Forum Post: Replace Minimum Wage with a Floating Wage Ratio
Posted 12 years ago on March 15, 2012, 3:59 a.m. EST by pewestlake
(947)
from Brooklyn, NY
This content is user submitted and not an official statement
A Floating Wage Ratio would work something like this:
"Wages for the highest-paid employee in any enterprise, including public and private, for-profit and not-for-profit, and all subsidiaries owned in whole or in part, may not exceed fifty times the wages for the lowest-paid employee for an equal amount of time. 'Wages' includes all forms of compensation, including but not limited to stocks and stock options, expense accounts, benefits and other perquisites. 'Subsidiaries owned in part' includes vendors when a substantial (more than XX%) of total labor hours incurred by the enterprise has been outsourced. Volunteers and employees who derive a substantial portion (more than XX%) of their wages from voluntary tips are exempt. Phase in: year 1: 250:1; year 2 - 200:1; year 3 - 150:1; year 4 - 100:1; year 5 and thereafter - 50:1."
A flat minimum wage across all industries, even adjusted regionally, doesn't account for wide differences in economic sectors and still allows companies to pay senior executives obscene salaries, which is among the main sources of economic inequity. A wage ratio would be adjusted by enterprise and force a whole new set of priorities in budgeting at the highest levels.
Do they pay themselves a gajillion dollars and raise the receptionist's salary to seven figures? Or do they tamp down the massive payouts and use that money for other things, like reinvestment in the company (stimulative), higher salaries for low-level employees (stimulative), and/or higher dividends (stimulative). It's the closest thing I've seen that would actually make all that wealth trickle down AND keep it in the private sector. It's not government redistribution, it's just a natural cap on how much managers can raid the kitty.
Most high salary executives in America work for publicly held companies. It's not their money and it's not the board's money either. If maximizing shareholder value is the number one tenet of corporate management, excessive salaries are an obvious violation of that principle. Implementing a floating wage ratio would correct that problem by leveraging natural market forces. Salary caps, profit caps and price caps don't work. This is the only way to place a natural cap on excessive corporatist wealth extraction without funneling taxes through the Internal Revenue Service.
It might, however, be important to pass a constitutional amendment that prevents the Supreme Court from equating the spending of money as an expression of speech BEFORE such a law is passed or they may see a reason to use the first amendment to strike it down. Absurd as it obviously is, if SCOTUS already equates spending money with speech, paying a salary must be, too. This has to end.
I think these ideas are very interesting and have merit.
how would such a law be passed?
It could be enacted as stand-alone legislation and enforced in the tax code by levying fines. But instead of the fines going to the state or federal governments, they wold go to the employees that have been wronged by any employer found to be in violation of the code. The IRS could simply cut the checks and bill the employer. And failure to pay would be enforced as a tax dodge. Very bad.
But the better method may be simply to enact it entirely within the tax code. Taxes on wages remain the same until the wage goes above the number allowed by the ratio for that enterprise (by dint of the lowest salary). Any employee receiving a wage higher than allowable under the ratio would be taxed normally for all wages under the threshold, but at an exorbitant rate (think 90%) for all earnings above that threshold. And employees receiving wages below the threshold would be exempt as long as that condition continues. It's justified by having to pay for the services the public must provide to those employees who cannot afford services on their own as a direct result of the non-living wages.
There may yet be more creative ways of enacting this idea but those two are both doable and less complicated than plenty of regulations already on the books.
right income tax records
I say we all boycott tips, let the bastard restaurant owners who are profitting 6 figure income in many cases pay their own dam employee salaries, or let them go to a buffet style, as we the people are not hiring!
Your disability check is waiting in the mailbox. Put down the Cheetos(TM) and go to the check cashing place so you can pay your electric and internet bills and keep complaining about the people who passed the policies that keep you alive. And in case you haven't left the basement for a while, you should know that it's Friday so the check cashing place in your neighborhood is probably closed for two days after 5pm. You still have to charge your free Hoveround so hurry up, peanut.
ya right, like theres going to be any disability, or medicare or whatever the government [pays to old people when I retire. Im relying upon my self, not others. We are on an unstainable path in case you havent noticed.
The best way to raise the low wage workers pay is to close the borders. Excess supply of labor drives down wages. That is why the borders are and always be open. The wealthy benefit the most. Walmart makes over $3 billion a year for every dollar per hour per worker that it does not have to pay.
And the low wages enable them to keep prices artificially low so that low-income workers can still afford to be consumers even though their wages have been flat for decades and the small businesses on main street are long gone. Massive agriculture subsidies enable factory farms to produce unhealthy food cheaply so the working poor can still afford to eat, though they'll die earlier than people who can afford to buy quality.
The economy is completely out of whack as a result of a skewed tax policy, interest-bearing currency, generous subsidies for well-connected corporatists and runaway siphoning of profits and tax dollars into vast pools of stagnant wealth. If we started to push the rewards of labor out into the working class at a much faster rate, more people would be able to afford higher quality, raising the sales volume of higher margin products, resulting in faster growth and higher rewards for everyone. Higher incomes affords better food and the demand for factory farmed food goes down, empowering smaller farms that typically pay higher wages.
And higher non-farm wages and demand for higher quality means prices can rise at the food stand and farmers can afford to raise wages and do more hiring of legal workers eventually. The natural inflation that comes with growth would accelerate at first until the equilibrium of marginal to actual GDP was restored, raising the quality of life for an expanding middle class as we did for three-plus decades until Reagan came along. Their are creative ways to use historical lessons to find good solutions for our problems today. If only we had an honest political process.
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managers would be motivated to pay their employees more so that they are allowed to make more
True, and that money is then spent into the economy and viola, growth. ;-)
It could also have the opposite effect. In a lot of small businesses, the owner is already making less than 50x the lowest paid employee. Say the owner pays himself $100 an hour. This would allow him to push the salary of his low end workers, the ones with little skill and who are easily replaceable, down to $2 an hour.
Only up to a point. The reason Americans don't take the many available jobs harvesting crops is because the wage is too low for the intensity of the labor. People need to work but they'll find other ways to survive if working means not earning enough to make ends meet or working too long or laboriously to have a decent quality of life.
The psychological difference between American workers and immigrants is that Americans aren't fleeing a backward economy with even fewer opportunities. It may be harder to survive in Mexico but that's not in our experience. Our experience tells us we should have a thriving economy with plenty of decent jobs here. So Americans naturally reach a cut-off point earlier than most immigrants. And $2/hour is way below cut-off for most Americans.
As the regulations work now, we're already on a race to the bottom with cheap, non-union, highly exploited immigrant labor. There's no mechanism in place that even begins to raise economic activity at the most important level of society -- the workforce. So, yes, there will be some owners who take advantage of the ratio to push wages way, way down. But they'll either lose employees or turn to illegal immigrants and we just strengthened the penalties for employers knowingly employing illegal workers.
Someone will always try to game any system in place. This system is game-able, to be sure. But with a rising tide actually lifting most of the boats, it would be counterproductive to go against the grain for very long.
Free Sex for everyone.
Free Pizza for everyone.
Lastly, free beer for the Irish.
You can keep your min wage, ... just send me girls.
Ok, hyperbole for equivalence, ... but honestly things are set by what people are willing to pay. Given that 1/2 of ameriKKKa today is legally defined as 'poor' do you honestly think the starving masses have any fucking political power to ask for more than crumbs?
Please.
You make no sense and you're boring.
The mechanism is already in place. Its called share voting. If the stockholders agree, the upper management can have their salaries curbed by an open vote. The Supreme Court will NEVER rule against this.
Where do you come up with this nonsense?
I just bought an oil royalty trust, and in 6 months, $100k became $175k, plus i still get 9% dividend. Top managers should ake money for virtually doubling my money.
It's called corruption as none of those people actually own the company in full and all of them are violating their legal fiduciary responsibility to the shareholders when they vote for obscene compensation packages. Since nobody in the board rooms is going to reverse that trend, much like salaries in Major League Baseball, it will take an act of congress to prevent the massive theft that takes place legally every day in America. This is wholly consistent with Congress' powers under the commerce clause.
The Supreme Court is owned in full by the corporatists. OF COURSE they will try to overturn anything and everything they don't like. Welcome to planet earth. Take your jacket off and stay a while. Eventually you'll come to the realization that inaction is not action.
And those managers didn't make that money for you, the spike in the market did, or perhaps you didn't notice oil prices soaring over the past few months. They just pulled a trigger.
You can stammer and wail about nonsense all you want. You just prove your own ignorance. So stick with those managers. You should definitely not be handling your own money. ;-)
They are stealing from investors, who freely invest their money without coersion.
You are clearly very very envious of wealth.
I have plenty of wealth. I'm not envious of anyone. I come from a rich family and I take care of my own just fine. Stealing from investors is still stealing. Typical how quickly you people abandon your conservative principles when it comes to other people's money.
Without a solvent government, your wealth would be worth nothing. You only have the wealth and could inherit it because of the government. Without the roads and other government services your property would be worth nothing, the same with your stocks. The bottom 80% have no real assets or wealth for the government to protect. The government is for and of the rich and you ought to pay more for it.
Hey, kiddo, I'm not the 1%. I haven't inherited squat yet, except for my dad's sardonic sense of humor and a few nice gifts here and there. But I'm no Mr. Moneybags and I won't be for a while yet, if I live. ;-)
I'm skilled and decently educated working class with a family safety net is all. But I also come from a broken family and I remember when my mother was on welfare for a couple years during the leanest times. So I've lived on both sides of the tracks but I'm just a working class stiff for now and the foreseeable future.
I'm totally, firmly planted within the terrain of the 99%.
The SCOTUS is NEVER going to force ANY sort of salary limits on anyone. Its completely unconstitutional. If you dont like the boardroom dynamics of company A, sell your stock andbuy stock in a company more in li e with your philosophy.
You are dreaming.
Who is harmed? Oh come on. You're kidding around, right?! All of society is harmed. (responding to your comment below)
Have you heard of a little thing called wealth and income inequality? It's harmful to society. The wealthiest have taken for themselves the vast majority of productivity gains, the increased profits from outsourcing jobs overseas, all the legislative policies (ie: deregulation) they can get their greedy hands on that are made to benefit the corporation (and thereby enriching themselves) for the sake of profitability, and perpetuate and promote regressive tax policies that benefit themselves also so they can become even wealthier, while, and because, they are corrupting government.
They just love the politicians who use fear tactics (the wealthy are the job creators! raising taxes will kill jobs! ) instead of facts. And devisive religious issues to further distract from the facts.
They do it because they have the power to do it. And unrestrained capitalism promotes greed. And money leads to even more power.
Everyone acts in their own economic self interest. Except the Religious Right. Who will continue to vote against their own economic self interest and perpetuate wealth concentration for 1% of society, in the hopes of overturning Roe v Wade. That's how Republicans keep getting elected - to anything.
But you're right. No one is forcing the lowest paid worker to work for low pay. Except a little thing called survival. No one is forcing the wealthy to keep corrupting government in order to benefit themselves either. But that's what they do. And it's not about survival. It's about greed. Way to go rich people!
But we shouldn't really blame the wealthy. Plato said 2500 years ago that Republics, left unchecked, become oligarchs. It's not their fault. It's just the nature of the Republic. According to Plato anyway. Yes, the rich are just innocent victims of the oligarchy.
Plato said after the Oligarchy, society will degenerate into Democracy in it's purest form - anarchy basically. Hey! That sounds a little like OWS doesn't it?
Yeah, you're right. High CEO pay isn't hurting anyone. Extreme levels of income inequality and wealth concentration in the hands of a few - no big deal. Everything will work itself out. According to Plato, after the Democracy stage comes Tyranny. But I'm sure everything will be just fine.
They are publicly held companies and as such, can be limited by the stock holders.
Sorry but your rant is worthless. Why is the lowest paid person depending on a company for their survival? Answer that. What poor decisions did that person make? If they studied hard in school, learned math, science and English well, they wont be the lowest paid.
We are promised the pursuit of happiness, not happiness itself. Pursuit means exactly that, you pursue your goals with effort and ambition.
Poverty is at record high levels. You would suggest that it must be because people make bad decisions.
I don't think the lowest level employee or poor people make any better or worse decisions overall than anyone else. I think they are trying to get along the best they can in increasingly difficult circumstances, where the cards are stacked against them.
MYTH: Poor people are unmotivated and have weak work ethics. REALITY: Poor people do not have weaker work ethics or lower levels of motivation than wealthier people (Iversen & Farber, 1996; Wilson, 1997). Although poor people are often stereotyped as lazy, 83 percent of children from low-income families have at least one employed parent; close to 60 percent have at least one parent who works full-time and year-round (National Center for Children in Poverty, 2004).
In fact, the severe shortage of living-wage jobs means that many poor adults must work two, three, or four jobs. According to the Economic Policy Institute (2002), poor working adults spend more hours working each week than their wealthier counterparts.
They lack access to health care, living-wage jobs, safe and affordable housing, clean air and water, and so on (Books, 2004)—conditions that limit their abilities to achieve to their full potential.
http://www.ascd.org/publications/educational-leadership/apr08/vol65/num07/The-Myth-of-the-Culture-of-Poverty.aspx
But go ahead. Blame record high poverty levels on the poor. Blame the victim. It must be all their fault. It has nothing what so ever to do with government policies and government corruption.
Right, Mr.Simple Minded Simpleton. My response my be a rant, but yours is so simplistic simpleton that it borders on the idiotic and illogical.
You seem to suggest that wealth concentration has everything to do with bad decision making by 99% of the population and some spectacular genius that has rewarded the 1%. Wealth inequality, that is at it's highest levels since the Gilded Age (which was followed by a deep Depression, by the way).
So in the last 30 years, 1% of Americans got ahead so spectacularly by being oh so smart and ambitious. It had nothing to do with government policies. And 99% get really spectacularly dumb and lazy. Yeah, that makes alot of sense.
Stockholders of publicly held companies, in theory, "can" limit CEO pay. They "can" put pressure on the boards to rein in compensation packages. Some very fiscally conservative companies actually do this. But not enough. As evidenced by extreme income inequality. Most often, even an underperforming CEO is let go in favor of a new CEO, which must be attracted by an even higher compensation package.
You seem to think public companies and, by extension, the free market, will just take care of everything. That's what Alan Greenspan thought too. Wall Street would police itself, no regulation needed, out of it's own self interest, and in the interest of it's shareholders. Alan Greenspan all but admitted he was wrong.
The lowest paid employee is dependent on a job for survival. A low paying job may be all they are capable of. Yes, based on low skills and abilities. The truth is, there will always be people that are either not very bright or did not have the opportunity to further their education. The cost of college has increased by 1025% in the past 30 years. A low level job or blue collar job may be the best they can do. That doesn't mean they work any less hard. The problem is, too many blue collar jobs, that require low skills, just a basic high school education, low ability, have been extracted from our country and are now in China.
But how about the middle class, college educated? Is 30 years of middle class wage stagnation the result of their being dumb and lazy? Making bad decisions? What bad decisions did they make that has resulted in their wages being stagnant for 30 years? Do they not work hard enough?
An environment of economic opportunity and equal representation in government is extremely helpful to the pursuit of happiness. Rather than corruption, job extraction, and wealth concentration.
None of the highly paid CEOs lucked into it. At the level they are, its an absolutely vicious dog eat dog competition. To be a successful trader, say for Goldman Sachs, you trade against other incredibly bright and competitive folks at Credit Suisse or ChinaBank. t Did you read what you just wrote? You want low skill and low ability people yo be paid well. NO. Low skill, low ability people must be paid poorly or why woild anyone strive to become high ability, high skill people.
Your college educated friends? Why arent they traders? Why arent they petroleum engineers?
You funny guy, doofus.
The people who do that kind of thing are suffering from neoplexia, and psychopathic behavior is a symptom.
YAY! Lets put all the diseased people at the top!!!
And then wonder why it all falls apart from time to time.
Is this your first recession?
You write like crap. And you are so incredibly simple minded I have to wonder if you're a teenager ditching school. You should be in English class working on your writing skills.
Low skill and low ability people should have opportunity for a living wage job Mr. Simple Minded Simpleton. Anything less, creates the need for government assistance. And I bet you don't like that at all. So don't 'cha think it would be better that those in the lower socio-economic levels to have opportunity for a living wage job so they won't require government assistance?
Ooopsies! Many blue collar jobs have been transferred overseas! Now what?! Hmmm. Maybe more people need to go to college to keep up with globalization and an increasingly more complex technological society! Oh wait. Darn it all. The cost of college is out of reach for many Americans since the majority of the population has been struggling with 30 years of wage stagnation and the cost of college has increased over 1000% that same time frame.
Traders in dog eat dog competition? Credit Suisse and China Bank?! That's some fancy bank name tossing Mr. Simple Mind. So what does that prove? Let's see. Big banks are powerful dens of vicious greed. People act like animals to survive there and get really really wealthy. And they deserve all the wealth they get because they are oh so much smarter and more vicious than the rest of us. I'll give you two points for highlighting Wall Streets vicious greed. Goody for you!
Why aren't they traders? Why should everyone be Wall Street traders? That's the dumbest teenager-like question I've ever heard.
There are plenty of intelligent college educated professionals that choose lots of different careers for lots of different reasons. And the majority of those are part of 30 years of middle class wage stagnation.
Is it at all possible for you to answer my questions without asking other dumb simple minded teenager-like questions?
I know it's asking alot! I'll try to make it really simple for you.
What has caused 30 years of middle class wage stagnation?
What has caused the highest levels of wealth concentration in over 100 years?
Do you think either of these things is healthy for society?
SCOTUS will usurp whatever authority they can get their hands on. As a result of their rulings, from Buckley v. Valeo onward, the spending of money is now equated with an expression of speech. It is on THOSE grounds that the SCOTUS would overturn a wage ratio. But if money as speech was eliminated via constitutional amendment beforehand, SCOTUS would have to cast about for other justifications.
What specific article or section of the constitution do you believe this violates?
Government setting private employee salaries? It violates the entire constitution.
One, that isn't what a floating wage ratio does. Two, "the entire constitution" isn't a good enough argument. The constitution contains all kinds of things. How would this legislation violate the second amendment? Or Article III? I gave you a legitimate answer and you keep taking pot shots from nowhere about nothing. You have a point anywhere in all that fluff that goes beyond "wah!?"
The commerce clause is the ONLy place where you could argue, but as corporations are chartered in one state, there is no basis. No where in the entire document is the government allowed to regulate a private business, in favt, its forbidden.
Yeah, and that's why minimum wage laws have been upheld for decades, because nowhere is that allowed in the constitution. All done with you now.
Minimum wage laws yes, these laws protect the worker. Maximum wage laws would be an infringement of an individuals rights. The state would be trampling on a persons right to pursue happiness.
Never going to be constitutional. NO ONE is harmed by high wages.
And in fact prevailing wage laws accelerate wage growth. If we could set a maximum wage law, we could set it for ALL jobs. Be careful what you wish for.
The law could be written so as to not disallow CEO's from earning anything, but would simply mandate that workers are paid not less that a certain proportion of that CEOs compensation. If that ratio was determined to be, say, 20 to 1, and the Board decided it want to pay the CEO 5 million dollars per year, they are free to do so as long as the lowest paid worker gets $250,000.00 per year. No one is stopping the Board from making that decision.
There is no ceiling, only a floor below which no worker can fall. The law would not violate the constitution as it would not limit the compensation of anyone.
Its a private contract between entities that enter into these contracts voluntarily. There is NOTHING in the law that precludes a company from doing this NOW. NOTHING. No one is being forced to work at the lowest salary, and no one is forcing the company to pay exorbitant salaries. Either party is free to seek another job or anothrt CEO.
And there is nothing in this proposal that limits the voluntary nature of such contracts.
But there is nothing currently that requires proportional pay for the lowest paid workers.
The minimum wage is a constitutionally, court upheld restriction of private contracts. There is nothing in that document that precludes this as well.
Ain't that doofus confused?
At least he's not calling you names yet........:)
He's funny when he does.
Name a class of people harmed by high CEO salaries? No one, since the company is complying with MW laws.
You cant force a company to do something thst it could do voluntarily if it so decided. Name a single person harmed by high CEO salaries?
You guys never give up. We already have a minimum wage law. Its been decided. No one is harmed by high CEO salaries, because there already is a MW law.
And yes your idea is restrictive. It the board feels a CEO is worth $10 million, he should get it. No one is forcing the lowest paid person to work, because a MW law exists.
So you believe the same right to pay as much as an employer wants doesn't exist in reverse? Wow. Just wow.
I changed my mind about ths. This is a great idea!! Peg the minimum wage to the highest paid in the company and use 30 times as the multiplier! So now, we can shit can the old minimum wage law and implement this new one! So, if I own a small business and I make $60000 as the owner, similar to a Baskin Robbins or a Subway Sandwich, my employees MUST work for $1/hr. ALRIGHT!!!!!
This is fun, like punching a whack a mole!
Owners don't earn wages. Dividends and profits are exempt. This is a WAGE ratio. You really need to pay attention more. But hey, if you want to keep kicking out like a reflex dummy, go ahead. I can beat your ass all day long. ;-)
Fine by me. You clearly dont know how compensation is handled today. I own a corporation. I pay myself $96000 salary. all the rest of my income is paid as a dividend. Hundreds of thousands paid as a dividend to avoid the Medicare portion of Social Security.
So based on YOUR law, i can cut my staff salaries to $3200/year! I LOVE this idea!!
"Fine by me. You clearly dont know how compensation is handled today. I own a corporation. I pay myself $96000 salary. all the rest of my income is paid as a dividend. Hundreds of thousands paid as a dividend to avoid the Medicare portion of Social Security.
So based on YOUR law, i can cut my staff salaries to $3200/year! I LOVE this idea!!"
Yes, you could drastically slash the wages of the staff you appear to hate so much. But good luck keeping those employees for long.
Glad you like the idea so much. Too bad you're such an unethical mooch that cooks the books to avoid paying your fair share of Medicare taxes. I assume you also avail yourself of the full panoply of government services in the form of write-off, charge-offs, abatements, amortization, depreciation, etc, etc. Yep, you're a pinnacle of fiscal morality, hoarding every penny you can while taking every tax dollar you can get your hands on.
I know your type all too well and I know, 100%, that if you really do own a "corporation" (as opposed to a "dba" or whatever), the ONLY thing keeping it afloat is taxpayer largess. And the reason you're so panicky is that you don't want to share the freebies with anyone else. Your arguments reveal your priorities and I really don't care about how condescending and angry you can sound. You can muster your best insults all day and it would continue to have zero impact on me.
Your question makes no sense. Sorry.
If you believe employers cannot be limited as to how high a wage may be set, it would be consistent to believe the same right would apply to how low a wage may be set. Whether it's an upper limit or a lower limit, your principle should apply. Since it obviously doesn't apply to lower limits, as the existence of minimum wage laws proves, there is no separate restriction on upper limits. I can't explain it in plainer English than that. If you want to keep arguing, reply to yourself.
They are completely different issues.
I have them oil royalty people, they call me all year long, every year, and I always dismissed them as a scam. I mean why would I want to risk my money on someone's word? Remember the suckers at Madoff.