I’m switching gears a little bit and writing about a maximum wage or wage ceiling policy. Switzerland is considering a maximum wage law that will limit how much a CEO of a company can make, set to 12 times what the lowest paid worker makes. There is talk that the U.S. should consider this type of policy.
According to those backing the policy in Switzerland, it isn’t an economic or political stance, it’s an ethical one. When the pay gap is so wide, it becomes fundamentally unfair, allowing the rich to wield undue influence over society, economics, and politics according to Swiss politician Cedric Wermuth. Once this slide occurs, democracy can begin to unravel.
In a study from Economic Policy Institute that Lynn Stout from Cornell Law School references, CEO pay including options jumped 875% between 1980 and 2012. Minimum wage workers have seen an increase of only about 5% over that same period of time.
One suggestion to look into is enforcing a limit of 100 times the minimum wage. It would still allow top executives to be millionaires. With the current federal minimum wage at 40 hours per week, their maximum wage would be about $1.5 million per year.
Does this have the potential to go into effect? It depends on where you look. Debate.org has a few open polls on the matter that are completely opposite in ranking. When looking for actual political surveys or polls, none could be found. It’s not a hot topic in politics. I think there would need to be a huge push from third parties or special interests groups in order to make it so and I have a few reasons for believing as such.
- Businesses and Individuals can donate to a particular party or candidate for upcoming elections. Talking about limiting income will affect the ability to raise the funds needed to run for office. Not only could financial support be pulled but it also could decrease the said support’s ability to contribute to the campaign.
- This might not be a bad thing though. There is some belief among citizens that way too much money is spent on campaigning and that individuals and companies have too much influence on government as it is, emphasizing one of the concerns the Swiss have of their government.
- I mentioned in my first post the core value of individualism and economic independence. In the Declaration of Independence there is that all-famous line, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” Many people feel that limiting one’s income is a definite limitation of one’s pursuit of happiness.
- But another question is since the government can regulate minimum wage, does that also give them the right to regulate maximum wage? Since it can affect national business and economy, I believe the national government already has the power if they choose to enforce it.
Lack of Information
- Other than suggestions and theories, I had a difficult time finding any solid information on the benefits and disadvantages of creating a maximum wage.
How would this affect minimum wage? If a maximum wage policy was put into effect, and was correctly tied to minimum wage, it could put more backing behind increasing minimum wage, if only to allow a larger income for those on the top of the food chain.