RUSH: Do you remember that guy in Seattle that owned the credit-card processing firm, Gravity Payments? This guy, Dan Price, made news back in April by announcing… He was making a million dollars a year plus as the CEO, and he made a big announcement with a lot of fanfare saying he had made a major decision. He read somewhere that $70,000 a year is the magic number for an employee to make, that with $70,000 a year you can pay your monthly bills. You can buy a car, have a decent house, a place to rent, and have disposable income left over. So he made the decision that every one of these employees was going to be paid $70,000 a year, including him. He was gonna take a pay cut from million plus down to $70,000 a year.
RUSH: This guy Dan Price, a lot of people said, “What a great guy! Wow, this is a guy who gets it!” You know, the left is out there always talking about the inequality in what CEOs make versus what their grunt employees make. So this guy came along and he bought into that, and he heard that 70 grand a year was a magic number for employees. Everybody could live comfortably on that, with no stress, or at least as little stress as possible.
He just made it across the board. In addition to people who praised him with, “Oh, wow, what a great guy, equality at a corporation; does this guy get it.” There were some, including me, who said, “This is gonna bomb. It’s gonna bomb in ways this guy hasn’t even factored. It’s not gonna help his business. It’s not gonna lead to a happy, unified, focused workforce. It’s gonna be divisive. It’s gonna create resentments. It’s gonna create all kinds of problems. And at the end of whatever test period, if there is one, it isn’t gonna work.”
Well, Mr. Price has come forward to announce that it was a disaster, exactly as I and others predicted.
RUSH: Now, back to can Price. Look, folks, this is a teachable moment. This is a big, big, big teachable moment, because one of the things — one of the many things — as we try to keep up with the left every day, is they get on this tear that CEOs are making way too much money and they’re making so much more than their employees. “It’s not fair, and it isn’t right, and it’s hurting the company! It’s not helping America.” So there’s a guy in Seattle that runs a credit-card processing company by the name of Gravity Payments.
His name is Dan Price, and he read somewhere that $70,000 a year is an ideal salary. If you earn 70 grand, you can have a nice car. You can rent a nice place to live and have some disposable income left over, and it’s a number where people feel good. Seventy grand a year. If they’re making that kind of money, they think they’re respected by their boss and so forth. So he made the decision he’s gonna pay everybody 70 grand. Every one of his employees was going to make the exact amount of money, including him.
He was the CEO, and he was making over a million. He was gonna cut his salary down to 70 grand just like everybody else. He was applauded from numerous corners all over the country (applauding), “Yay! Yay! This is great! Finally a sensitive CEO who knows it’s unfair for him to make anything more than he’s employees. They’re the REAL ones that make it work!” See, that’s the key. A CEO to these people on the left is just a figurehead. He doesn’t really do anything.
In fact, the CEO probably don’t even know what’s going on half the time. It’s the middle managers and the employees. They’re the ones that really make a company work. They’re the ones that really make a company work. They’re the ones that ought to be making all the money. So they applauded this move. But there were some “critics.” I was one leading the pack — so acknowledged, by the way, by the New York Times, even, and not in a snarky way.
“The move drew attention from around the world — including from some outspoken skeptics and conservatives like Rush Limbaugh, who smelled a socialist agenda — but most were enthusiastic.” Well, Mr. Price has admitted now that the whole thing blew up on him, it’s been an abject failure. It has bombed out. “Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to” pay entry-level people the same amount they were making.
New hires were making 70 grand just like people that had been there for life, just like people that had been there for years. It didn’t matter how long you’d worked there, didn’t matter how hard you worked, did not matter what your contribution to the company was. You made 70 grand a year. Let’s go to the audio sound bites. I just want to remind you, just to refresh your memory what I said about it back on April 15th of this year.
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RUSH ARCHIVE: This is pure, unadulterated socialism, which has never worked. That’s why I hope this company is a case study in MBA programs on how socialism does not work, because it’s gonna fail. … He’s chosen $70,000 as an arbitrary salary because he read that’s where people are happy. And he’s gonna find out… (laughing). It isn’t gonna take long because once everybody figures out they’re all making the same, no matter what they do, the slackers are gonna surface. It’s human nature! ….
Let me tell you what he’s doing here. I know exactly what this guy is doing, and that’s why I know exactly what’s gonna happen. … He’s assigning the same passion to his employees that he has, but they don’t make enough money. He’s read that $70,000 is that liberating magic number where you become happy, and he wants people to be able to focus on the work, not on they can’t pay the light bill; they can’t pay whatever bill.
So he’s gonna pay ’em 70 grand so they don’t have to worry about making their payments. They don’t have to worry about being in debt, and they can focus on their passion, which is his business. And you can do that with one or two. Not every employee is the same. You can do that now and then, that can work for a time. But I think what the guy’s doing is trying to buy love. Myself, I think the guy’s trying to buy respect, trying to buy affection; that never works, by the way.
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RUSH: It was a long monologue, and I went on to predict specifics of what would happen, that long-term employees who valued themselves greatly would be resentful and lose their passion, and they would see people not working very hard or not caring and going on vacation, getting the same amount they were getting, and it just wasn’t gonna work. And the fact that he had cut his own pay to 70 grand was not gonna get him any credit.
At the end of the day, it wasn’t gonna matter to anybody. It wasn’t gonna mollify anybody. It wasn’t gonna change anybody’s attitude. It was gonna lead to rampant unhappiness because nobody thinks they’re the same as everybody else. Contrary to what the left is trying to force on us, nobody wants to be the same as everybody else. You might not want to be like somebody in this way or that way, but you don’t want to be the same, and you don’t want to be considered the same. You want to be considered unique.
There’s only one of you. And if you’re healthy psychologically, you know it’s a special you. There isn’t another you. You don’t want to be lumped in with a bunch of slackers, half-baked, half-caring people. You want to be thought of as the cream of the crop, and you can’t be if everybody’s making 70 grand. The fact that there are going to be different degrees of talent and ability and passion, means it just never had a chance. So here is Mr. Price on the New York Times website on Friday. Remember, he just did this back in April. Well, that’s when we heard about it. He might have done it some months prior. But they posted a video at the New York Times of Dan Price discussing the impact of his decision.
PRICE: I’m working as hard as I’ve ever worked to try to make it work. I’m renting out my house right now to try to make ends meet myself. I haven’t made this little amount of money since I was in my early twenties. It helps that I’m 31, and don’t have any kids, too (laughing), and no girlfriend. No girlfriend to tell me I’m crazy.
RUSH: It’s just a few months later this guy is now renting out his house for additional income. He took a pay cut from over a million to 70,000, in order to be fair and to show that he was no better than anybody else and that even as CEO his contributions were no more important than anybody else’s. And see, that’s the rub. “Nobody’s more important than anybody else.” That’s socialism to a T. Nobody’s more important. Everybody’s the same. They’re interchangeable! If one person making 70 quits, it doesn’t matter!
Go get somebody else, pay them 70, and you haven’t lost anything, and of course none of that’s true. The main policy or main flaw with socialism side from run out of somebody else’s money at some point is that we’re not the same and we are not equal. There is no such thing as fairness. Fairness is always arbitrary depending on who has the power to define it, and there certainly is no equality. There’s equality of opportunity, equality of chance, equality before the law, but these people talk about equality in terms of outcomes, and there’s no such thing.
You put a system of socialism in place where you have equality of outcome, and you’re always gonna have some renegades, some entrepreneurs who are gonna say, “Screw this,” and they’re gonna bust out, and they’re gonna do what they do, and they’re not going to be shackled by silly rules like this. And then you have, on the other end of it, people who are gonna say, “I’m gonna get 70 grand a year, man, and I don’t have to do anything special? I just have to show up?” and that’s all they’re gonna do. Because slackers are everywhere.
If you’re not going to be compensated or rewarded for merit-based behavior, then there’s no reason to be concerned about merit-based behavior. So that goes out the window, too. But look at the New York Times story here. Most everybody praised the effort, most everybody got behind this idea and thought it was wonderful. There are just two or three people the Times references here who had the audacity to criticize it, and of course your beloved host named as one of those. So I don’t know what he’s gonna do now.
He could do a GoFundMe campaign, crowd fund, or what have you. But this is the frustrating thing for me. And I think it’s always gonna be frustrating. The evidence that liberalism, socialism, fairness, sameness, equality, good vibes, good feelings, the evidence that it doesn’t work is abundant, it’s everywhere, and it doesn’t seem to register with people. The good intentions always seem to trump the evidence. They always seem to overpower it. But at some point, everybody has a learning experience personally where perhaps they learn it personally rather than objectively, at a distance.
RUSH: Thomas in Fort Collins, Colorado. Welcome, sir. Glad to have you on the program.
CALLER: Rush, it’s my pleasure to speak to you. Thanks for taking my call.
RUSH: You bet.
CALLER: You know, I heard your comments about Dan Price, and he seems like a really nice guy. I read a bit of that article as well, and his intentions were good, but it appears that, you know, he just doesn’t recognize the consequences of making that decision, of paying people with limited skills $70,000. Now, those folks making $70,000 are gonna have expenses for $70,000 a year, and what’s gonna happen to those folks when they lose their job? They are going… How are they gonna make their payments, keep the nice cars they bought, you know? They probably have upgraded their home and paying much more in rent or purchased a house. Those people are likely gonna lose everything.
RUSH: Well, now, theoretically you’ve got a great point here. I don’t know how long that these people have made that money. I don’t know they’ve been paid that much enough. We just heard about this in April. But it’s possible. People may have gone out and upgraded their cars, they may have gone out and upgraded where they live, and they may eventually… I didn’t read the entire story. Have some of them already been laid off? Have some already been fired, or is that projected to happen down the road?
CALLER: I think he’s actually initially had to hire some people, and when he hired those folks, he’s paying them much, much more than he would have, ’cause initially he had a lot of responses after all the media attention that he received. But, yeah, he ended up losing some. I think ultimately he has to let some people go.
RUSH: Well, those people that have taken what their new salary was and started living on it and maxed it out, you’re right. They are going to have expenses that they’re not gonna be able to replace if they can’t find a job that pays them at least that much. And the odds are they won’t. The tough thing about this is… Somebody has to say this. Whoever says this is gonna be thought of as heartless and mean-spirited and all that. But a lot of these people weren’t worth 70 grand. Merit based, they just weren’t worth it.
“Wait a minute, Mr. Limbaugh! They were being paid. What do you mean they weren’t worth it?” In terms of how productivity determines wages and value and worth, they weren’t worth it, some of them weren’t worth. They were getting any where near that. By definition, they weren’t worth it. If he wasn’t paying them 70,000 beforehand, they weren’t worth it. But, then again, you are worth what somebody will pay you. Well, this guy came up with an arbitrary number of 70 grand, and there were some people who assuredly were not worth it.
They were not make this that beforehand. The only reason that matters is they’re not going to be able to replace it if they do not have the skills, the talent, resume — and the economy being what it is. So that is a good point, something to think about. This is a great example where good intentions can oftentimes come back to bites you. This guy only wanted these people to have a happy life. You know what spurred this with the guy? And, by the way, this is a legitimate concern.
He’s got a business to run, and he found out that a lot of his employees were being distracted by the fact that they were late on a car payment or late on the rent, and the creditors were hassling them, and they were distracted, and they weren’t working, and he said, “Okay, I don’t want people working for me to be distracted by this.” So he found out that 70 grand is the magic number with that stuff doesn’t happen, and he just said, “I’m gonna pay every 70 grand,” because he wanted ’em focused on the job.
Now, I can understand that. That, in and of itself, you could say actually is an act of compassion, and the intentions behind it are wonderful. But then the reality, as old Thomas here points out, is some of them weren’t worth that. I only say that in the sense that their next jobs they’re probably not going to get that. And the odds are they won’t. I hope they do, but they probably won’t. In which case they’re going to have a lifestyle that has been structured around 70 grand — which, by the way, it’s not first time something like this will have happened.
But it just… That’s why all this is a teachable moment. I was dead serious when I said I hope this ends up as a case study at MBA school down the road because this plan that this guy had takes every demand or suggestion that liberals have, and he put it in play, put it in motion. And now he has to rent his house out to get by! He can’t make it on 70 grand because, of course, he had a lifestyle that was based on some amount up to a million. He may have been living it all. Who knows? Anyway, thanks for the call. I appreciate it, Thomas.
RUSH: One more piece of information about this company, ladies and gentlemen. What is it? Gravity Partners, whatever the name of this company is. Gravity Payments. Here’s the thing. It sounds like the whole company may fold now. That’s how bad things have gotten. This plan to pay everybody 70 grand a year was implemented three months ago, according to the New York Times. But get this — and this was perhaps the worst thing that happened.
“Less than two weeks after the announcement, Mr. Price’s older brother and Gravity co-founder, Lucas Price, citing longstanding differences, filed a lawsuit that potentially threatened the company’s very existence.” So apparently there was trouble in paradise even before Dan Price made this move, and then he made the move and his brother/cofounder says, “What the hell is going on?” and filed a lawsuit which could end up putting the company out of business.
Now, you say, “Well, maybe what Dan Price was trying to do was save the company. Maybe it was in trouble to begin with.” Who knows? Whatever. But this didn’t work, and it has now led to the absolute worst possible outcome for everybody. No more company. So, yeah, it sounded great, everybody making $70,000, but it wasn’t possible. Financially it wasn’t possible, and in every other way it didn’t make any sense. So now look at these great intentions. Look at this heartfelt desire for everybody to do well, be happy, and not have to be pressured by bill payments that were late so forth.
Now there might not be any jobs anywhere at this company because there might not be a company.