Seattle CEO Dan Price caused waves a few months ago when he raised the minimum wage of everyone in his company to $70,000. Why’d he do this? He found a study which convinced him that people who earn $70,000 are happiest. This would mean that many people in his company would get a substantial pay raise.
Unfortunately (but predictably), the move backfired. Some of his top people have left. The guy is having trouble making ends meet. His labor costs have skyrocketed far beyond what he had anticipated. Morale has been hurt.
Despite this, CEO Dan Price has my respect. He risked his own money, his own neck, to test his theory. Unlike so many armchair economists and politicians who advocate minimum wage but risk nothing, Mr. Price had the guts to attempt to change the world. Yes, his plan failed, but that’s what happens in real life, that’s what happens in markets. Most businesses do fail, and there are lessons on how not to do things. This is how we get progress, by trial and error.
Another thing to keep in mind is the cost of the failure is born by Mr. Price. Unlike nationally enacted policies, which spread the pain to everyone whether they took risk or not, the cost of Mr. Price’s $70,000 experiment is his and his alone. Likewise, the reward would have been his.
I respect Mr. Price immensely more than any politician or armchair philosopher who preaches but risks nothing. I wish him the best in future endeavors.