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Why do you think lowering the maximum wage is a bad idea?

Manopolus

Metaphorical Anomaly
Manopolus
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I read this really cool idea via Robert Reich's Facebook page a week ago or so.

Why not have a maximum wage based on a multiple of the lowest paid worker in a corporation/company? That way, if the CEO wants more money, he has to give everyone else a raise too.
 
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Apparently the Swiss considered this but voters rejected the idea by almost 2:1.

My own preference is not to cap it, but to tax it at a higher marginal rate. Say 45% on income over $1 million. Perhaps 50% on income over $5 million. Use the money for programs that help the poor.
 
Manopolus said:
I read this really cool idea via Robert Reich's Facebook page a week ago or so.

Why not have a maximum wage based on a multiple of the lowest paid worker in a corporation/company? That way, if the CEO wants more money, he has to give everyone else a raise too.
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For starters because it's useless. The same CEO can just as easily outsource the lowest paid workers to a subsidiary or a third party, circumventing the rule.

McHrozni
 
McHrozni said:
For starters because it's useless. The same CEO can just as easily outsource the lowest paid workers to a subsidiary or a third party, circumventing the rule.

McHrozni
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.....or indeed find other ways to be rewarded that don't involve salary or bonus.

Rather better would be to engender a feeling of corporate community where it isn't acceptable for senior management and executives to plunder a firm at the expense of the workers and the shareholders. I have no problem with exceptional people being rewarded for exceptional performance but too often it seems that executives are receiving multi-million pound rewards for doing nothing more startling than ensuring that the building isn't burning down.

Legislating against excessive pay is never going to work, the only way to stop it is to make it so socially unacceptable that shareholders will stop it to prevent reputational damage to the companies in which they are investors.
 
McHrozni said:
For starters because it's useless. The same CEO can just as easily outsource the lowest paid workers to a subsidiary or a third party, circumventing the rule.

McHrozni
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The Don said:
.....or indeed find other ways to be rewarded that don't involve salary or bonus.

Rather better would be to engender a feeling of corporate community where it isn't acceptable for senior management and executives to plunder a firm at the expense of the workers and the shareholders. I have no problem with exceptional people being rewarded for exceptional performance but too often it seems that executives are receiving multi-million pound rewards for doing nothing more startling than ensuring that the building isn't burning down.

Legislating against excessive pay is never going to work, the only way to stop it is to make it so socially unacceptable that shareholders will stop it to prevent reputational damage to the companies in which they are investors.
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I didn't say that it wouldn't require a few extra rules to insure that it actually works as intended. Many lawyers are actually quite intelligent. Surely they can figure these things out. We all know that business will use any loophole they can think up to their own benefit. The trick is to make any loopholes also beneficial to society at large.
 
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balrog666 said:
Envy is a sin. And rather silly.
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Who said anything about envy? I'm merely concerned about widening inequality and wage stagnation. It's got nothing to do with my personal situation. Seriously, do you know anything about my personal financial situation, anyway? I certainly didn't mention it. Why the hell do you want to make this personal? It isn't for me.
 
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Manopolus said:
Who said anything about envy? I'm merely concerned about widening inequality and wage stagnation.
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Those are two different issues. But why does income inequality concern you? And don't call it just inequality, there are many kinds of inequality, and not all of them are economic.
 
Manopolus said:
I didn't say that it wouldn't require a few extra rules to insure that it actually works as intended. Many lawyers are actually quite intelligent. Surely they can figure these things out. We all know that business will use any loophole they can think up to their own benefit. The trick is to make any loopholes also beneficial to society at large.
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When you need to hire an army of lawyers to adjust your laws in a myriad of complicated ways, what you end up with is unlikely to be "beneficial to society at large" nearly as much as it is likely to be beneficial to lawyers at large.

Furthermore, unintended consequences extend beyond what you would call "loopholes". Suppose, for example, a grocery chain simply eliminated baggers who were the lowest-paid employees. This would allow them to raise CEO salary under your law, but is this a loophole? If you count it as such, then you're creating an incredibly rigid labor market (eliminating those jobs would also save costs, which they might use to become more competitive with other chains). That rigidity will hurt, even if nobody is exploiting "loopholes".
 
Why do you think lowering the maximum wage is a bad idea?

Manopolus said:
I read this really cool idea via Robert Reich's Facebook page a week ago or so.

Why not have a maximum wage based on a multiple of the lowest paid worker in a corporation/company? That way, if the CEO wants more money, he has to give everyone else a raise too.
Click to expand...

Because compensation increases are, properly and only, a retention decision on the part of the employer. You should increase someone's wages only if you think they might leave, and you want them to stay. It's usually more cost-effective to make these decisions on a case-by-case basis for individual employees. Labor unions have formed with varying degrees of success in different industries and at different times, to compel employers to make these decisions collectively.

Opinions of fairness about compensation equality, held by people outside the company, should never enter into such decisions, except so far as those opinions are also held by employees of the company, and may have a significant effect on their decision to stay on at their current wages.
 
What's to stop folks from just opening up more businesses instead? Just sounds like it changes the incentive from growing vertically to growing horizontally. And thus drive management bloat without helping the working class.
 
The Don said:
Legislating against excessive pay is never going to work, the only way to stop it is to make it so socially unacceptable that shareholders will stop it to prevent reputational damage to the companies in which they are investors.
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How do you make it socially unacceptable? Excessive pay isn't something you can shame a person about. I am a bit baffled by this suggestion. Of course it also relies on the powerless shareholders to implement which won't work either.

The way I think makes most sense it is to penalize large corporations for being large. They have no business being large and thus, could easily be broken into smaller corporations that have fewer employees, make less revenue and have lower executive compensation as a result.
 
Manopolus said:
I didn't say that it wouldn't require a few extra rules to insure that it actually works as intended. Many lawyers are actually quite intelligent. Surely they can figure these things out. We all know that business will use any loophole they can think up to their own benefit. The trick is to make any loopholes also beneficial to society at large.
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As mentioned, they will benefit the said lawyers, first and foremost. Maybe some low income workers would also benefit, but that's doubtful. Society at large would have no discernable benefit.

McHrozni
 
oglommi said:
When Marx said this opiate was seen as medicine, not as drugs as we see it today.
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If Marx meant opium as a medicine and not a recreational drug (and it WAS a recreational drug even then), then he was still talking about its anesthetic properties, not any curative ones. He makes it quite clear that religion is something that should be discarded because he believed it leads people to accept what should be intolerable. fuelair is echoing his sentiments exactly.
 
wrs said:
How do you make it socially unacceptable? Excessive pay isn't something you can shame a person about. I am a bit baffled by this suggestion. Of course it also relies on the powerless shareholders to implement which won't work either.
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I'm not sure where you get the idea that shareholders are powerless. Sure, small individual shareholders are effectively powerless but then again if you own 0.00001% of a company your influence should be limited but the major shareholders have significant influence within a company. This manifests itself in a company's focus on growth and/or or dividends through to who is in charge - many a Chairman or CEO has been hounded out by the shareholders.

Social unacceptance of excessive* pay is a societal thing. Some societies like the Scandinavian ones used to frown at overt displays of wealth (though that is changing) and in Japan and Germany in medium sized companies it simply is not the done thing to get a huge salary. In part this is IMO due to a longer term view of business where companies are grown for the next generation not milked for every last penny in the next 12 months.


* - excessive is a subjective judgement. Someone making multi-millions from their own entrepreneurship or by turning around a failing company may not be excessive but it may be excessive where the individual has taken little or no personal financial risk and has not done anything exceptional

wrs said:
The way I think makes most sense it is to penalize large corporations for being large. They have no business being large and thus, could easily be broken into smaller corporations that have fewer employees, make less revenue and have lower executive compensation as a result.
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Penalising success and removing economies of scale does not sound like something that would be good for the economy at large. In some cases there is a minimum size of organisation required to support the business itself. for example the multi-billion investments in aerospace, car manufacture, pharmaceuticals and so on mean that large organisations are required.
 
The Don said:
Penalising success and removing economies of scale does not sound like something that would be good for the economy at large. In some cases there is a minimum size of organisation required to support the business itself. for example the multi-billion investments in aerospace, car manufacture, pharmaceuticals and so on mean that large organisations are required.
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These companies started out big? Don't think so, that dog doesn't hunt. Moreover, smaller organizations bring success closer to those who actually earn it.
 
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