The Corporate Law Group

Is Dan Price Good for Employees?

Dan PriceDan Price had a revelation and decided to pay all of his employees $70,000 per year. He had been making $1.1 million and calculated that it would cost him $1.8 million a year to do that. He cut his own pay to $70,000 and cashed in some investments and invested it all in the business. He had previously given raises (which were over time) and productivity had increased enough to pay for them. Is he a genius, a pariah, a fool, or something else altogether? We say maybe one of the first three, but certainly the latter.

Excoriated by the political right and lionized by the political left (neither one correct or helpful), a free marketer would applaud Price for taking care of those who take care of him and wish him the best. He wants to make this work, so great. His business could go under. Apparently the raises cost more than the money he was making so it may not be sustainable. Then again, raises in past have apparently been completely made up for by increased productivity so maybe he thrives and prospers. Certainly if he needs a shipper, by paying above market he should be able to get the best shipper in the country. In any event it’s his business to do with as he pleases. B Schools, tee up your case studies.

Is he an advertisement for an increased minimum wage? Not at all. We’ve argued before that if you are going to mandate a minimum wage it should be $100 per hour. If you are going to make stuff up, why be cheapskates? “No, that’s too much,” you say? Based on what? Your feelings? The exact same logic is true of $15 or $7 or $3. Why be stingy and stop at $15? No one’s feelings should be forced on everyone else. Including the guy who wants to work for $10 because he can’t find a job and lives in an inexpensive area? There’s always someone at the margins and by mandating anything you subvert the market and steal their choices.

In any case, is Dan Price good for employees? Certainly the ones who work with him now as long as his company prospers and they keep those jobs. We say, “Go Dan.” It’s your company to do with as you please.