Should the US Copy Switzerland and Consider a 'Maximum Wage' Ratio?

Hugh Pickens DOT Com writes "John Sutter writes at CNN that as Swiss citizens vote on November 24 to consider capping executive pay at 12 times what the lowest-paid worker at a company makes in a referendum. Some say the idea of tethering top executive pay to some sort of concrete metric might stop American execs from floating further into the stratosphere. 'Here in America, the land of unequal opportunity, the CEOs of top-500 companies make in a single day about what it takes an average "rank-and-file" worker a year to earn, according to the AFL-CIO, the federation of unions,' writes Sutter. 'Democracy starts to unravel if a few people become wildly, ethereally successful, while the rest of a country struggles.' A $1 million salary worked for American CEOs from the 1930s to 1980s, says Lynn Stout. But CEO pay, including options realized that year, jumped about 875%, to $14.1 million, from 1978 to 2012, according to the Economic Policy Institute. 'What we've got is basically an arms race,' Stout says, 'where the CEOs are competing on pay because they each want to have higher status than the others.' Peter Drucker, the father of business management, famously said the CEO-to-worker salary ratio should not exceed 20:1, which is what existed in the United States in 1965. Beyond that, managers will see an increase in 'resentment and falling morale,' said Drucker. Stout has suggested that the IRS make CEO pay a non-deductible business expense when it's higher than 100 times the minimum wage. 'Limiting CEO pay to 100 times the minimum wage would still allow top execs to be millionaires,' concludes Sutter. 'And here's the best part: If the fat cats wanted a pay increase, maybe the best way for them to get it would be to throw political weight behind a campaign to boost the minimum wage.'"

Comments

Re:Yes.

[0123456]

The free market is supposed to be a tool, not a ruler - if it won't do its job, we rework it.

The free market is what people do when no-one is holding a gun to their head to force them to do something else.

The sad part is that, after socialists destroy one city or nation, they just move on to the next and destroy that too.

Re: Yes.

[ShieldW0lf]

The wealth of the US comes from the deal Kissinger made with the Saudis. Its all stolen through guile. That deal is unraveling, and the Americans are about to become impoverished to the point of total societal collapse. Full stop.

Re:Yes.

[sumdumass]

Because it is morally wrong to tell a person the max they can make. If you think not, then wait until the government decides you have to take a pay cut and cannot make over a certain amount. And no, you cannot claim that it will only be used to penalize the rich. Once the government has the ability to do so, that ability extends to all of the country.

It would be better to unionize and tie the salary of the grunts to the executive pay levels. Perhaps in the form of bonuses too. Either way, if the government can say you as a ceo can only make a certain amount, they can say you as the burger flipper or it drone or whatever can be limited in pay too.

Re:Yes.

[I'm New Around Here]

As the executive you'd still be allowed a wage one hundred times that of the lowest paid worker which seems very fair to me.

But it doesn't seem fair to the guy who is actually putting his family in the balance.

Besides, your business is unlikely to ever reach the kind of turn-over where you could afford to pay yourself that much.

Wow. Way to incentivize there. Your mother never hugged you when you were a child, did she?

If it does you'll be the owner of the company so your net worth would still be very large. An argument based on personal risk in this context is flawed. I'd rather see a raised progressive tax rather than a flat out ban on high wages though, because I have a feeling that won't pan out. Anyway, best of luck to you in the future.

Yes. Best of luck in pawning your family's future in an endeavor that will most likely fail, and that at best should only give you slightly more wealth than staying in your 9-to-5 job working for some faceless company.