Many of us have long recognized that this country needs to increase the minimum wage. But merely raising the minimum wage will not address the excessive and increasing concentrations of wealth that contribute to a myriad of political, economic, and social problems. We need a maximum wage. Such a maximum, set as a multiple of the minimum wage could potentially revolutionize our society and begin to solve many problems.
Many Americans are unaware of just how concentrated wealth is or of the havoc that concentration wreaks through excessive power. As of 2012, the average CEO made 331 times as much as the average worker and more than 774 times as much as a minimum wage worker. And inequality is getting worse. Between 2009 and 2012, 95% of all gains in income went to the top1%.
What are the consequences of such enormous and increasing concentrations of wealth? Those of us on this web site know all too well. As we all know, the rich control our elections. Thanks to Citizens United, the rich give virtually without limit to political campaigns for both parties, thereby influencing the policies of our elected officials and to at least some degree determining who is elected. In effect, the rich have bought most of our political leaders. Great concentrations of wealth exclude from office most of those outside the two-party system, those whose thinking strays too far left of the mainstream. In effect, they stifle creative, outside-the-box thinking in our political system. The wealthy are also able to hire highly paid lobbyists who, in some cases, not only influence but actually write (e.g. ALEC) legislation that favors their rich clients and that further concentrates wealth. The promise of lucrative private sector jobs once they leave government service influences even non-elected civil servants charged with regulating corporations for safety, health, and environmental impact.
The wealthy also control the flow of money so that many of us spend large percentages of our income in debt service. Forty million Americans owe an average of $30,000 each in student debt while crushing debt owed to the wealthy has left many of our communities impoverished.
The desire to accumulate ever greater wealth is also destroying our environment. Oxfam has estimated that the top 1% of earners consume 10,000 times as much carbon as the average person.
The pursuit of ever more concentrated wealth has led us into ever longer wars, has driven jobs off our shores, and has nearly destroyed the world’s economy. It has also forced many people into dangerous and boring jobs that sap their creative energy. Concentrated wealth empowers large corporations to crush competition. Rich corporations monopolize whole segments of our economy from pharmaceuticals to farming to telecom.
What are the moral implications of our inequality? What do the amounts we pay people say about our values? What does it say about us that we pay weapons manufacturing CEO’s hundreds of times more than firefighters or nurses who save lives? Or that we pay gas and oil executives, who threaten our water and climate, hundreds of times more than forest rangers who care for land, water, and climate? Or that we pay the glorified gamblers who manage hedge funds and Wall Street banks hundreds of times as much to speculate with our money as we pay caregivers to care for our children and our elderly?
Why are we not even talking about a policy that could address these issues? Why has no one publicly even suggested we debate the issue of a maximum salary? We can double, even triple, the minimum wage and still do nothing to address the concentrations of wealth that are destroying us. A maximum wage could restore some balance to our economic system. The wealthy would necessarily have less money to buy our politicians and less to pay lobbyists as well as less to tempt civil servants into supporting their interests. Oil companies would be less able to afford costly and destructive drilling practices such as fracking or mining or piping tar sands oil. Hedge funds and investment banks would have less to gamble with. Large corporations would have less wealth to use in buying out or otherwise destroying competitors. Our economy, including our dangerously vulnerable, highly concentrated utility system would very likely become less concentrated, more localized and variable. And with maximum wages tied to minimum wages, the latter would be very likely to increase substantially.
It’s even possible that a maximum wage, by driving increases in the minimum wage, would free some people from excruciatingly boring jobs so that they can pursue work they enjoy, work that actually uses their skills and creative energies. Before I retired from teaching, I would often ask my students what career they hoped to pursue. When they answered, I would ask why. Almost always, the reason was that the career paid well. They were going to spend their lives doing not something they really wanted to do, not something they felt called to do, but something they would be paid well to do. For someone like me, blessed as I was with work I loved, this seemed a tragedy. Is it not possible that with a far more equitable pay structure at least some people will feel free to pursue what they really want to do rather then feeling compelled to take a more lucrative job?
So where should we set that maximum income—at how many times the minimum wage? The Swiss recently voted on a referendum to set the maximum wage at 12 times the average worker’s pay. Apparently, the number 12 was almost random based simply on the idea that no one ought to make more in a year than the average worker made in a year. Though the measure was defeated, over 1/3 of voters favored the measure.
I would suggest a multiplier based on the ratio most voters expect.
Surveys show that most people, including most Americans, think that inequality is too great, that the rich make too much compared to average people. According to a study by the Harvard Business Review, people worldwide felt on average that maximum income should ideally be only 4.6 times as much as the unskilled workers’ income. Americans appeared to have seen the ideal ratio as somewhere between 6 and 7.
The same study shows that most Americans think CEO’s average incomes are thirty times as much as unskilled workers’ incomes. If we were to set the multiplier for maximum incomes at 20 times the minimum, I suspect that most people would not perceive that as a very radical change. We should simply enact a simple confiscatory 100% tax on income over that maximum. That is all income, unearned as well as earned. No deductions. No exclusions. No exemptions. The confiscated income should then be deposited in a public bank.
I’m not an economist. I do not know what unforeseen consequences such a plan might bring. I do not know how well it would work. I’m sure it would need any number of tweaks and changes (much as does the Affordable Care Act). But I do know this. We cannot survive if we go on as we have, allowing wealth to become ever more concentrated in a few hands until a handful of billionaires essentially own us all and virtually all our land. That even discussing a maximum wage would make Republicans (and many Democrats) as well as their corporate cronies exceedingly uncomfortable is an added bonus. It is probably the one thing they most fear. I for one would love to see them squirm. So I think the idea of a maximum wage is at least worth discussing. At the very least, it might enable us to inform many people about the appalling extent of inequality in this country.