed those. So why is it that you could build the first homes and roads and sewers and power plants and hospitals and schools, but not more of the same?
      - sokoloff 7y ago
        Do you imagine that the size of sewers, hospitals, schools, and power plants to serve 100K people are the same size as those to serve 500K people? If you've got existing, working infrastructure built out for population X, you have a lot more building to do to support 5X. Often that requires tearing down existing, functional infrastructure and replacing with larger.
        eru 7y ago
        Yes, but it's usually less than 5x more. I don't really see your argument. The per capita expenditure should be the same or less. If really necessary, just charge real estate developers for it.
ecmascript 7y ago
Such an inspiring story, I wish more people were like Dan Price.
- KSteffensen 7y ago
  I wish more people were like the Dan Price in this story.
jmkni 7y ago
The BBC basically providing free marketing for a company, yet again!
- codingmess 7y ago
  Only to further their goal of Socialism.
- epanchin 7y ago
  So you don’t think this is unusual enough to be newsworthy?
  - lonelappde 7y ago
    The article is not news, it's uncritical uninvestigative PR.
    - yitchelle 7y ago
      Why can't this article be news as well? I found it to be quite interesting.
- IAmEveryone 7y ago
  Nothing wrong with that-as long as it’s really free. It’s the paid article that’s wrong. Journalism shouldn’t give coverage intended to benefit a company. But it’s just as important they don’t forgo telling a story they consider interesting just because it might incidentally benefit the subject.
numlock86 7y ago
Oh, that story. I remember it. A lot of the high-performers left shortly after that. It was all triggered by some lawsuit in the first place anyway. The "give everyone the same salary" was like a compromise to weaken the lawsuit while at the same time to make a positive impact on media.
- atlasunshrugged 7y ago
  Yeah, I'm really surprised more people aren't bringing up the lawsuit aspect of it (and the accusations of domestic abuse) while saying he's a 'nice guy.' https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric.. https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric.... https://www.hundredeightydegrees.com/investigation/2018/2/27.. https://www.hundredeightydegrees.com/investigation/2018/2/27....
  - rntksi 7y ago
    Here's the correct link (yours has ... in it): https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric...
    - atlasunshrugged 7y ago
      Thanks!
  - adrianhon 7y ago
    Those links are broken, probably because they were copy and pasted from the comment rather than from the hyperlink. Here are the correct links: https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric... https://www.hundredeightydegrees.com/investigation/2018/2/27/70k-ceo-makes-a-mint-tortures-ex-wife-advises-on-metoo https://www.hundredeightydegrees.com/investigation/2018/2/27...
- fsloth 7y ago
  But is it actually interesting why this started? As a purely economic experiment it's surely at least not a total failure as the company is still standing. I'm not sure what value the "high performer" qualification has in this instance. They were the highest paid, but I don't think we have any guarantees to their actual output. If the CEO is an untrustworthy agent (as some of the stories make him out to be) how can we trust any of the valuations of his employees?
angarg12 7y ago
> "When money is not at the forefront of your mind when you're doing your job, it allows you to be more passionate about what motivates you," she says. I spent the first several years of my career working in academia for a poverty level wage. I can confirm from my own experience that when you worry about not being able to pay rent and all the bills, it's very difficult to be productive, much less in a job that requires any kind of focus or creative thinking.
- mikorym 7y ago
  South Africa has this problem in academia and to a order of magnitude worse. Not only do you worry about your own small income; but grants, scholarships, registration fees and a myriad of other things have in recent times become volatile and can be taken away from year to year. Most of the issues is due to 1) our government being corrupt and 2) promises the government made about free education. I am not against free education, but I am against impoverished professors. This is why I decided to side-step academia. It is delaying my PhD by probably 3–7 years (I am at year 2's start now) but it's better than having in theory 100% time spent on a PhD but actually worrying about the University and your peers, your own future, etc. in reality.
  - NohatCoder 7y ago
    I believe that the story is similar a lot of places in the world. At least in Denmark, stories of researchers spending more time seeking grant money than doing research are not uncommon.
    - ahartmetz 7y ago
      As part of a lecture, I have had a lab tour with a semi-famous professor in Germany. He said that he sometimes gives ideas, but is most of the time just organizing and looking for money for his group. And he said that that is normal in his situation (successful academic career with a sizable group).
  - einpoklum 7y ago
    > grants, scholarships, registration fees and a myriad of other things have in recent times become volatile Welcome to the sad reality of academia almost everywhere in the world. (sigh)
smitty1e 7y ago
It's an excellent story. But what works in a group smaller than Dunbar's Number[1] may not quite scale up. Don't let that Politician Obfuscating Near You (PONY) con you into believing otherwise. [1] https://en.wikipedia.org/wiki/Dunbar's_number https://en.wikipedia.org/wiki/Dunbar's_number
- Mikhail_Edoshin 7y ago
  Indeed. There are roughly three ways to convince people to keep the discipline needed for the collaborative work: force them, interest them economically, or have them believing the cause. Slavery, capitalism, and monastery. Real systems usually are mixes. E.g. Soviet system is largely slavery plus some bits of capitalism and a lot of propaganda to cover the monastery aspect. Or a capitalist company with a visionary leader may be quite a monastery too. Now, the most pleasant way to work is indeed a monastery, but the one that scales well is capitalism :) Slavery is inferior on both counts, but may work when there's no way to add economic interest.
  - smitty1e 7y ago
    My point is that the monastery (or clan) represents roughly the maximum facile size of a voluntary (internally motivated) organization. Scaling above that starts to require some external management structure (your corporation). Then there is the military (retired Navy here) where there is an explicit hierarchy and a Uniform Code of Military Justice to as an external driver. Hence the authoritarian fascination with military terms. If that's your thing, then organizing society like some vast bipedal ant colony seems attractive.
  - Pfhreak 7y ago
    What about worker coops? Not capitalist, but not necessarily driven by believing in a cause.
    - someguyorother 7y ago
      Or tenured professors in fields where they could get paid a lot better if they went private, yet they don't? That's basically a position that makes money go away as an immediate problem, and then the rest of the appeal is having one's hobby as one's job. Scientific freedom and intrinsic value.
tkyjonathan 7y ago
If its minimum of 70k, then its probably a good idea, because you would only hire if you absolutely have to. 37signals would be proud. If you decentivize the most productive people, then you might hurt the rest of the company.
Mikhail_Edoshin 7y ago
As far as I know, there was an Argentine tango orchestra (one of five great tango orchestras) led by Osvaldo Pugliese that used a similar approach. Pugliese was indeed a communist, a member of Communist Party of Argentina, I believe, and in his orchestra they divided all the earnings equally among members. Was one of the most stable tango collectives.
- claire-ah 7y ago
  As a gravity employee and tango aficionado, I find this comment extremely relevant
627467 7y ago
There have been several CEOS who historically have paid themselves 1usd or very low salaries. They end up making up the difference in other parts of their comp packages. I suppose this boss is also the main shareholder so he benefits from productivity increase.
- deleted 7y ago
  [deleted]
- flush 7y ago
  >He realised that he would not only have to slash his salary, but also mortgage his two houses and give up his stocks and savings. Not sure if this means ALL of his stock, but this doesn't seem to be the same thing.
golemotron 7y ago
The things you can do when you're in a high margin non-competitive market.
- Pfhreak 7y ago
  Amazon is low margin, Bezos could give up more wealth. Grocery stores are low margin, but I'm sure you could reduce the pay of Kroger's ceo. I'm trying to think of a company whose ceo makes millions that couldn't take similar steps to increase worker pay at the ceos expense and coming up with nothing.
voltrone 7y ago
And what about that one employee that tend to work more than the others(every company have one of those, maybe it's you), do you find it fair for him to get the same salary as everybody ? why would you better yourself and be more productive only to get paid the same as everybody.
- dsr_ 7y ago
  Yes, it's fair. If you don't like the conditions, go work somewhere else: it's not a company town where your choice is work for BigCo or move.
- Pfhreak 7y ago
  Yes. Working more isn't what we should evaluate people on. It sets up perverse incentives that create long term damage by encouraging everyone to overwork.
rafaelvasco 7y ago
What this guy did is a thing that most people wouldn't even consider. Looking outside of him and caring for other people more than himself, sacrificing himself for others. I won't say that he was right or wrong but that state of consciousness of seeing beyond your own ego and empathize with others like he did is a thing that we as humanity must nurture within ourselves if we want to survive and prosper in the long run. Prosperity and progress is not about power and money, it's about social communion and caring about others as much as we care about ourselves.
- skizm 7y ago
  He raised everyone’s pay in response to a lawsuit that claimed he was paying himself too much. Also it gives the company less profit so if he has to buy out his partner (as a result of the lawsuit), he can do so for less.
  - rafaelvasco 7y ago
    Doesn't invalidate what I said I think;
    - shkkmo 7y ago
      It doesn't invalidate your point that it would be beneficial did what he claims it did. It might invalidate your assertion that he was: > Looking outside of him and caring for other people more than himself, sacrificing himself for others.
      - rafaelvasco 7y ago
        Yeah, agreed. So the point remains, though it doesn't apply to him, but to people in general.
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StanislavPetrov 7y ago
Anyone who was worked a job where low wages are paid (either as a worker receiving low wages or in a managerial position) knows that there is an extremely tangible effect on work quality and productivity. Workers who feel they aren't being fairly compensated for their labor don't work as hard. They don't show as much attention to detail. They don't have any loyalty to their employers, who they perceive as exploiting them. They are much more likely to quit or leave at the first opportunity for any job that seems better. They aren't invested in good customer service. They grow to resent their employers when they work full time and still don't make enough to afford basic necessities. Its no surprise to me that paying workers a living wage (or even something close) results in measurable benefits for a business, in a variety of ways (not to mention immeasurably improving the lives of employees). Further (since this seems like such an alien concept to most high-wage, HN members) getting paid a decent wage also allows massive benefits to the economy and society at large. We're currently looking at a global pandemic with the coronavirus. Given the apparent virility, it seems inevitable that this virus will spread to every country in short order. Most low wage workers don't get sick leave. Many get fired even for taking unpaid sick days. These are your cashiers, your grocery store workers, the people who make your coffee - the service industry workers who make up the bulk of American labor. Even those workers who won't get fired for taking sick days, often can't afford it. We've all seen the stats about the huge number of Americans who cannot afford an emergency expense of a few hundred dollars. Staying home sick qualifies. The containment efforts we've seen in South Korea and Italy have (so far) largely failed - and these are countries with universal healthcare and worker protections that we don't have. Right now it costs $3,200 to get tested for the coronavirus in the United States. Not treated - just tested! Working people cannot afford this and will not get tested, or treated - which will make the crisis worse. How much will this crisis end up "costing" us in the long run? If not this one, how much will the next, inevitable one cost us, because working people don't have the income or benefits to take care of themselves? Massive kudos to this guy for paying his workers a fair wage. Hopefully other employers are enlightened enough to follow his lead and do the same, with the understanding that paying adequate wages benefits not only their business, but society and the economy at large.
- lotsofpulp 7y ago
  > Its no surprise to me that paying workers a living wage (or even something close) results in measurable benefits for a business, in a variety of ways (not to mention immeasurably improving the lives of employees). Not if their work doesn’t really differentiate the product. I have all the research I need about products from the internet, so I don’t need a store employee to sell me anything. Same with many other low paying positions. They are low paying because customers aren’t valuing the extra benefits of a non plug and play staff.
wantedjean 7y ago
Only for the free PR, it was worth it...
misterti 7y ago
I wish i was a part of this story
- kzrdude 7y ago
  Since this is HN, I guess you should go for being the founder & CEO part of it. ;)
arayh 7y ago
While I admittedly do not know any of the inside details, but if you read up on some of the "Glass Door" reviews on Gravity Payments, you'll see a trend of reviews commenting on the cult-like behaviour of the company. I'd suggest doing your own research on companies you apply to before you get mesmerized by their media publicity.
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curiousguy 7y ago
I wonder how long it will take for the salaries to normalise comparing with market rate. The salaries increased to 70k minimum, so they’re paying above market rate for a few roles. The hiring quality will also increased. For example, with a 40k salary, the company could hire someone with 5 years of experience, with 70k, they can find someone with 10 years of experience. So in a few years the company will get rid of low performance and hired more skilled workers and the salary vs skill will match the market rate again. (with a few exceptions)
- macspoofing 7y ago
  >I wonder how long it will take for the salaries to normalise comparing with market rate. When they stop growing and increased competition will cut into their margins, and especially if they start losing money. At that point, they'll be looking at efficiencies everywhere - and those expensive employees will probably be laid off.
yitchelle 7y ago
I wonder how he arrived at 70K? 100K is just as arbitrary as 70K?
- driverdan 7y ago
  Read the article.
  - yitchelle 7y ago
    I did before I posted my comment. It says "After crunching the numbers, he arrived at the figure of $70,000." "Crunching the numbers" does not give details as to how he arrived to 70K. The article made a reference to report by Daniel Kahneman and Angus Deaton, but it is not clear. Have I missed something?
RestAndVest 7y ago
I remember when this happened. The internet went into a frenzy - people celebrating the imminent end of the company...etc I wonder where are these clowns now. I hope they got cancer and bankrupted themselves lol.
earwetr 7y ago
"His company, Gravity Payments, which he set up in his teens"... I'd LOVE to see how a TEENAGER was able to go through the PCI-DSS certification process and PASS the D-level.
- jschwartzi 7y ago
  It’s possible PCI-DSS didn’t exist back then. DSS has only been around since 2004.
  - C12H22O11 7y ago
    Here is v1.0 of PCI-DSS from December 2004, same year this company was founded. Doesn't seem very difficult to comply with, it is essentially 'Use a firewall and antivirus and don't use the default password' http://ftp.freenet.at/mar/PCI_data_security_standard.pdf http://ftp.freenet.at/mar/PCI_data_security_standard.pdf
    - earwetr 7y ago
      now compare with https://www.pcisecuritystandards.org/documents/PCI-DSS-v3_2_1-SAQ-D_Merchant.pdf https://www.pcisecuritystandards.org/documents/PCI-DSS-v3_2_...
  - earwetr 7y ago
    most likely true. these days you have to be a well funded company that has enough cash to jump through the hoops. the cost of entry these days is astronomical. hence very few players on the market.
    - ska 7y ago
      regulatory capture?
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programminggeek 7y ago
Note that this story has been told and retold for years. Whatever difference in pay he paid has more than paid for itself in press attention and marketing.
fallingfrog 7y ago
I’m very impressed by the generosity of this business owner- I don’t know if I would have that kind of moral compass in his position. However- it still needs to be said that we really ought to fight to create an economic system in which everyone has the means to have a comfortable life, even if individuals that make it up are not virtuous. Because this kind of story is a rarity, and the market will certainly punish him for his generosity.
- alharith 7y ago
  > in which everyone has the means to have a comfortable life, Why do you think everyone should have the means to have a "comfortable" life? Perhaps you mean means to meet necessities? If not, what does "comfortable" mean to you? Additionally, why do you think that the means are not there today?
- ianlevesque 7y ago
  Isn’t the point that the market hasn’t punished him? For five years?
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shahedshah 7y ago
While I like good-feel news such as this, there is more to the story than meets the eye. Buried in the comments are links to news sources which go into further legal details.
adultSwim 7y ago
Why can't we do tech co-ops?
photawe 7y ago
Such a refreshing article! Nice to know there are awesome people out there!
Lapsa 7y ago
I'm bit jealous of that Tesla. And I don't even have driver's license nor care about car models. Gifts are underrated.
bloblaw 7y ago
I used to work at Gravity. Dan (owner of Gravity) is sincere and frankly the real deal. Dan Price really is like what is presented in this article. He actually cares about his employees and is being genuine here. He's a good person, making a private business decision to increase the pay of frankly his lowest paid workers. In a city where the average tech worker earns $275k a year, he believes its the right thing to do to make sure everyone that works for him at Gravity can earn enough to afford rent, food, and some fun. Say what you will about the merits of decision, but it takes real leadership to make it and stand by it. I happen to think he's doing the right thing and I hope other companies choose to follow suit.
- Ligrev 7y ago
  Genuinely curious, not judgemental here. How did the usually-much-better-paid people feel about this? Did they complain that their salaries were now closer to the lesser paid people? Like, I could see somebody not feeling like that's fair so I'm wondering how the morale was impacted by that.
  - wjp3 7y ago
    If you read the article it covers that.
    - deleted 7y ago
      [deleted]
    - amflare 7y ago
      It doesn't really. It just said a couple people resigned in protest.
      - kamaal 7y ago
        Never understood this. This is like complaining you are unhappy that other people should even have a good life. It's one thing to aspire to have a good life. And totally different to derive your happiness from watching others suffer.
themagician 7y ago
We’re getting there in some places. Minimum salary in California is now $54k. By 2020 it will be $62k.
- deleted 7y ago
  [deleted]
anentropic 7y ago
> Two senior Gravity employees also resigned in protest. They weren't happy that the salaries of junior staff had jumped overnight, and argued that it would make them lazy, and the company uncompetitive. The mentality of these people...! Not people you want in your company
- staticautomatic 7y ago
  Yeah good riddance to those two.
- dominotw 7y ago
  >and argued that it would make them lazy, I have hard time believing this.
  - kylec 7y ago
    Yeah, if you're making $70k and you could only get $40k elsewhere, you're probably going to work really really hard to not lose your job.
    - anon73044 7y ago
      I've had this raise in 2 years at my current employer. If anything, I'm not putting in as many 60+ hour weeks as I was 2 years ago. What's the incentive? "We'll pay you more, so you can work more and deal with more stress and, one day, you can have a heart attack at you desk. "
      - favorited 7y ago
        It's like the saying goes, if you get paid 100k to work 80 hours/week, you're getting paid 50k.
        beatgammit 7y ago
        Yeah, you might as well get two $50k jobs for better redundancy.
dang 7y ago
Threads from 2015: https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=10450541 https://news.ycombinator.com/item?id=10450541 https://news.ycombinator.com/item?id=10448113 https://news.ycombinator.com/item?id=10448113 https://news.ycombinator.com/item?id=10657913 https://news.ycombinator.com/item?id=10657913 Related from 2016: https://news.ycombinator.com/item?id=12071667 https://news.ycombinator.com/item?id=12071667
davidsawyer 7y ago
Can we get the title changed to something that mentions that $70k is the minimum and not an across-the-board rate?
- FalconSensei 7y ago
  I was also confused by this title
macspoofing 7y ago
It seems like a good initiative, but two thoughts immediately come to my mind: 1) Him making $1million salary at a small-medium company is quite a bit, but that may be because ... 2) ... the company is clearly making a lot of money (as in a lot of profit) and/or growing quickly. When you're growing and making huge profits at a software company, you can afford to pay above the market rate because you have spare cash. At some point that will change. The growth rate will plateau and they will cut salaries (maybe not for existing employees, but for new hires), or layoff expensive staff. But props to Dan to get this done when he had the chance to.
pcvarmint 7y ago
https://mises.org/library/what-happened-when-one-company-set-minimum-wage-70000 https://mises.org/library/what-happened-when-one-company-set...

537 points by orjan 7y ago

Note: I heard this story around 2015-2016. https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=9371854 I'm not sure which is more applicable: 1. Hurray, decency. 2. Shouldn't getting excited about what would've been middle-class income 70 years ago be a sign how far workers' pay has fallen?

travbrack 7y ago
Huh? Inflation calculator says 70k in 1950 is worth 754k today. Edit: I did the calculation backwards. Thanks to everyone who pointed that out.
- zelphirkalt 7y ago
  You have it the wrong way around. You should calculate what historical wage would be 70k today. GP is probably also relating to what you can buy using 70k.
- opan 7y ago
  Wouldn't you instead want to see what 70k today is equivalent to back then, then check how that pay compares to the average?
- eru 7y ago
  I think you'd need to do the opposite: take 70k today, and figure out what the inflation calculator suggests about it's value in 1950 dollars. Just using your numbers, that would be about 6.5k. Now compare with median annual incomes in 1950. Asking Google about '1950 median american income' gives 'Average family income in 1950 was $3,300.' Not quite what I wanted to know, but close enough. (We are looking at per worker income, and would probably be more interested in median than average.)
  - mzi 7y ago
    I found this link[0] that tells us that the median income - adjusted for inflation - seems to be rising since 1967. https://www.davemanuel.com/median-household-income.php https://www.davemanuel.com/median-household-income.php
    - nbp160130 7y ago
      This is measuring household income, not individual income. Real household income isn't increasing because wages are rising, it's increasing because more people in a household are working.
      - eru 7y ago
        On the other hand, household sizes have decreased. (Though not sure about workers per household.) > [...] it's increasing because more people in a household are working. More people are working outside the house and participating in the market economy. Women worked before, domestic chores don't show up in these statistics. Presumably they produce a lot more working outside the house: to estimate a monetary value of what they did before compare with the prevailing wages for nannies and housekeepers.
- primitivesuave 7y ago
  By the other interpretation of $6500 dollars in 1950 (roughly equivalent to 70k today), it would be much higher than the average family income of 1950 of $3,300 and put you in the top 10-20% of earners, which is probably not as far as 70k gets you today.
  - eru 7y ago
    Of course, fewer people were middle class back then.. But yeah, the original comment we are replying to doesn't have much going for it.
  - bencoder 7y ago
    The true inflation rate is probably a lot higher than CPI which is what most calculators use. Somewhere between 7-13% [0] (for example) [0] https://www.businessinsider.com/if-people-knew-the-actual-inflation-rate-it-would-crash-the-economy-2016-8?r=US&IR=T https://www.businessinsider.com/if-people-knew-the-actual-in...
    - eru 7y ago
      Serious economists mostly suspect that the CPI overstates inflation. See eg https://www.schroders.com/en/sysglobalassets/digital/insights/pdfs/2016/ih5_is-inflation-overstated.pdf https://www.schroders.com/en/sysglobalassets/digital/insight... or do some Google searches. In any case, I agree that inflation (or more precisely, the price level) is a finicky statistic to agree on. So if you are making an argument, it's better if you can avoid inflation. Eg people like to argue whether median real income has stagnated or not. And that crucially hinges on inflation. But what they actually want to talk about seems to be whether workers get 'exploited' more. So we can instead look at the labour share of GDP over time. No inflation adjustment necessary. The article you linked to is somewhat hilarious. It suggests eg China is cooperating with the US in massaging American inflation numbers. (See point 2 in their list.)
  - luckylion 7y ago
    Comparing family income 1950 with a single income in 2020 though. Have two incomes of that size in a family, and you'll be at 140k, which will put you in in that range.
- deleted 7y ago
  [deleted]
eru 7y ago
Where do you get that 'middle-class income' from? The standard of living that 70k USD buys today is vastly better than what the median income bought in 1950. (Of course, Seattle is rather expensive. The 70k USD would go much further in a city that didn't restrict residential construction so much.)
- TomMckenny 7y ago
  You can not even buy a house built on the 1950s on 70k a year. And while most quality claims (which usually lack actual numbers) certainly look subjective, the quality of a dirt lot or vial of insulin has obviously not changed while their adjusted inflation price has sky rocketed. At any rate, the claim that "stuff" is more expensive because it is better implies that decades of technical improvements have resulted in no efficiency gains. At best, it implies the value per man hour has essentially remained flat. And since the option of buying lower priced versions of items has dispersed, we can never know if the higher quality item is fairly priced.
  - eru 7y ago
    Dirt has become enormously more expensive. The more dignified term to use here is 'land prices have increased.' One could argue that the quality of the dirt has improved a lot; or at least the quality of its location. The US in 2020 is a much richer place than the US in 1950; so we'd expect land to cost more. (But in addition, there are those restrictions on housing supply that I already mentioned.) You are right about insulin probably not having gotten much better. There's a few other goods like that as well. Some of those problems are self-inflicted. Eg education is much more costly these days, too. Who claimed that stuff is more expensive because it's better? Taking hedonic adjustments into account when producing inflation numbers is the proper thing to do. Productivity improvements would then show up by decreases in the price level measured like that. We can see that for eg computers. A good enough desktop computer today costs less in nominal dollars than in the early 90s, despite being enormously more powerful. Yes, you are right that we can not buy many of the crappier things any more. That's partially down to regulation, but also down to there just not being enough demand for lots of crappy stuff to keep production at scale running. So that makes calculating the price level harder. The usual work-around is to only look at adjustments from one year to the next, and chain them. Another workaround is to go with the Big Mac index. (https://en.wikipedia.org/wiki/Big_Mac_Index https://en.wikipedia.org/wiki/Big_Mac_Index) That index is a bit of a joke, since it just measure the price of a Big Mac. But it's surprisingly useful for what it is.

cyberferret 7y ago

Just to clarify - the article mentions that he put everyone in the company on a minimum salary of $70K. I would think that high level technical staff on $100K+ would have been more than a little upset to have their salary slashed. Junior staff members are the winners here!

nbp160130 7y ago
I can't find any mention of technical staff having their salary slashed. The only mention of pay cuts is the one the CEO took. Would you mind sharing a source where this is stated?
- jsty 7y ago
  I think they mean that if the headline is taken as written it implies everyone in the company being moved onto 70k - even if their salary was originally higher, not that the article actually states that this happened.
- chrisseaton 7y ago
  > Would you mind sharing a source where this is stated? It’s in the title. ‘Everyone on 70k’ is a pay cut if you were in more than 70k, as any professional would be. It’s clearly wrong as it doesn’t make any sense, but that’s the source they were referring to.
  - jpxw 7y ago
    I mean technically it can be true that everyone is on 70k, and some people are on more.
    - chrisseaton 7y ago
      How's that? It can be true that everyone is on at least 70k, and some people are on more. It can't be true that everyone is on 70k, and some people are on more. If you're on 80k then you aren't on 70k are you?

bufferoverflow 7y ago

This is very nice of the owner, but extremely inefficient economically. Which means most companies can't afford to do something like that. Only if your profit margins are huge.

mister_hn 7y ago
Like Amazon, Facebook, Google, Apple or Microsoft?
- luckylion 7y ago
  Amazon has huge profit margins because they don't do this. If they paid their warehouse staff, drivers etc a minimum of $70k a year, their retail margins would look very different. For Facebook, Google, Apple and Microsoft, not much would change, they don't employ that many people below the threshold, I think, unless you count the outsourced contractors that do moderation, annotation etc. This company's policy doesn't extend to the company they outsource the cleaning of their office to either, so that wouldn't be a fair comparison.
fsloth 7y ago
Ineffficient? It would depend on the total value add of each employee. As stated, the performance of the company increased. The capability of individual employees increased. Now, without exact numbers, I can't say economically this or that. But effectively this was not a zero sum game. The company was not paying more for the same outcome, they were paying more for more output. The output of the company increased. This is how investments are usually supposed to work, you put money in, and reap profits. What makes this a bit more difficult to gauge that it's likely the increased performance does not come from individual output, but from a better cohesion of the team which generally makes things always easier and efficient. What people often get wrong is that they think about wages atomically - I pay this guy this much and he delivers this. Whereas when you are having a team of workers (whose job is not to be a mindless drone) and whose output depends on the co-operationnof the individuals, often the second order effects are more important. For example: rewards. You give a huge reward to the single top performer in your company. What happens? Everybody becomes jealous of him, and some will feel cheated since they contributed heavily to the projects the individual participated in. Future collaboration will likely suffer. In fields were output is purely of individual performance (some sales jobs, logging, etc) this calculus is of course different. In these situations the atomic cost analysis probably works.

atlasunshrugged 7y ago

I think it's important to mention some other sides of this story, namely that the raise came right around the time his brother filed a lawsuit for him overpaying himself and domestic abuse allegations. I don't remember the articles exactly but there were some rumors that this change was a PR stunt and shield for him Some articles that talk about the other side: https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric... https://www.hundredeightydegrees.com/investigation/2018/2/27/70k-ceo-makes-a-mint-tortures-ex-wife-advises-on-metoo https://www.hundredeightydegrees.com/investigation/2018/2/27...

eru 7y ago
Btw, I think Google could already either pay 70k+ to every employee or is pretty close. They just need to make sure that all the janitors and baristas are employed by subcontractors.
- DyslexicAtheist 7y ago
  what would a barista or janitor get paid at Google today? I always thought that they did use subcontractors for these roles? I must misunderstand, are you implying that employment via a subcontractor would increase their salary?
  - jshevek 7y ago
    > I must misunderstand, are you implying that employment via a subcontractor would increase their salary? Subcontracted workers are technically not employees of Google, therefore can be disregarded when making claims about the min salary of employees.
  - grouchoboy 7y ago
    I understand that if the low salary workers are employed via a subcontractor, that workers salary is irrelevant for the average salary you are paying.
  - eru 7y ago

deleted 7y ago

[deleted]

WalterBright 7y ago

Since it's working for Dan and his company, great! > in Seattle that wasn't enough to afford a decent home. Because the population in Seattle has grown by leaps and bounds, if everyone could afford one of the supply of homes, the prices would go up until demand equals supply.

eru 7y ago
Well, they could also build more homes. But Seattle has somehow decided they don't want that.
- draugadrotten 7y ago
  when building homes, you also need to build roads, sewers, power plants, hospitals, schools... it's not just about a few houses.
  - clarry 7y ago
    You always needed those. So why is it that you could build the first homes and roads and sewers and power plants and hospitals and schools, but not more of the same?
    - sokoloff 7y ago
      Do you imagine that the size of sewers, hospitals, schools, and power plants to serve 100K people are the same size as those to serve 500K people? If you've got existing, working infrastructure built out for population X, you have a lot more building to do to support 5X. Often that requires tearing down existing, functional infrastructure and replacing with larger.
      - eru 7y ago
        Yes, but it's usually less than 5x more. I don't really see your argument. The per capita expenditure should be the same or less. If really necessary, just charge real estate developers for it.

ecmascript 7y ago

Such an inspiring story, I wish more people were like Dan Price.

KSteffensen 7y ago
I wish more people were like the Dan Price in this story.

jmkni 7y ago

The BBC basically providing free marketing for a company, yet again!

codingmess 7y ago
Only to further their goal of Socialism.
epanchin 7y ago
So you don’t think this is unusual enough to be newsworthy?
- lonelappde 7y ago
  The article is not news, it's uncritical uninvestigative PR.
  - yitchelle 7y ago
    Why can't this article be news as well? I found it to be quite interesting.
IAmEveryone 7y ago
Nothing wrong with that-as long as it’s really free. It’s the paid article that’s wrong. Journalism shouldn’t give coverage intended to benefit a company. But it’s just as important they don’t forgo telling a story they consider interesting just because it might incidentally benefit the subject.

numlock86 7y ago

Oh, that story. I remember it. A lot of the high-performers left shortly after that. It was all triggered by some lawsuit in the first place anyway. The "give everyone the same salary" was like a compromise to weaken the lawsuit while at the same time to make a positive impact on media.

atlasunshrugged 7y ago
Yeah, I'm really surprised more people aren't bringing up the lawsuit aspect of it (and the accusations of domestic abuse) while saying he's a 'nice guy.' https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric.. https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric.... https://www.hundredeightydegrees.com/investigation/2018/2/27.. https://www.hundredeightydegrees.com/investigation/2018/2/27....
- rntksi 7y ago
  Here's the correct link (yours has ... in it): https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric...
  - atlasunshrugged 7y ago
    Thanks!
- adrianhon 7y ago
  Those links are broken, probably because they were copy and pasted from the comment rather than from the hyperlink. Here are the correct links: https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric... https://www.hundredeightydegrees.com/investigation/2018/2/27/70k-ceo-makes-a-mint-tortures-ex-wife-advises-on-metoo https://www.hundredeightydegrees.com/investigation/2018/2/27...
fsloth 7y ago
But is it actually interesting why this started? As a purely economic experiment it's surely at least not a total failure as the company is still standing. I'm not sure what value the "high performer" qualification has in this instance. They were the highest paid, but I don't think we have any guarantees to their actual output. If the CEO is an untrustworthy agent (as some of the stories make him out to be) how can we trust any of the valuations of his employees?

angarg12 7y ago

> "When money is not at the forefront of your mind when you're doing your job, it allows you to be more passionate about what motivates you," she says. I spent the first several years of my career working in academia for a poverty level wage. I can confirm from my own experience that when you worry about not being able to pay rent and all the bills, it's very difficult to be productive, much less in a job that requires any kind of focus or creative thinking.

mikorym 7y ago
South Africa has this problem in academia and to a order of magnitude worse. Not only do you worry about your own small income; but grants, scholarships, registration fees and a myriad of other things have in recent times become volatile and can be taken away from year to year. Most of the issues is due to 1) our government being corrupt and 2) promises the government made about free education. I am not against free education, but I am against impoverished professors. This is why I decided to side-step academia. It is delaying my PhD by probably 3–7 years (I am at year 2's start now) but it's better than having in theory 100% time spent on a PhD but actually worrying about the University and your peers, your own future, etc. in reality.
- NohatCoder 7y ago
  I believe that the story is similar a lot of places in the world. At least in Denmark, stories of researchers spending more time seeking grant money than doing research are not uncommon.
  - ahartmetz 7y ago
    As part of a lecture, I have had a lab tour with a semi-famous professor in Germany. He said that he sometimes gives ideas, but is most of the time just organizing and looking for money for his group. And he said that that is normal in his situation (successful academic career with a sizable group).
- einpoklum 7y ago
  > grants, scholarships, registration fees and a myriad of other things have in recent times become volatile Welcome to the sad reality of academia almost everywhere in the world. (sigh)

smitty1e 7y ago

It's an excellent story. But what works in a group smaller than Dunbar's Number[1] may not quite scale up. Don't let that Politician Obfuscating Near You (PONY) con you into believing otherwise. [1] https://en.wikipedia.org/wiki/Dunbar's_number https://en.wikipedia.org/wiki/Dunbar's_number

Mikhail_Edoshin 7y ago
Indeed. There are roughly three ways to convince people to keep the discipline needed for the collaborative work: force them, interest them economically, or have them believing the cause. Slavery, capitalism, and monastery. Real systems usually are mixes. E.g. Soviet system is largely slavery plus some bits of capitalism and a lot of propaganda to cover the monastery aspect. Or a capitalist company with a visionary leader may be quite a monastery too. Now, the most pleasant way to work is indeed a monastery, but the one that scales well is capitalism :) Slavery is inferior on both counts, but may work when there's no way to add economic interest.
- smitty1e 7y ago
  My point is that the monastery (or clan) represents roughly the maximum facile size of a voluntary (internally motivated) organization. Scaling above that starts to require some external management structure (your corporation). Then there is the military (retired Navy here) where there is an explicit hierarchy and a Uniform Code of Military Justice to as an external driver. Hence the authoritarian fascination with military terms. If that's your thing, then organizing society like some vast bipedal ant colony seems attractive.
- Pfhreak 7y ago
  What about worker coops? Not capitalist, but not necessarily driven by believing in a cause.
  - someguyorother 7y ago
    Or tenured professors in fields where they could get paid a lot better if they went private, yet they don't? That's basically a position that makes money go away as an immediate problem, and then the rest of the appeal is having one's hobby as one's job. Scientific freedom and intrinsic value.

tkyjonathan 7y ago

If its minimum of 70k, then its probably a good idea, because you would only hire if you absolutely have to. 37signals would be proud. If you decentivize the most productive people, then you might hurt the rest of the company.

Mikhail_Edoshin 7y ago

As far as I know, there was an Argentine tango orchestra (one of five great tango orchestras) led by Osvaldo Pugliese that used a similar approach. Pugliese was indeed a communist, a member of Communist Party of Argentina, I believe, and in his orchestra they divided all the earnings equally among members. Was one of the most stable tango collectives.

claire-ah 7y ago
As a gravity employee and tango aficionado, I find this comment extremely relevant

627467 7y ago

There have been several CEOS who historically have paid themselves 1usd or very low salaries. They end up making up the difference in other parts of their comp packages. I suppose this boss is also the main shareholder so he benefits from productivity increase.

deleted 7y ago
[deleted]
flush 7y ago
>He realised that he would not only have to slash his salary, but also mortgage his two houses and give up his stocks and savings. Not sure if this means ALL of his stock, but this doesn't seem to be the same thing.

golemotron 7y ago

The things you can do when you're in a high margin non-competitive market.

Pfhreak 7y ago
Amazon is low margin, Bezos could give up more wealth. Grocery stores are low margin, but I'm sure you could reduce the pay of Kroger's ceo. I'm trying to think of a company whose ceo makes millions that couldn't take similar steps to increase worker pay at the ceos expense and coming up with nothing.

voltrone 7y ago

And what about that one employee that tend to work more than the others(every company have one of those, maybe it's you), do you find it fair for him to get the same salary as everybody ? why would you better yourself and be more productive only to get paid the same as everybody.

dsr_ 7y ago
Yes, it's fair. If you don't like the conditions, go work somewhere else: it's not a company town where your choice is work for BigCo or move.
Pfhreak 7y ago
Yes. Working more isn't what we should evaluate people on. It sets up perverse incentives that create long term damage by encouraging everyone to overwork.

rafaelvasco 7y ago

What this guy did is a thing that most people wouldn't even consider. Looking outside of him and caring for other people more than himself, sacrificing himself for others. I won't say that he was right or wrong but that state of consciousness of seeing beyond your own ego and empathize with others like he did is a thing that we as humanity must nurture within ourselves if we want to survive and prosper in the long run. Prosperity and progress is not about power and money, it's about social communion and caring about others as much as we care about ourselves.

skizm 7y ago
He raised everyone’s pay in response to a lawsuit that claimed he was paying himself too much. Also it gives the company less profit so if he has to buy out his partner (as a result of the lawsuit), he can do so for less.
- rafaelvasco 7y ago
  Doesn't invalidate what I said I think;
  - shkkmo 7y ago
    It doesn't invalidate your point that it would be beneficial did what he claims it did. It might invalidate your assertion that he was: > Looking outside of him and caring for other people more than himself, sacrificing himself for others.
    - rafaelvasco 7y ago
      Yeah, agreed. So the point remains, though it doesn't apply to him, but to people in general.

deleted 7y ago

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StanislavPetrov 7y ago

Anyone who was worked a job where low wages are paid (either as a worker receiving low wages or in a managerial position) knows that there is an extremely tangible effect on work quality and productivity. Workers who feel they aren't being fairly compensated for their labor don't work as hard. They don't show as much attention to detail. They don't have any loyalty to their employers, who they perceive as exploiting them. They are much more likely to quit or leave at the first opportunity for any job that seems better. They aren't invested in good customer service. They grow to resent their employers when they work full time and still don't make enough to afford basic necessities. Its no surprise to me that paying workers a living wage (or even something close) results in measurable benefits for a business, in a variety of ways (not to mention immeasurably improving the lives of employees). Further (since this seems like such an alien concept to most high-wage, HN members) getting paid a decent wage also allows massive benefits to the economy and society at large. We're currently looking at a global pandemic with the coronavirus. Given the apparent virility, it seems inevitable that this virus will spread to every country in short order. Most low wage workers don't get sick leave. Many get fired even for taking unpaid sick days. These are your cashiers, your grocery store workers, the people who make your coffee - the service industry workers who make up the bulk of American labor. Even those workers who won't get fired for taking sick days, often can't afford it. We've all seen the stats about the huge number of Americans who cannot afford an emergency expense of a few hundred dollars. Staying home sick qualifies. The containment efforts we've seen in South Korea and Italy have (so far) largely failed - and these are countries with universal healthcare and worker protections that we don't have. Right now it costs $3,200 to get tested for the coronavirus in the United States. Not treated - just tested! Working people cannot afford this and will not get tested, or treated - which will make the crisis worse. How much will this crisis end up "costing" us in the long run? If not this one, how much will the next, inevitable one cost us, because working people don't have the income or benefits to take care of themselves? Massive kudos to this guy for paying his workers a fair wage. Hopefully other employers are enlightened enough to follow his lead and do the same, with the understanding that paying adequate wages benefits not only their business, but society and the economy at large.

lotsofpulp 7y ago
> Its no surprise to me that paying workers a living wage (or even something close) results in measurable benefits for a business, in a variety of ways (not to mention immeasurably improving the lives of employees). Not if their work doesn’t really differentiate the product. I have all the research I need about products from the internet, so I don’t need a store employee to sell me anything. Same with many other low paying positions. They are low paying because customers aren’t valuing the extra benefits of a non plug and play staff.

wantedjean 7y ago

Only for the free PR, it was worth it...

misterti 7y ago

I wish i was a part of this story

kzrdude 7y ago
Since this is HN, I guess you should go for being the founder & CEO part of it. ;)

arayh 7y ago

While I admittedly do not know any of the inside details, but if you read up on some of the "Glass Door" reviews on Gravity Payments, you'll see a trend of reviews commenting on the cult-like behaviour of the company. I'd suggest doing your own research on companies you apply to before you get mesmerized by their media publicity.

deleted 7y ago

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curiousguy 7y ago

I wonder how long it will take for the salaries to normalise comparing with market rate. The salaries increased to 70k minimum, so they’re paying above market rate for a few roles. The hiring quality will also increased. For example, with a 40k salary, the company could hire someone with 5 years of experience, with 70k, they can find someone with 10 years of experience. So in a few years the company will get rid of low performance and hired more skilled workers and the salary vs skill will match the market rate again. (with a few exceptions)

macspoofing 7y ago
>I wonder how long it will take for the salaries to normalise comparing with market rate. When they stop growing and increased competition will cut into their margins, and especially if they start losing money. At that point, they'll be looking at efficiencies everywhere - and those expensive employees will probably be laid off.

yitchelle 7y ago

I wonder how he arrived at 70K? 100K is just as arbitrary as 70K?

driverdan 7y ago
Read the article.
- yitchelle 7y ago
  I did before I posted my comment. It says "After crunching the numbers, he arrived at the figure of $70,000." "Crunching the numbers" does not give details as to how he arrived to 70K. The article made a reference to report by Daniel Kahneman and Angus Deaton, but it is not clear. Have I missed something?

RestAndVest 7y ago

I remember when this happened. The internet went into a frenzy - people celebrating the imminent end of the company...etc I wonder where are these clowns now. I hope they got cancer and bankrupted themselves lol.

earwetr 7y ago

"His company, Gravity Payments, which he set up in his teens"... I'd LOVE to see how a TEENAGER was able to go through the PCI-DSS certification process and PASS the D-level.

jschwartzi 7y ago
It’s possible PCI-DSS didn’t exist back then. DSS has only been around since 2004.
- C12H22O11 7y ago
  Here is v1.0 of PCI-DSS from December 2004, same year this company was founded. Doesn't seem very difficult to comply with, it is essentially 'Use a firewall and antivirus and don't use the default password' http://ftp.freenet.at/mar/PCI_data_security_standard.pdf http://ftp.freenet.at/mar/PCI_data_security_standard.pdf
  - earwetr 7y ago
    now compare with https://www.pcisecuritystandards.org/documents/PCI-DSS-v3_2_1-SAQ-D_Merchant.pdf https://www.pcisecuritystandards.org/documents/PCI-DSS-v3_2_...
- earwetr 7y ago
  most likely true. these days you have to be a well funded company that has enough cash to jump through the hoops. the cost of entry these days is astronomical. hence very few players on the market.
  - ska 7y ago
    regulatory capture?

deleted 7y ago

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programminggeek 7y ago

Note that this story has been told and retold for years. Whatever difference in pay he paid has more than paid for itself in press attention and marketing.

fallingfrog 7y ago

I’m very impressed by the generosity of this business owner- I don’t know if I would have that kind of moral compass in his position. However- it still needs to be said that we really ought to fight to create an economic system in which everyone has the means to have a comfortable life, even if individuals that make it up are not virtuous. Because this kind of story is a rarity, and the market will certainly punish him for his generosity.

alharith 7y ago
> in which everyone has the means to have a comfortable life, Why do you think everyone should have the means to have a "comfortable" life? Perhaps you mean means to meet necessities? If not, what does "comfortable" mean to you? Additionally, why do you think that the means are not there today?
ianlevesque 7y ago
Isn’t the point that the market hasn’t punished him? For five years?

deleted 7y ago

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shahedshah 7y ago

While I like good-feel news such as this, there is more to the story than meets the eye. Buried in the comments are links to news sources which go into further legal details.

adultSwim 7y ago

Why can't we do tech co-ops?

photawe 7y ago

Such a refreshing article! Nice to know there are awesome people out there!

Lapsa 7y ago

I'm bit jealous of that Tesla. And I don't even have driver's license nor care about car models. Gifts are underrated.

bloblaw 7y ago

I used to work at Gravity. Dan (owner of Gravity) is sincere and frankly the real deal. Dan Price really is like what is presented in this article. He actually cares about his employees and is being genuine here. He's a good person, making a private business decision to increase the pay of frankly his lowest paid workers. In a city where the average tech worker earns $275k a year, he believes its the right thing to do to make sure everyone that works for him at Gravity can earn enough to afford rent, food, and some fun. Say what you will about the merits of decision, but it takes real leadership to make it and stand by it. I happen to think he's doing the right thing and I hope other companies choose to follow suit.

Ligrev 7y ago
Genuinely curious, not judgemental here. How did the usually-much-better-paid people feel about this? Did they complain that their salaries were now closer to the lesser paid people? Like, I could see somebody not feeling like that's fair so I'm wondering how the morale was impacted by that.
- wjp3 7y ago
  If you read the article it covers that.
  - deleted 7y ago
    [deleted]
  - amflare 7y ago
    It doesn't really. It just said a couple people resigned in protest.
    - kamaal 7y ago
      Never understood this. This is like complaining you are unhappy that other people should even have a good life. It's one thing to aspire to have a good life. And totally different to derive your happiness from watching others suffer.

themagician 7y ago

We’re getting there in some places. Minimum salary in California is now $54k. By 2020 it will be $62k.

deleted 7y ago
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anentropic 7y ago

> Two senior Gravity employees also resigned in protest. They weren't happy that the salaries of junior staff had jumped overnight, and argued that it would make them lazy, and the company uncompetitive. The mentality of these people...! Not people you want in your company

staticautomatic 7y ago
Yeah good riddance to those two.
dominotw 7y ago
>and argued that it would make them lazy, I have hard time believing this.
- kylec 7y ago
  Yeah, if you're making $70k and you could only get $40k elsewhere, you're probably going to work really really hard to not lose your job.
  - anon73044 7y ago
    I've had this raise in 2 years at my current employer. If anything, I'm not putting in as many 60+ hour weeks as I was 2 years ago. What's the incentive? "We'll pay you more, so you can work more and deal with more stress and, one day, you can have a heart attack at you desk. "
    - favorited 7y ago
      It's like the saying goes, if you get paid 100k to work 80 hours/week, you're getting paid 50k.
      - beatgammit 7y ago
        Yeah, you might as well get two $50k jobs for better redundancy.

dang 7y ago

Threads from 2015: https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=9371854 https://news.ycombinator.com/item?id=10450541 https://news.ycombinator.com/item?id=10450541 https://news.ycombinator.com/item?id=10448113 https://news.ycombinator.com/item?id=10448113 https://news.ycombinator.com/item?id=10657913 https://news.ycombinator.com/item?id=10657913 Related from 2016: https://news.ycombinator.com/item?id=12071667 https://news.ycombinator.com/item?id=12071667

davidsawyer 7y ago

Can we get the title changed to something that mentions that $70k is the minimum and not an across-the-board rate?

FalconSensei 7y ago
I was also confused by this title

macspoofing 7y ago

It seems like a good initiative, but two thoughts immediately come to my mind: 1) Him making $1million salary at a small-medium company is quite a bit, but that may be because ... 2) ... the company is clearly making a lot of money (as in a lot of profit) and/or growing quickly. When you're growing and making huge profits at a software company, you can afford to pay above the market rate because you have spare cash. At some point that will change. The growth rate will plateau and they will cut salaries (maybe not for existing employees, but for new hires), or layoff expensive staff. But props to Dan to get this done when he had the chance to.

pcvarmint 7y ago

https://mises.org/library/what-happened-when-one-company-set-minimum-wage-70000 https://mises.org/library/what-happened-when-one-company-set...