A Maximum Wage
“The highest paid worker in any company can earn no more than a multiple of the lowest worker, whether this is 10X 50X or 200x
”
”
If you would like to comment on a particular block, click on the pale blue bar to the left of the text. If you would like to view the comments on a particular block, click on the speech balloon.
2. How does it fit with Compass’ core beliefs of equality, solidarity, democracy, freedom, sustainability and well being?
Equality - It it based on the principle that all people are born equal and, despite what the free market believes, nobody is worth thousands more than any other individual. It would reduce material inequality.
Solidarity - It will create a more solidaristic atmosphere between shop floor workers, the board and trade unions because the material differences between them will be reduced.
Wellbeing - Studies have shown that more equal socities have higher levels of wellbeing than unequal ones.
3. How does it build the institutions of social democracy, like social groups and collective and cooperative forms of ownership and control?
By pegging the lowest earners wages to the highest in individual businesses it will create an atmosphere where workers and managers are forced to work together for a common purpose. More trade union consultation may allow a greater role for trade unions, shop floor workers and lead to a more collective leadership models.
4. How much will it cost or raise and where will any cost come from?
It will cost very little. It may require some research as to show what the level the relative earnings ratio will need to be set.
5. Which groups in the electorate are likely to support or oppose this measure? Is there any polling evidence you have on this?
The poorest tenth of the population have, between them, around 1.5% of the country’s total income and the second poorest tenth have 4%. In contrast, the richest tenth have 30% and the second richest tenth have 15%. (http://www.poverty.org.uk/09/index.shtml)
Therefore 80% of the U.K population or above will be unaffected and should support this measure. This is supported by Fabian polling; http://www.guardian.co.uk/politics/2009/jan/04/fabian-society-poll-taxation-wealth
It will be opposed by the rich elite.
6. Is there a place or country where it’s worked? Please provide some information.
I think it has been tried in Norway.
7. What are the three main arguments in favour/against it?
In Favour;
1) Social cohesion. Crime and unhappiness ruin unequal societies
2) Morality of the equality of individuals
3) Equality within societies leads to higher wellbeing and solidarity, it also ensures the welathy elite cannot opt-out
Against;
1) May lead to brain drain
2) Loss of motivational effect of high wages (research suggests this is untrue - http://www.guardian.co.uk/politics/2003/aug/06/executivesalaries.economy)
3) Will not redistribute wealth as quickly and directly as progressive taxation.
Comments
-
Good day, well done site. Want to get money for blogging? Check out: http://bit.ly/PaidWriting
-
Ruth Lister, Professor of Social Policy, Loughborough University
I strongly support this proposal for a maximum wage. Although I fear the resistance to it will be enormous, the case has been made by at least one public commentator who has been identified with the ‘Blairite’ wing namely Martin Kettle in the Guardian a few years ago. If I remember correctly, his argument was that it is no different an intervention in the market than is the mechanism of a minimum wage.
The case iis well argued here. It underlines the case that in arguing for equality we need to address the initial distribution of incomes as well as argue for more progressive redistribution policies. However, reading an interesting article on the idea of a maximum wage recently, it did occur to me that the more successful the policy was, the less effective would be more redistributive tax policies in raising money from the better off. That’s a trade off we’d need to debate. But in the mean time this proposal is a good way of encouraging debate about the overall distribution of rewards in our society.
-
I can’t see how this could work in practice. Low paid work would just be outsourced to other firms, rendering the regulation ineffective.
-
Martin Rathfelder, Director, SHA
We could start with the public sector. A ratio of ten times the wage of the lowest paid, per hour, should be sufficient to incentivise the top people. Some senior managers claim they work very long hours and so need extra rewards - well let them record these long hours like everyone else if they want to be pad for them
-
Joe Cox
Elro, I cannot see your concern, if this legislation bound all firms to the ratio then lower paying firms would have to reduce their top wages or raise their minimum wage. Whether the job is outsourced or not is irrelevant
-
L Borland
This was used by Ben & Jerry’s - the US feel good ice cream company, until it ran into recruitment problems in Europe.
-
L Borland
For more about Ben & Jerry’s salary policy, where until 1994 no executive was paid more than 7 times what the lowest paid employee earned, see the New York Times, June 14, 1994 edition.
Norway, Sweden and Finland all apply fines for speeding which are proportionate to income .Nokia’s boss, in Finland, paid the highest ever speeding fine (Anssi Vaajoki) as Finland appears to be alone in having no upper limit.
-
L Borland
Wages are only part of remuneration - stock options and pension payments being other ways in which top executives are rewarded. David Vise in “The Google Story” discusses how stock options are used by Google to retain creative staff who would otherwise leave to set up their own companies when they had a great idea for a new product, and also how its intense competition for talent with Microsoft affects pay. Its a very readable book by a Washing Post journalist - try your local library (I did).
May lead to a brain drain? Well I would expect multinationals to relocate outside the UK within nanoseconds if this type of policy were to be imposed, with a catastrophic loss of tax revenue. As the Ben & Jerry’s example shows, we are free to chose to set up companies on this basis, and there are investment advisors who can help savers identify companies with salary structures they consider fair.
-
sbpzcgjnthlyxkri painterskic trucks husbands experts cards cormorants colts preachers girls managers kite sticks maps wagers paper cash tests falcons lorries stick mountains riches bacteria flowers monitors painters keys documents objects sales winnings irritants arrows impediments hares aircraft brush show infantry worshippers physicians books curs actors beauties matrons sea academics islands toads employees harpers professors bullets goldfinches women
-
It appears similar to you’re creating problems yourself by trying to unravel this issue instead of looking at why their is a retardant in the first actual place
-
Very good article. I’ve found your site via Bing and I’m really glad about the information you provide in your articles. Btw your sites layout is really messed up on the Chrome browser. Would be cool if you could fix that. Anyhow keep up the great work!
-
Hello just thought i would tell you something.. This is twice now i’ve landed on your blog in the last 2 days looking for totally unrelated things. Spooky or what?
A "Block" is any paragraph, image or code in a post. It will be highlighted in blue when it's selected:
The default "Block" is always the title block for the post, that is where general comments are posted:
To comment on any "Block" within a post, click on the comments bar next to that block:
To view comments about a "Block" within a post, click on the yellow comment indicator next to that block:
The default "Block" is always the title block for the post, that is where general comments are posted:
To comment on any "Block" within a post, click on the comments bar next to that block:
To view comments about a "Block" within a post, click on the yellow comment indicator next to that block:
Posting Comment...
June 16th, 1914 at 2:50 am
Good day, well done site. Want to get money for blogging? Check out: http://bit.ly/PaidWriting
January 21st, 2009 at 4:44 pm
I strongly support this proposal for a maximum wage. Although I fear the resistance to it will be enormous, the case has been made by at least one public commentator who has been identified with the ‘Blairite’ wing namely Martin Kettle in the Guardian a few years ago. If I remember correctly, his argument was that it is no different an intervention in the market than is the mechanism of a minimum wage.
The case iis well argued here. It underlines the case that in arguing for equality we need to address the initial distribution of incomes as well as argue for more progressive redistribution policies. However, reading an interesting article on the idea of a maximum wage recently, it did occur to me that the more successful the policy was, the less effective would be more redistributive tax policies in raising money from the better off. That’s a trade off we’d need to debate. But in the mean time this proposal is a good way of encouraging debate about the overall distribution of rewards in our society.
January 23rd, 2009 at 6:05 pm
I can’t see how this could work in practice. Low paid work would just be outsourced to other firms, rendering the regulation ineffective.
January 29th, 2009 at 1:25 am
We could start with the public sector. A ratio of ten times the wage of the lowest paid, per hour, should be sufficient to incentivise the top people. Some senior managers claim they work very long hours and so need extra rewards - well let them record these long hours like everyone else if they want to be pad for them
January 31st, 2009 at 10:58 pm
Elro, I cannot see your concern, if this legislation bound all firms to the ratio then lower paying firms would have to reduce their top wages or raise their minimum wage. Whether the job is outsourced or not is irrelevant
July 1st, 2009 at 1:31 am
sbpzcgjnthlyxkri painterskic trucks husbands experts cards cormorants colts preachers girls managers kite sticks maps wagers paper cash tests falcons lorries stick mountains riches bacteria flowers monitors painters keys documents objects sales winnings irritants arrows impediments hares aircraft brush show infantry worshippers physicians books curs actors beauties matrons sea academics islands toads employees harpers professors bullets goldfinches women
February 1st, 2010 at 8:30 pm
It appears similar to you’re creating problems yourself by trying to unravel this issue instead of looking at why their is a retardant in the first actual place
February 13th, 2010 at 3:08 am
Very good article. I’ve found your site via Bing and I’m really glad about the information you provide in your articles. Btw your sites layout is really messed up on the Chrome browser. Would be cool if you could fix that. Anyhow keep up the great work!
February 17th, 2010 at 3:30 am
Hello just thought i would tell you something.. This is twice now i’ve landed on your blog in the last 2 days looking for totally unrelated things. Spooky or what?