A socialist takeover at Gravity Payments?

April 28, 2015

SOCIALISTWORKER.ORG READERS may have heard of Dan Price, the sole owner and CEO of Gravity Payments in Seattle. On April 13, he announced that he is unilaterally raising the lowest wage at his company to $50,000 now, $60,000 at the end of next year, and $70,000 at the end of 2017. He will drop his own salary to that of his lowest-paid employee.

Price's reasoning is that the cost of living in Seattle is outrageous. He is absolutely right. Rents rose 8 percent last year. Average rents in Seattle now hover around $2,000 per month. More and more, poor and working-class people are forced out of the city. Price told the Los Angeles Times another reason for the raise: "I want to self-impose a minimum wage now," rather than wait for a government mandate to increase pay.

This action is the far extreme of a trend that has seen large corporations like Walmart, McDonalds and Target raising bottom wages under pressure from the Fight for 15 and an increasingly tight labor market, Whether Gravity Payments will be able to withstand competitive pressure and keep this commitment remains to be seen. The wage increase is not backed up by a union contract, so is not easily enforceable.

Image from SocialistWorker.org

Price is the sole owner of Gravity, and therefore the sole recipient of Gravity's $2 million in profit last year. Most of Price's income has come from profits, not his salary, so his wage cut is not as significant as it appears. Raising the lowest wage will increase stability, longevity and good will at the company, leading to more profit. It will also likely ward off any unionization attempts for a long time.

GRAVITY PAYMENTS is following a model closer to Japanese companies. In Japan, the ratio of the salaries of CEOs to average workers is 16 to 1. In the U.S., it is 257 to 1, and much higher at larger corporations. This strategy has served large Japanese companies like Toyota very well. Instead of profits going to high CEO compensation, they go back into company investment or corporate dividends.

So Dan Price's method has a solid capitalist pedigree. In spite of higher salaries, the workers at Gravity Payments will still be exploited. They will not receive the full value of what they produce. The profits they create will still go to Dan Price.

Readers’ Views

SocialistWorker.org welcomes our readers' contributions to discussion and debate about articles we've published and questions facing the left. Opinions expressed in these contributions don't necessarily reflect those of SW.

Given the solid capitalist basis of Price's move, it is ironic that Rush Limbaugh has denounced it as " socialism." Of course, Limbaugh doesn't consider his much higher salary a form of socialism. Usually, he reserves that label for even mild government regulation of corporations, taxes and other state intervention in the economy. Until now, Limbaugh has hardly ever met a corporate policy he disapproves of. Pollute the air and water? Fine with Limbaugh. Burn fossil fuels? Sure, who cares about rising sea levels and horrific weather events? Rely on sweatshop labor? Absolutely! Let the market set wages.

So when capitalists attack workers and the earth, Limbaugh is on board, but when a capitalist decides to exploit his workers a little bit less, he goes ballistic! This time, he doesn't want the "market" to set wages.

Of course, we should expect such nonsense from Limbaugh, who can't tell a socialist from a socialite. But his criticism has a certain capitalist logic. It is in the general interest of capitalists to hold down wages as much as possible. Of course, worker organizing can challenge this logic and force higher wages. In certain rare cases, like at Gravity, a higher wage can temporarily serve the interests of a corporation in a particular niche. Just as on other issues, there is often a conflict between the general capitalist interest and that of particular capitalists.

We should be happy about the workers at Gravity getting a wage increase. However, they should not rely on the fickle good will of their boss. They still need to organize. Until workers everywhere own the whole economy and manage it for the good of everyone, and therefore end exploitation, we will not have socialism--in spite of Rush Limbaugh's capitalist confusion.
Steve Leigh, Seattle

E-mail alerts

Further Reading

Today's Stories

From the archives