Case Study 4: The Happiness Minimum Wage: The Story of Dan Price and Gravity
Payments
Written by Kelly Nyhoff
Case Summary
In 2015, 31-year-old executive Dan Price increased the salaries of all employees at his credit
card processing company in Seattle to $70,000 per year and decreased his own annual salary
from $1.1 million to $70,000. Price says that it was conversations with employees led him to a
Case Analysis
on to increase all
employee wages at his company and the positive results from these changes actually has a
Critical Thinking Questions and Suggested Answers
1. When interviewed in 2018 by the Center for Values-Driven Leadership at
humans to make the organization better. That is 100% backwards with how most
going to sacrifice myself, sacrifice my colleagues, sacrifice my integrity, sacrifice
i As you reflect on your own experience
in organizations, can you remember a time where you felt that your life and the
lives of those around you were genuinely treated as a priority to the
organization? What occurred in that setting to convince you that you were
valued? Please reflect on this and explain.
This question is designed to simply permit each student to reflect critically on their
own experiences in organizations and to discern the reasons why they might have felt
2. If you have not had this type of experience in an organizational setting, what did
you experience that communicated a low priority and/or a devaluing of employees as
persons? Please reflect on this and explain.
See response above. Again, the reflection in this question is designed to help the
3. As you think about your own leadership values, how might you strive to convey
your values to your organization? Please reflect on this and explain.
This question is designed to provide a space for students to reflect on their leadership
4. In 1968, Frederick Herzberg published a paper in the Harvard Business Review
go on to become a top-selling article for HBR, selling more than 1.2 million
reprints since its initial publication.ii In this paper, Herzberg presents his –
conducted in the 1950s and 1960s. Herzberg discovered that the things that make
people satisfied and motivated on the job are different from the things that make
them dissatisfied, and he asserted that wages alone do not tend to motivate
employees toward higher job-related performance. What do you think about
Please reflect
and explain.
Students may argue that if a salary is insufficient, a person will be focused on
improved earnings to enhance employment satisfaction. Herzberg argued that
5. Is it possible that people today have different workplace motivations than the
people Herzberg studied in the 1950s and 1960s did? Please reflect and explain
why you either agree or disagree with this statement.
Students might suggest that, for their generation, worker satisfaction today also
includes broader societal factors such as a desire for their work to make a difference in
Students might note that the factors that are the most motivating are ones that do not
change over time. Indeed, research has continued to show that good wages,
appreciation for work done well, job security, and opportunities to grow and advance
6. In your opinion, what are some things that might earnestly generate employee
motivation? Reflect and explain.
There are wide range of possible student responses, here.
Appreciation is a good topic to explore with students. One possible way to begin the
7. If Herzberg was correct, what else might have been occurring at Gravity
Payments that could have generated the type of enormous increase in
productivity and reduction in employee turnover that the firm has experienced
since instituting the $70,000 minimum wage?
Students might have a variety of ideas, here. For example, given the increase in
employee salaries and the reduction in the salary of CEO Dan Price, there was a
8. Since January 2017, the Securities and Exchange Commission has required
American publicly traded companies to disclose the relationship between their
iii In 2018, the
median chief executive pay ratio was 254:1, an increase of 8.1% over the 2017
ratio of 235:1.iv Dan Price of Gravity Payments was quoted in the New York
Times
v At the time Price instituted the $70,000-per-
year minimum wage, the ratio of CEO salary to the average employee salary at
his firm was 23:1, assuming his salary was $1.1 million per year and the average
salary of his staff was $48,000 per year. From your perspective, would it be
beneficial for the United States to consider legalizing maximum salaries for
CEOs? Please reflect and explain.
Students might have a variety of ideas, here. Wage inequality has grown rapidly, with
the share of company wages for executives continuing to rise rapidly, resulting in
