He employs 50 Boise workers. They took pay cuts to avoid layoffs. The choice paid off
Idaho native Dan Price says his gamble to keep all of Gravity Payments’ workers employed during the coronavirus pandemic has paid off.
Five months after the Seattle credit-card payment-processing company saw its revenues plummet, Gravity Payments is on the rebound. Business is still down 20%, but that’s a far cry from the 55% drop the company experienced in March.
“It’s bad, it’s as bad as during the Great Recession, as bad as we thought it would ever get, but it’s allowed us to break even or slightly better,” Price, the company’s founder, said in a phone interview with the Idaho Statesman.
Faced with the COVID-19-induced collapse in revenues, Price met with his 185 employees, including 50 in Boise, and explained the company’s plight. Nearly every employee agreed to a voluntary pay cut of between 5% and 100%.
Price took a different route than some of his competitors. Toast, which focuses on restaurants, laid off half of its staff — 1,300 workers — in April. Shopify laid off a reported 30 to 50 employees.
In the 16 years Gravity Payments has been in business, it has never laid off any employees, Price said. He didn’t want to do that this time, either.
Gravity received widespread attention in 2015 when Price announced that every employee would be paid a minimum of $70,000 a year. He said he felt laying off employees who had helped the company grow would have betrayed his commitment to them.
Nor did he want to jack up payments to the company’s 20,000 customers by $100 a month.
“That would have given us an extra $2 million a month, which would have solved our financial crisis,” he said. “Our employees unanimously rejected that idea and said they’d rather take the pain themselves in a pandemic rather than have any kind of insult or injury to the small businesses that rely on our services.”
Both the company’s headquarters in Seattle and the branch office in Boise remain closed. Employees have worked at home since March.
The number of new customers Gravity Payments added in July was 31% more than in July 2019, giving Price hope that the company will see its business increase in the months ahead.
Before the pandemic, Price had set aside cash reserves to help the company get through a possible recession with a loss of 20% of sales. That helped the company deal with the downturn in business from the pandemic. Gravity also benefited from a federal Paycheck Protection Program loan in the range of $2 million to $5 million.
“That helped us cover payroll,” he said.
Workers have now had their full salaries restored, and the company paid them what they lost in July from the pay cuts.
Price grew up between Melba and Marsing in rural Canyon County. He co-founded Gravity Payments with his brother, Lucas, while he was a student at Seattle Pacific University. Their father, Ron Price, is a well-known business consultant in Boise.
“I’m so proud of my team,” Dan Price said. “I’m genuinely shocked by their willingness to sacrifice in so many ways and to help so many small businesses and get us to a place where we’re going to be around for a long time.”
In a column published by the Washington Post Aug. 12, Price said research shows that companies that resort to layoffs perform worse over time than companies that keep all of their employees.
He criticized companies such as JC Penney, Neiman Marcus and Hertz, which laid off large numbers of workers before rewarding executives with millions of dollars in payouts.
Price told the Statesman: “Even though Gravity has weathered the storm incredibly well, good people all around us are getting money and power taken away from them.”
This story was originally published August 20, 2020 at 4:00 AM.
