I would like a law

[lynxreign]

It is a simple law.

No employee of any company at any level can make more than 100 times the lowest paid employee of that company.

You're paying someone $20,000 a year, then you can make 2 million a year. Want a raise? You have to raise the salaries of the lowest paid employees.

Now, tell me why you don't like my law.

Comments

[jestermotley.livejournal.com]

Simple legal loophole -

You run a company that RUNS the other companies.

So the CEOs of the top company can make millions and billions because their company only has 10 people, the lowest of which is paid 100k.

And there you have it.

Or not even that complex. The most mundane of tasks would get outsourced to consultants. Very little would be done "in house"

[whiskeyjack.livejournal.com]

How about 'no one can make more than 100 times minimum wage?'

Or we just return to having a 90% tax bracket on the highest incomes like the one Elvis had to pay.

Or hey - communism baby! Viva la Revolution!

[head58.livejournal.com]

It's Socialism and you hate America!

[chaoticmoth.livejournal.com]

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. 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?

What happens if you have all high-paid employees due to excellent work and longevity. Then you need to hire someone and while they are excellent on paper, they are fresh out of college and completely unproven. 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.

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

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?

To start a separate thread

[chaoticmoth.livejournal.com]

Since this will be a US law, what is to stop the best people from going to International Companies for higher pay than they can get in the US?

[editswlonghair.livejournal.com]

Another big problem w/r/t unhinged CEO compensation are incestuous boards of directors, glad-handing each other's companies and enable such greed. Boards also need to be more transparent and accountable to shareholders and employees, not just the CEOs and upper management.

And, of course, institutional investors play a big role in this complicity, when fund managers turn a blind eye to corporate mismanagement because they are either more concerned with short-term profits over long-term viability; or they are complicit, getting their pay to play kickbacks and egregious bonuses for their hedge fund and credit default swap shenanegans which create paper wealth.

But I have to admit, the libertarian in me does not like such overt legislating of capitalism in this way (for many of the reasons already outlined). Oversight and regulation for health, safety, and environmental reasons are one thing-- but ultimately I think market forces should (and will) decide economic concerns such as price and remuneration... Hell, as much as I hate seeing the de-industrialization of our country, I don't know if such cost of manufacturing concerns should be legislated either.

I hope (and really do believe) that the out of control executive wage and bonus inflation of the past couple of decades is coming to an end because of this depression... shareholders who've seen such huge losses are hopefully not going to stand for continuing the $20m salaries and $100m golden parachutes anymore. But, just like the cycle of business, this social responsibility is a cycle too... soon enough, I'm sure we'll have another gilded age in the mid-21st century once memories fade and future Republican admins and congresses loosen whatever 'Newer Deal' regs get put into place during this mishigas...

[whiskeyjack.livejournal.com]

Your comments go BOOM!

[kevnes.livejournal.com]

I remember hearing this from a professor back at UMass...not sure the name of the class but Justin Lewis was the professor:

Back in the '80s, Japanese top executive pay was capped at about 7 times what their lowest paid worker makes. If I remember correctly, this was not a mandated cap, but an expectation that was honored by most major companies.

This cap apparently enabled them to reinvest more of their profits in their companies which enabled Japanese businesses to be very successful and productive during that time. Professor Lewis asked why American companies didn't follow suit.

My own opinion is that the problem is cultural, not economic or legal in nature. American culture demands competition to the extreme. To be considered successful, you need to be as successful or more successful than everyone you grew up with.

You can't address this issue with just a law, the culture needs to be addressed, which is much harder.