lynxreign | I would like a law

This falls under the "where do you draw the line" situation. Why 100? What if down the road it is revised by the lawmakers to 99 times. Then 98. And so on.

That's not a valid argument. You might as well say "What if velociraptors decide to eat everyone making $45,000 a year?" It has nothing to do with the law as proposed. If "What if future legislators change things" was a valid criticism, no law could ever be passed.

When the government is the employer they can set maximum salary just like any other company can set their own maximums, but when they aren't the employer what right do they have to set the salary cap?

They're the government. They have the same right as they do to set taxes, form regulations, ban dangerous conditions, etc...

The normal starting pay for this person would be below the 100 times mark, so you either don't hire them, or have to give people pay cuts just so you can hire this person at a reasonable rate.

Give me a formula where this would be the case. If you want to hire someone straight out of college and you start paying them at 30,000 a year then the highest salary can be 3 million a year.

I think it is an honorable goal, but not one that should be dictated by law.

If it isn't dictated by law, it isn't going to happen.

And what if you are the owner of a company and it is just you, let's say you developed a brilliant piece of software that you sell, and you are making 5 million a year, but you need to hire someone at $10/hour just to stuff envelopes?

Do you need them to be working a 40 hour week? Then you pay them $50,000 a year and your salary only goes down to $4,950,000 a year. Poor baby. If you only need them to work 20 hours a week, then you're only paying them $25,000 a year and you make $4,975,000 a year. Again, poor baby.

but why should somebody get paid $50K a year to stuff envelopes?

And why should someone's pay be so dependent on what the upper management makes? I mean, what incentive would there be to work for a smaller company who pays their CEO less (and therefore can set a lower starting wage), versus striving to work for Company X, where all starting envelope stuffers make $50K+ a year in order to maintain their CEO's salary? It just starts to exert really, really odd pressures on the marketplace that - while noble - could create some very damaging ripple effects.

And as far as caps of any kind on salary - it's all well and good to look at the people pulling in $10M a year and think WTF!!!, but $2M isn't all *that* much anymore, and when you hit that at age 45 - well, what do you do then? Where's the incentive if you can't move up the compensation ladder, even if it is higher than most of us even can see?

Finally, you can cap pay all you want, but there will always be perks, alternative compensation, and the like - and you'll have to pry those golf clubs out of the CEO's cold dead hands...

Oh my god, "The Man" has overtaken my soul!

Good point, aren't there CEO's making $1/year? So now nobody else can make more than $100/year under Lynx's law? :)

Good point, aren't there CEO's making $1/year? So now nobody else can make more than $100/year under Lynx's law? :)

In that company, yes. However, with this law, that would never happen. Why are they working for $1 a year? Because that doesn't matter to them. They've already made hundreds of millions at their companies and are still getting their enormous incentive packages. Those bonuses would count toward their yearly income and would thus mean they're not really making $1 a year.

So here is a question along a different path:

How would you implement this law without voiding legal agreements in place on pay? You could banrupt companies that suddenly had to boost everyone's salaries because they are contractually obligated to pay some higher levels high salaries.

You have a short transition period of a few years. Some of those agreements will lapse and others will be forced to renegotiate those contracts. Or you force them to renegotiate immediately. Again, I don't think it'll affect as many people as you think.

I don't think you realize how many low-paid employees there are. The minimum wage is set to increase to $7.25/hour this July. At 40 hours/week, 52 weeks/year, that is $15,080/year. Any company paying someone minimum wage would have to redo the salaries of everyone making 1.5 million/year or greater.

Shall we discuss sports franchises?

Yep, and that's fine. They'd also raise the salaries of all those people as much as they could so they wouldn't have to cut the people at the top as much.

Only 1.5% of people make over 250,000 a year. Over 1.5 million a year? I'd be surprised if it is .5% You'd likely only see .1% of earners needing a revision downward.

But then giving them an increase doesn't work out (I just posted a separate example) if they work for a large company.

Sure it does, it just makes it harder for the top earners to increase by much quickly in large companies. Perhaps it would result in more small companies. That's not necessarily a bad thing. You'll never convince me something is bad because it is bad for WalMart.

Just because you don't like WalMart doesn't mean the math lies when it comes to showing how hard it would be to give a small increase to a top earner.

I'm not saying it does. I'm saying the fault there lies in assuming the top earner needs more than a small increase.
I'm also saying WalMart is a horrible company tha treats its employees, customers and communities like shit.

And yet they are one of the most successful companies around. Why? Because they provide their products at a lower price, benefiting everyone who shops there and saves money. And why do people work for them? Because they provide jobs. And why do communities allow them in? Because they provide tax revenue.

Except that these are all examples of short-term thinking.

Communities allow them in becuse they'd have to perform amazing legal tricks to keep them out.
Wal-Mart runs other businesses out, damaging both the community and the tax-base.

Why do people work for them? Because a job is better than no job, much of the time, and WalMart has eliminated most other jobs in the community at that level.
Wal-Mart provides substandard jobs and eliminates competing jobs, harming the employees. Not every job is a GOOD job.

They provide lower prices, but at the cost of community and their employees who would be better off paying a little more while earning more.

They're successful because they've managed to screw everyone from suppliers to employees to communities all in the goal of the highest profit for the CEOs.

And those are all the ways that companies will "become more profitable" as your plan would have them do - if they can't squeeze lower-income-earners, they'll screw us somewhere else - outsourcing, child labor in foreign countries, melamine, etc. You can't squeeze a corrupt system in one place and not expect the corruption to just ooze somewhere else.

but why should somebody get paid $50K a year to stuff envelopes?

Why shouldn't they be?

And why should someone's pay be so dependent on what the upper management makes?

You're looking at it upside-down. Upper management's pay depends on what the lowest paid worker makes.

could create some very damaging ripple effects.

Or some very good ones. Why pay someone to JUST stuff envelopes? There are machines that do that.

here will always be perks, alternative compensation, and the like - and you'll have to pry those golf clubs out of the CEO's cold dead hands...

Sure, and that's all part of their annual pay.

but $2M isn't all *that* much anymore

No offense, but that is more yearly than you or I are ever likely to make.

It is only $2M if you're paying your lowest employee $20,000. Want a raise? Give them a raise. Now you're making more money and so are they.

and when you hit that at age 45 - well, what do you do then?

You work on ways to make your company more profitable. If it makes more money you can pay everyone more and you'll make more too. Want to get back to $10M a year? Fine, figure out a way for your company to make enough so the lowest paid employee makes $100,000.

Seriously? You think someone doing unskilled labor should make $50K-$100K a year, just because the compay they work for can afford to pay it, while a genius architect with like 20 years experience who is visionary but works for a less profitable firm makes the same amount? I can easily see that happening under your plan, and well... yes, I do think the skilled, educated, and innovative architect deserves to make more than the envelope stuffer (or the janitor or the receptionist or a whole host of other people), no matter what firm they work for.

I just think that tying salaries SO completely to company profitability (as opposed to the loose link they already have), throws the whole "career path" thing out of whack! It's not fair to workers who pursue education, who are leaders, who have ideas and drive innovation, to have the idiot who's smacking gum while answering the phones make the same pay, all because of some artificial floor put in place by the CEO who doesn't want to give up their pay.

And what about the people under the CEO - are there stuctures in place there too? So the 3 vice presidents under the CEO stay there long enough and get enough raises to make the same amount as the CEO adn they all sit there making the same pay? Or do they have their own cap and as soon as they hit it they're looking to move to another, more profitable/bigger firm with a better paid CEO so they can have some room to maneuver.

I don't want to work in an environment where my pay is so heavily influenced by an artificial floor/ceiling structure - I expect a reasonably similar amount of pay no matter who I work for - as do you, I imagine. How would it affect your job choices if you were offered dramatically different rates of pay for different firms? Because there would be an impact on everyone's salaries, as the whole range would have to be adjusted to accomodate the new structure.

Anyways, why I'm worrying about this when I have to go actually earn my pay so I don't become an envelope stuffer is beyond me... interesting stuff, though - sort of an Ideals/Reality clash for me, I suppose.

I can easily see that happening under your plan, and well... yes, I do think the skilled, educated, and innovative architect deserves to make more than the envelope stuffer (or the janitor or the receptionist or a whole host of other people), no matter what firm they work for.

And they will. CEOs who try to pay everyone under them the same flat salary will soon find their talent going to other companies.

And what about the people under the CEO

No-one said the CEO had to make the most. It applies to everyone in the company. The highest paid can make no more than 100 times the lowest paid. That's a HUGE range. Except for very large companies I think you'll find most people fall into that as it stands now.

How would it affect your job choices if you were offered dramatically different rates of pay for different firms?

I don't think it'd be all that dramatic. Larger companies make more, but have more employees and/or costs. If you're making $80K at one company where the top earner is making 2 million and the bottom earner is making $20K and you switch to a company where the top earner is a 4 million and the bottom at 40k, why would your 80k switch that much?

but let's say that a certain type of employee - a janitor, or a bathroom attendant, or a cafeteria worker - the lowest paid employee at all these various firms - her salary now is jumping around by tens of thousands based on where she works! I mean, sure there's some variation, but under your plan a more profitable company who *can* afford to pay more, would *have* to pay her more in order to allow the upper ranks the room to increase their salaries, which is the only way their upper ranks (the people who are actually makign the money in the first place), will stay there. So even though she's sweeping the same floors the same way, she gets paid double at company X?

So maybe my 80X doesn't shift that much, but the bottom earner's pay sure does...

And I do believe that my pay would shift - because I fall somewhere on a compensation line, and if that line is compressed or expanded or moved left or right, my pay will too.

But then, you don't have a problem with the envelope stuffer makign $50K (which I am strongly against - a living wage, yes, but more than a mid-level manager/executive/nonprofit manager? no)

which is the only way their upper ranks (the people who are actually makign the money in the first place), will stay there.

1) Why is that the only way they'd stay there? Where else will they go?

2) I think you're mistaken over who is actually making the money. We're talking caps of MILLIONS of dollars a year. Less than .1% of employees make this much. The people actually making the money will likely get raises as well as the top 1 or 2 people at a company are forced to share more equitably.

There are often laws that are often not passed because of concerns about laws that could be passed based on the law proposed. Possible precedent-setting laws fail quite often.

My basic point is your law boils down to "No more than X times the salary of the lowest person" where X is a variable set by the government at its whim. You picked 100 times because you felt it was logical. I don't think having lawmakers choose a different value for X is quite the same as velociraptors. :)

And, hey, shouldn't this post be here http://community.livejournal.com/reign_of_lynx/ ?

Yeah, it probably should be there, but I didn't think of it. Perhaps I'll cross-post later for archival purposes.

I'm willing to let X be negotiated upwards or downwards once statistical analysis has been done on the plan. It is no different from setting tax rates or fines. All can be adjusted upwards or downwards by future governments.

I would like a law

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what incentive would there be to work for a smaller company who pays their CEO less

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Again, I don't think it'll affect as many people as you think.

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You'd likely only see .1% of earners needing a revision downward

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You'll never convince me something is bad because it is bad for WalMart.

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I'm also saying horrible company tha treats its employees, customers and communities like shit.

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If "What if future legislators change things" was a valid criticism, no law could ever be passed.

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