If capped salaries were common, you’d see even more dubious capital gains shifting schemes. We want to create a space where we can voice your views, get the full picture of a debate and shape your own opinions. Information about your device and internet connection, including your IP address, Browsing and search activity while using Verizon Media websites and apps. A maximum wage would go some way to limit the influence of the very rich, enabling a stronger civil society and democracy. In the wake of Corbyn’s comments, a financial media outlet in the UK is working on an analysis that delves into the pros and cons of the maximum wage notion. All this while CEO and exec pay has exploded. Maximum wages are a poor solution to the real problem of wealth inequality. Required fields are marked *. They should make at most 10x what the concession stand people make. The minimum people keep the money circulating whether they like it or not through taxes and bills. A maximum wage stifles competition, incentivizes poor investments, and solidifies the currently wealthy. A reporter who heard those comments later asked Ellison about this maximum wage “joke” he had made. Despite all our efforts, we unfortunately did not find a second legitimate and competent person willing to defend this point of view. Are our future doctors going to drop out of med school? Maximum wages ensure companies can’t attract highly paid workers from competitors. She has absolutely nothing to do with the subject matter at hand and it’s frankly quite sad to see a supposedly grown man starting off an argument like that. “You won’t believe what the progressives want to do next,” the Weekly Standard mocked above a story that described Ellison’s maximum wage comments as “jaw-dropping”. Pulse that owner would be very happy to get richer off of the poor which would be you. It is free to read online – please support us so we can keep it that way. Will new global targets further women's rights? If she’s suffering from some affliction that means she can’t be attacked then why are we listening to someone with such an affliction? Wayne Ellwood investigates. In 1942, shortly after Pearl Harbor, FDR asked Congress for a 100% top tax rate that would leave no individuals with more than $25,000 of annual income – about $375,000 today – after taxes. A ‘living’ wage should be a given, not a gift, otherwise we are effectively condemning individuals to live in debt and/or have a substandard domestic and social life. However, a max wage would help bring about this and it would also, if not too far gapped (i.E. We do not want to limit the wealth that may be produced and enjoyed by entrepreneurs, but we do want to encourage business leaders to help reduce the earnings gap. We know that reduced gaps will bring bounty to companies which enforce them, and we know that society is capable of exerting pressure and getting results (not just on the Living Wage but also on fair trade and on international human rights issues). Jason... New Internationalist co-founder Peter Adamson dives into the perils of basing ‘fairness’ on meritocracy. For decades we have exported a Western consumerist dream to the Global South; little wonder migrants now want to share our good... Five reasons why Jeremy Corbyn is electable. It's scary that about 100 people control more money then The massive 7 billion population. It's absolutely insane. Those who wish to legislate for maximum pay rest their case on pay inequality being the most significant factor in the harms they link to it. Since the credit increases along with income, it promotes the incentive to work. Where I work, there is a maximum wage, and many people have hit it. Strikes have shown our strength. With tax rates on high incomes way down, our top 1% have doubled their income share. I think all the conservatives who oppose the maximum wage law should notice the NEW JOBS I put in there. Anti-poverty activists form a human ring around the European Parliament in Brussels last November to call for better wealth distribution in EU countries. In some cases, it was more than 1000 times, up from just 50 in 1970. How much they wish to pay the CEO to manage that business is up to them. I was being restrained here. But do so with a view to society’s complexity rather than an evangelical assumption that a change in the law will beckon utopia. Help us get The Spirit Level film to the finish line. Many ask for an apology, which is unacceptable to others. In civilized societies, we set limits all the time. We know that change must be incremental for it to be fair – that pulling the rug out from beneath our highest achievers may reduce inequality but will also reduce growth and exile many who contribute highly to our economies. Max. Age? It's not fair that they get paid more than me. It’s an idea that shouldn’t be entertained. OK, the people who go into politics, the bureaucracy, they’ve noted that the incomes of people who do something useful for a living have soared above theirs. The film industry is failing women, but there is hope, as Nikki van der Gaag explains. Back in 2014, the maximum wage briefly entered the public eye as a solution to wealth inequality in the United States. There is a very logical reason for this I feel. America’s top unions backed FDR’s plan – and so, Gallup pollsters reported, did a clear plurality of Americans. This is why corporate executives rarely see their compensation drop when the company does poorly if the market did poorly as well. What can we do about all this? Rather than just raising wages with the company raising prices, or with the cost of living rising, tie the lowest paid worker with the highest paid worker. I think most Americans would agree that no enterprise where workers would have to labor over a century to make what their CEOs can make in a year should get a single one of our tax dollars. Why do you think any other industry works differently? But the jealousy of the ruling classes really isn’t a good enough reason to have something as horribly stupid as a maximum wage. That would be a disadvantage because that person put in more work than the other. How successful might a “super tax” be in keeping a lid on high pay? But private equity, which does not suffer from that principal/agent problem, pays more than public companies. In the United States, the debate followed research by Sam Pizzigati, the chief proponent of the maximum wage since the 1990s. The idea of a maximum wage is close to a drivel. Sorry folks, the Laffer Curve really does exist, there’s a tax rate at which people stop going to work any more. Reiff kills his own argument. Equality matters in terms of health and happiness, but surprising new data reveals that it is also better for the environment –... Finding home: Lack of affordable housing is a crisis across the West. Currently, Americans are debating raising the national minimum wage from $7.25 per hour to $10 per hour over the next two years. Visiting Professor, Frankfurt School of Finance and Management. While conservatives will oppose it, such a … I believe passionately in balancing the harm of the action against the harm of interventions. This will keep the cost of living down as nearly everyone will be in the sweet spot (not too expensive, not too cheap). Congress felt the heat. Professor Danny Dorling explains why it is important to think about equality. The rich beat it back. Once pay is high enough to incentivize maximum effort, extra compensation does nothing. Huge companies are already leaving the US and outsourcing jobs to factory workers around the world. The maximum wage can be traced back to Ancient Greece, when the philosopher Aristotle claimed nobody in Greece should earn more than 5 times what the poorest persons in Greece were earning. Any dollars over 50 times what a minimum-wage worker earns over the course of a year would face a 90 percent tax rate. McDonald’s is an outlier, but even more average figures are astounding. Your email address will not be published. Professor of psychology and behavioural economics, who has researched perceptions of ‘ideal wealth distribution’. My 2012 book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970, traces the course of maximum wage struggle through the first half of the 20th century. Suppose we impose a cap on UK football players salaries of £40k/year. We could lessen this resistance if we set our maximum-wage cap as a ratio, instead of a fixed sum. | The Continental Telegraph. We believe it is necessary to voice every opinion without taking sides and that every opinion should be heard. Max. Those who wish to legislate for maximum pay rest their case on pay inequality being the most significant factor in the harms they link to it. Excessive pay at the top results in greater inequality and over-consumption that has a cost for all in society. Michael Roscoe examines what gives money its value. So taken literally, there is no problem whatsoever with setting a maximum wage. Some 22% of working Americans, one Senate report noted last year, labor for companies with federal government contracts. Absolutely. To narrow the resulting inequality, many economic justice advocates argue, we need to battle for more than redistributive measures that just try to clean up the messes inequality creates. Why need to ask ourselves why these people have so much power and why we allow them to keep this insane amount of wealth while the rest of us do all the work to keep their businesses running for wages that most people can barely live on. Maximum Wage: A ceiling imposed on how much income a worker can earn in a given period of time. According to Bill Gates, Steven Pinker and the like, the world has never been better and global poverty is shrinking. Our best bet, from Diamond and Saez, is around 54%. Real take-home pay for the vast majority of Americans, on the other hand, has stagnated since 1970. Let's say we restrict people from earning more than $5 million a year. Social decency, most people agree, demands a minimum wage, a floor that defines a minimum income for all those who labor. Why? In addition, such laws would potentially demotivate employees to work harder in their respective jobs as there would be a 'limit' placed on how much they can potentially earn in a given period of time. Progressive lawmakers in Congress would later pick up Adler’s proposal. When Switzerland made the switch big name Swiss companies like Nestle, Swatch, and Glencore never left. A maximum wage is a ceiling proposed on income of a worker in a given period of time. For example, take stock buybacks. Lockheed’s CEO pocketed $22,866,843 for the year, 186 times the take-home of the typical Lockheed employee. Don’t be so precious. How can we ever expect the majority of companies to implement a maximum wage out of choice when the ethical and socio-economic considerations are less obvious than adopting a Living Wage, and the most powerful risk seeing their wages cut? In the United Kingdom, Jeremy Corbyn (the leader of the Labour party) called for a maximum wage to be implemented for the highest earners. Alessandra Mezzadri says workers’ wellbeing depends on the living wage. By insisting upon transparency of pay ratios and executive pay, we can enable and promote shareholder activism and corporate responsibility. In the UK, the Labour party would like to deny contracts to companies with ratios over 20 to one. But the less money wasted on people who don't need it, (The people who are already getting a very large paycheck) and that money can be distributed among the common workers, it can be used to create new jobs within the company, (who doesn't want more jobs? Most importantly, however, there is no point in paying executives more than necessary to get them to work as hard as they can.