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CEO to take pay cut in order to give his workers a living wage, minimum $70K

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Dan Price stunned the business world when he announced four years ago that he would begin paying his 120 employees at Gravity Payments a minimum salary of of $70,000 a year.

Employees gasped when they heard the news at Gravity’s Seattle headquarters. Price, who grew up between Melba and Marsing in rural Canyon County, slashed his $1.1 million salary to $70,000.

On Monday, Price expects a similar reaction when he surprises workers of a small Idaho company that he bought two years ago, ChargeItPro. At an announcement at Gravity Payments’ new Boise office at 110 N. 27th St., he’ll offer the 40 workers the same minimum salary, although it will be phased in over four years.

“I expect that many people will be very happy about it,” Price said in a telephone interview with the Idaho Statesman from his office in Seattle.. “And will sense that it’s fair and it makes sense and that’s the way it should be.”

Gravity Payments processes credit card payments for merchants. When Price bought Eagle-based ChargeItPro, which developed payment processing software for small businesses, employees earned salaries starting in the high $20,000s.

Price increased the minimum pay to $40,000, which he said was the “most that the business could afford without completely toppling.” The raises erased most of the company’s profits, he said.

“But it just seemed like a more pressing thing for us to pay as close to a livable wage as possible,” he said.

With Monday’s announcement, he said, ChargeItPro employees making less than $50,000 will be bumped up to that level. Over each of the next four years, they’ll get 5,000 raises that will bring them to $70,000.

Gravity has given the 27th Street building, built in 1960 and formerly occupied by Associated General Contractors, an extensive makeover since buying it. Gone are the yellow pastel panels of old. Tinted floor-to-ceiling windows with black supports cover the front and back.

The building has room for 104 employees. Price said he expects to add workers over time, including software engineers, payment specialists and sales people.

“The mix of jobs in Boise, at least initially, will be very similar to the mix of jobs in Seattle, which is very heavy in software engineering, product management, sales and account maintenance and customer service,” Price said. “And then some administrative jobs like fraud and security specialists — things that when you’re in the payments industry are kind of necessary.”

The Boise office will also have a “substantial number” of call center employees, who will also earn $70,000 after four years.

“Our competitors outsource those jobs to India and the Philippines and other places and offer very, very low wages, in some cases $2 to $3 or $4 an hour,” Price said. “And that’s an important job.”

A handful of the company’s Seattle workers have accepted offers to relocate to Boise, where the cost of living is lower and their salaries will go further, he said.

Price will continue to live in Seattle, but said he expects to come to Boise several times a year.

“Recently, my parents moved to Boise and they have a nice guest room,” he said. “I’m definitely going to be splitting time a bit more.”

His father, Ron Price, is well-known in Treasure Valley business circles as a longtime consultant, coach, speaker and author.

Gravity Payments was founded by Price and his brother, Lucas Price, in 2004.

After the announcement about the $70,000 salaries, a couple of Gravity Payments employees quit. They were upset that other employees were suddenly being handsomely compensated and that it appeared their own efforts weren’t being rewarded as well.

Lucas Price ended up suing his brother, saying Dan Price paid himself excessive amounts and violated his brother’s rights as minority stockholder. He sought to force a sale of the company or dissolve it. In 2016, a Seattle judge dismissed the case. Price bought out his brother and now owns the entire company.

The company has continued to prosper in the four years since the higher wages were ushered in. Employee turnover has gone down significantly, Price said.

“The Seattle market tends to have high turnover, because Amazon drives a lot of the culture, and it’s just a high turnover environment there,” Price said. “But our turnover has been much lower … since the $70,000 minimum wage came in.”

Before then, Gravity Payments employees collectively averaged zero to two babies born per year. Since then, he said, they average close to 30 per year.

“It’s really fantastic to see people literally growing their families and having the resources to do so,” Price said. “We went from having virtually no first-time homeowners to, now, there’s roughly a half-dozen or so first-time homeowners.”

The number of employees saving for their retirement accounts has tripled, a third have become debt-free, and two-thirds have significantly paid down their debt, he said.

Last year, Gravity Payments and its 200 employees processed $10.2 billion in payments. In 2014, before the announcement of the pay increase, it processed $3.8 billion.

“There was a lot of chatter after the announcement that employees would waste their money, that it was a stupid idea and that it would hurt everyone,” Price said. “I think we have definitely proven that wrong.”

(c)2019 The Idaho Statesman (Boise, Idaho)
Visit The Idaho Statesman (Boise, Idaho) at www.idahostatesman.com
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