Minimum Wage vs Maximum Wage

[Paul Austin]

Please, feel free to point out in the OP where he talked about having a cap on what an hourly wage worker or sales per week commission earner gets to earn each week.......

Feel free to show me where I mentioned them too...

 

[Paul Austin]

Not quite sure you get the idea. A maximum wage in regards to corporations means that a CEO's salary would be linked to the lowest wage of that company. So, for example a CEO could only earn say 10x more than the lowest paid employee. There would be no upper limit, a CEO's salary could be as high as he wants, as long as he increases the wages at the bottom to keep the 10x difference.

Which obviously, in a real world environment, with any global company would not only be impossible to enforce, but more importantly impossible to enact on a to frequent basis which would lead to what?

A fixed income over a period where it could be exceeded.

 

[Paul Austin]

I believe his intent was on hourly wage, not total salary. That at least fits the context.

And yes, that would be one potential possible effect of his plan, to encourage companies to not grow above a certain size, maybe.

Its why we dont have upper caps in most human related things, it tends to lower productivity by removing incentives beyond the upper limits.

Why do you think the Chinese re-aligned economically?

They found shared wealth actually was less appealing, & less of an incentive than human greed.

 

[Mycroft]

Not quite sure you get the idea. A maximum wage in regards to corporations means that a CEO's salary would be linked to the lowest wage of that company. So, for example a CEO could only earn say 10x more than the lowest paid employee. There would be no upper limit, a CEO's salary could be as high as he wants, as long as he increases the wages at the bottom to keep the 10x difference.

You remark would be great...except that the OP says nothing about a CEO's salary being linked to anything. It does, in fact, say: "If there is only so much you CAN make..."

Now, I suppose you could be a mind reader and you know that's what KevinKohler really meant, but at this point I'd say you are trying to change the premise of the OP based on your opinion.

 

[Redress]

Its why we dont have upper caps in most human related things, it tends to lower productivity by removing incentives beyond the upper limits.

Why do you think the Chinese re-aligned economically?

They found shared wealth actually was less appealing, & less of an incentive than human greed.

You would note if you had read the thread I do not support his plan. I simply pointed out the misunderstanding on your part.

 

[Mycroft]

People need to be reminded that, historically, government instituted price controls are bad. They consistently lead to unintended consequences that are worse than the problem they were intended to fix.

 

[Paul Austin]

You would note if you had read the thread I do not support his plan. I simply pointed out the misunderstanding on your part.

I wasnt aware there was one, but nevermind.

 

[KevinKohler]

The money would be diverted to stockholders in dividends, not "workers."

I think the idea of maximum wages SUCKS. That is more oppressive than minimum wages.

However, I'm confident major corporation stockholders would LOVE the idea! Since generally top management and large stockholder means about the same thing, it would greatly serve to their benefit and management salaries could be restructured to be in stock dividends - meaning your system is a way to royally screw everyone else. Plus corporations then just need have the government put whatever ceiling they want on hourly and lower management employees.

Finally, you insisting that this not be considered as a discussion of socialism is absurd, since that is exactly the topic.

I'm well aware that this is socialism. What I didn't want, though, were "That's SOCIALISM!" being the major impetus to people's arguments.

Hourly wages would not be capped. Actually, I'm not entirely sure how it would work, it's just a thought that's be bouncing around in my head for a while. Could be, simply a maximum wage per industry. As in, if you work in the grocery business, the most you could earn per year would be, say, 10 million. That same ceiling applies to the lowly stocker, up to the multi chain owner. The purpose being, to reduce the financial incentive to nickle and dime both your employees, but also your hard assets (the business itself). The side affect would be, one person would not be able to monopolize any one facet of any given economy. The most they can make is 10 million, so, why continue to buy more stores, or build more, after you're already making that amount of money. Someone else can then fill that spot.

 

[KevinKohler]

But anyway, a progressive tax code is essentially the same thing. You don't need a maximum wage, just maybe a higher top marginal income tax rate. That would accomplish, in theory, all the same things. I'm not an expert, but closing loopholes might be necessary.

Increasing capital gains to however high we please might be in order too.

Ah, but it's not the same thing. Increased taxes is a business expense, and it can always be passed on to the consumer. Closing loopholes is an obvious one, but it's also never going to happen, because too many of the people who we look to to do exactly that, USE those same loopholes.

Don't think for a moment that this discussion is rooted in any way in a plausible reality. It's as realistic as a Ron Paul presidency. It's never gonna happen. It's just a thought I wanted to flesh out, and you guys are tremendous at helping me see the many cracks and flaws, etc.

 

[KevinKohler]

So when I reach the upper limit whats my incentive then?

Am I expected to "retire", or work for nothing (slavery)?

No, you would simply work without a possibility of making MORE than you already ARE. My idea simply forces you to take that money and reinvest in your business...the liberal version forces you to hand that extra money at a progressive rate to the government to decide with what to do.

 

[Paul Austin]

No, you would simply work without a possibility of making MORE than you already ARE.QUOTE]

So for nothing then?

We abolished that system.

Why would anyone want to work for nothing?

Thats a hyper-incentive for reduced productivity, which would hurt everyone.

Ask China why they reverted from that concept.

 

[KevinKohler]

Wages and their effects are a very complicated system. Note one key aspect of it however: a raise in wages by a company has a much smaller effect on the cost to provide a product/service than it has on the spending power of the people getting the wage increase. A business that increases it's wages by 10 % would see total costs increase more like 2 to 5 %. The wage increase being caused by a minimum wage would mean no change in competitiveness assuming each company passes the cost along to consumers, and consumers see a trivial increase in cost of living overall. Meanwhile those who got the wage increase see a significant increase in their spending power and standard of living.

A five percent increase in operating cost is the difference between solvent, and not solvent, for many small businesses. Minimum wage laws are CHOKING them to death. Minimum wage laws do more to help corporations kill their business rivals, then it does to help either the workers for those corporations, or their customers. I wonder what the numbers would look like if you compared the number of small business to big business ratios, from the start of minimum wages, to now, per capita. Be interesting.

There is a limit beyond which a minimum wage does more harm than good, and increasing the minimum wage does cause other issues. You cannot legislate away the "working poor". It will not work. Not surprisingly the pros and cons of a minimum wage and an increase to such tend to be overinflated by those for or against it. And that is where we reach the problem with your idea. First and primarily, it is trying to fix something that isn't broken. Minimum wages work and as long as increases are kept modest and spread out in time, increases do not have a significant negative impact on the economy.

A minimum wage always does more harm than good, it's just that the harm isn't seen till later. And no, you can't legislate away the working poor, but you CAN prevent the birth and growth of monopolies via legislation. True, minimum wages don't have a significant NEGATIVE impact on the economy...but also true, they don't have a POSITIVE effect, either on the economy, or for the people stuck earning such a wage. The secret to economic mobility, on an individual basis, is market volatility, in my opinion. A business was never meant to outlive, by generations, it's founder and original owner. It's like being a cashier at a store, wanting to promote to a front line manager, waiting for the current front line manager to retire...but said manager never gets older, never retires.

Secondly, an increase in the cost of living(inflation) is not a bad thing, and it is going to happen. Where it is a problem is when that increase is too high. Increases in the cost of living and related wage increases through market pressure have such positive effects as reducing the longterm cost of borrowing money as an example.

The direct result of minimum wage increases, increase in the cost of living. Not too bad a thing for those on minimum wages, and not really too bad for the wealthy. Not so great for all the folks in the middle.

Lastly, the more controls you try and place on a market, the harder it is for that market to self correct. That is the real highwire act, adding enough regulation on the market to reduce catastrophic or major failures such as recession/depression, hyper-inflation, etc, while not adding too much. You want to ensure that any potential good outweighs the risks, and in this case, your idea fails that test.

This is delicious coming from a self described "very liberal". What are the risks of requiring a maximum wage concept upon the major conglomerate business that call this country home? You've listed none, thus far.

 

[KevinKohler]

A lot of high income positions take compensation in forms that aren't necessarily cash. This behavior would most likely just go up.

Plus, you'd probably see a lot of fraud. I don't think you could effectively cap incomes.

This is, of course, ignoring the principle of the issue.

I think all of the logistics can be worked out. Will there be fraud? Sure. Same as we currently have. Business owners buying hard assets for personal use that are billed as business expenses, in order to use business capital for the purchase. So on, and so forth.

Finding solutions to those would be problems would not be overly hard, I don't think. Not nearly as hard, as, say, trying to enforce US tax law on international accounts and the like.

The PRINCIPLE of the issue, is another story.

 

[KevinKohler]

How am I not?

Every ounce of work, beyond that limit is gratis, for nothing.

Sounds like a bad idea to me.

What would I tell my workers?

"Sorry guys, youve earned the upper limit this week, you can continue to work for nothing, or go home & come back next week"?

Unless they are making as much as YOU are making, I don't see that happening. Plus, this would not apply to small business owners. This concept is to HELP small business owners be more competitive with their corporate rivals.

 

[AliHajiSheik]

Not quite sure you get the idea. A maximum wage in regards to corporations means that a CEO's salary would be linked to the lowest wage of that company. So, for example a CEO could only earn say 10x more than the lowest paid employee. There would be no upper limit, a CEO's salary could be as high as he wants, as long as he increases the wages at the bottom to keep the 10x difference.

Don't you think 10x is still way to much?

 

[KevinKohler]

Its why we dont have upper caps in most human related things, it tends to lower productivity by removing incentives beyond the upper limits.

Why do you think the Chinese re-aligned economically?

They found shared wealth actually was less appealing, & less of an incentive than human greed.

Do you think that is all the rich in the world suddenly vanish, or lost most of their money so that the middle class was the new rich, that things like yachts, bughatti's, and multi million dollar homes would vanish with them? Or sit around un owned, unused, unsold? Or, do you think simply that, sans anyone to pay the current price tag of 1.6 million for a Veyron, the cost would decrease till that car sold again? Rich people would still be rich. I'm not removing their incentive to do anything other than monopolize a market.

 

[KevinKohler]

You remark would be great...except that the OP says nothing about a CEO's salary being linked to anything. It does, in fact, say: "If there is only so much you CAN make..."

Now, I suppose you could be a mind reader and you know that's what KevinKohler really meant, but at this point I'd say you are trying to change the premise of the OP based on your opinion.

His idea is OK, but has more flaws in it. It would play hell with currency values, for one thing. And by "only so much you CAN make", I mean on a yearly basis.

 

[Paul Austin]

Unless they are making as much as YOU are making, I don't see that happening.

Either a limit is reached, & someone works for nothing, which is bad, or its not reached & the limits pointless.

Plus, this would not apply to small business owners. This concept is to HELP small business owners be more competitive with their corporate rivals.

By making bigger rivals work for nothing & thus destroying productivity, which would just lead to a cycle of boom & bust, you know, you start small, work hard, grow, hit a glass ceiling, productivity drops, you cease to be competative, you go bankrupt, rinse & repeat.

Meanwhile foreign bussinessmen, not constrained by these limits, continues to grow his firm, benefiting from the boom/bust cycle of his rivals, & ends up dominating the market, leaving the domestic market as dead as a dodo.

I cant really see it as a good idea.

 

[KevinKohler]

No, you would simply work without a possibility of making MORE than you already ARE.QUOTE]

So for nothing then?

We abolished that system.

Why would anyone want to work for nothing?

Thats a hyper-incentive for reduced productivity, which would hurt everyone.

Ask China why they reverted from that concept.

No, not for nothing. If you cap is set at 10 million a year, then you would make 10 million a year, year after year, adjusting for possible inflation, though, without minimum wages, inflation would likely halt to near zero. What WOULDN'T happen is you would not be able to give yourself a raise, or receive a raise, for 15 million a year, etc etc etc.

 

[KevinKohler]

Don't you think 10x is still way to much?

It wouldn't matter, because, so long as the wages are linked like that, it would simply devalue the currency, so that, say, a floor sweeper at the grocery store making 20 dollars an hour so that the owner of the store can make 200 an hour...that 20 dollars an hour would equal to the 10 an hour they make now.

 

[KevinKohler]

Either a limit is reached, & someone works for nothing, which is bad, or its not reached & the limits pointless.



By making bigger rivals work for nothing & thus destroying productivity, which would just lead to a cycle of boom & bust, you know, you start small, work hard, grow, hit a glass ceiling, productivity drops, you cease to be competative, you go bankrupt, rinse & repeat.

Meanwhile foreign bussinessmen, not constrained by these limits, continues to grow his firm, benefiting from the boom/bust cycle of his rivals, & ends up dominating the market, leaving the domestic market as dead as a dodo.

I cant really see it as a good idea.

Globalism is the number one hurdle, you are correct. No matter WHAT we do in this country, no matter the laws, etc, monopolization continues to be a threat. And once again, I'm not suggesting that anyone is working for nothing. You're simply not eligable for an increase in yearly compensation after the ceiling is hit.

 

[Paul Austin]

Do you think that is all the rich in the world suddenly vanish, or lost most of their money so that the middle class was the new rich, that things like yachts, bughatti's, and multi million dollar homes would vanish with them?

A lot of things yes.

A $1.5 billion dollar house isnt $1.5 billion profit, there are costs in there, so if no one can meet them then yes the products would vanish.

Or sit around un owned, unused, unsold?

In a lot of cases yes because theyd be devalued.

 

[KevinKohler]

Let's address some facts.

FACT - 89% of the accessible resources in this country (those not controlled by the government)are owned or controlled by less than 10% of the population.

FACT - Despite numerous anti trust laws, most products in this country to sold to us by less than 30 DIFFERENT companies. When you go to the mall, the grocery store, the gas station, a restaurant, an airport, etc...your options are limited, in terms of buying from different producers. Try it out. Go to the grocery store, and see what all you can find that ISN'T made by the Nestle Corporation. I bid you good luck.

FACT - The US needs menial labor jobs filled, and there are far more of THOSE jobs than there are of "real" jobs.

FACT - The US is a consumer driven economy.

Any arguments so far?

 

[KevinKohler]

A lot of things yes.

A $1.5 billion dollar house isnt $1.5 billion profit, there are costs in there, so if no one can meet them then yes the products would vanish.



In a lot of cases yes because theyd be devalued.

Devalued according to CURRENT market values. Nice thing about the market is, it's always changing. Or at least, to be healthy, it should.

 

[Paul Austin]

No, not for nothing. If you cap is set at 10 million a year, then you would make 10 million a year, year after year, adjusting for possible inflation, though, without minimum wages, inflation would likely halt to near zero. What WOULDN'T happen is you would not be able to give yourself a raise, or receive a raise, for 15 million a year, etc etc etc.

You dont seem to get it.

If you earn x for doing x & your productivity increases to x+1 but your renumeration stays at x then you are doing the +1 for nothing.

Its basic math