Skip to main content

The nation's financial woes can be solved entirely with a simple, three-part solution, that will eliminate the need to raise taxes on the wealthy.

Step 1- Limit total compensation to company's highest-compensated employees (ie CEO) to no more than mildly obscene compared to the average of all employees' compensation- say 10x the company non-management annual average.

Step 2- Raise the minimum wage to something that one can actually live on, working 35 hours a week.

Step 3- Limit dividend payouts based on employee compensation. Perhaps something along the lines of $1 in annual dividends for $20 in employee compensation.

The results of this, as I see it, would be as follows. Senior management would push for average employee compensation to increase, and for the company to only hire full-time employees, so that their own compensation could increase. Every full-time employee would make enough to live on, and thus would stimulate the economy with increased spending. Shareholders would push for total employee compensation to increase so that annual dividends could increase. As the lower rung of employees receives a more equitable compensation, they begin paying more taxes reducing the need to tax the wealthy. They also become eligible for health insurance as full-time employees.

Poll

My reaction is:

72%16 votes
13%3 votes
0%0 votes
13%3 votes

| 22 votes | Vote | Results

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  35 hour work week-I'd vote for that. (1+ / 0-)
    Recommended by:
    Words In Action

    It would have the added benefit of some companies needing to add workers. I have no expertise to comment on the plausibility of the other ideas, but they sound good.

    Oh for crying out loud!

    by 4mygirls on Mon Jan 21, 2013 at 07:09:54 AM PST

  •  Or as they said in the 60s, (1+ / 0-)
    Recommended by:
    Words In Action

    tune in and drop out.  

    What we need is a Democrat in the White House.

    by dkmich on Mon Jan 21, 2013 at 07:14:03 AM PST

  •  I really like the first two ideas. (3+ / 0-)
    Recommended by:
    4mygirls, FG, Words In Action

    I don't know enough about business to have an opinion about the third.  Have you done the math on it?  

    •  The ratio would be widely off some typical (0+ / 0-)

      examples. Consider Southern Copper.

      They have sales / revenue of about 6.82 billion, representing just over $550K in revenue per employee. There are over 12,100 employees.

      I'm fairly certain the costs underlying that number would not be in line with a $1 dividend to $20 employee compensation ratio.

      The actual dividend paid out to shareholders was $2.75 per share last year. There were over 830 million shares. Total dividend payout was over $2.3 billion.

      If that represented $1 in dividend for every $20 in employee compensation you would need significantly over $45 billion in labor costs. (Tack onto that the cost of goods factors like raws, refining, shipping, etc).

      That flies well over the true sales/revenue number of $6.82 billion.

      I'm not gainsaying the notion promoted here - I am suggesting that the ratio proposed is simply unworkable.

      Also, gathering the true underlying financials to measure dividends vs. employee compensation is not going to be such a simple task.

      Finally, I can forsee howls from large institutional investors (pension funds for instance) who would be appalled by the resulting drastic reduction in dividends should such a scheme be applied - at a 1:20 ratio of dividends:employee compensatio.

      •  Thanks for the insights. (0+ / 0-)

        I expected it to be complicated, as you confirm.

      •  I was looking at it from the other direction- (0+ / 0-)

        if you only pay your employees $1billion in compensation, then you can only pay out $50million in dividends. The rest of the money would have to be held over or invested back into the company. And yes, there would be howls from the investors accustomed to receiving more money than the people actually doing the work, oddly enough I'm ok with that. There's no way to make everyone happy.

        The ratio I suggested may well be too high, but for many companies/industries, that 5% of employee compensation could well be most or all of the profit anyway. It would also, I think, encourage many companies to run debt-free, as they would have less pressure from investors to return large dividends.

        •  Precisely why would institutions then invest? (0+ / 0-)

          If the aim is to reduce dividends - making that class of stock significantly less attractive.

          •  There would still be money to be made, (0+ / 0-)

            the difference being that investors would be looking more for long term health and sustainability. The aim isn't so much to reduce dividends as it is to recognize that there are no profits without labor, and to reward labor fairly versus institutional profit.

            You can make money without infrastructure, you can't make it without labor. So why should (using the example above) the investors receive a large enough dividend as to make the company take on debt (dividend of $2.75 per share, profit of $2.73 per share), and yet the workers who earned that money for the company received less than 27% of the earnings as compensation? The investors performed no work, yet took home nearly 3 times as much compensation.

    •  Not extensively- I wanted to get the basic (0+ / 0-)

      premise out, but the exact figures would probably need to vary by industry. The basic idea though, would be that the people actually doing all the work would receive more compensation instead of the money going to the people who had some money to put up a long time ago, or inherited it. As it is, we're going to see less and less employee compensation as more manual labor tasks are automated.

  •  I'd settle for 42X (0+ / 0-)

    The rate back in the 80s, before Supply-Side economics really kicked in.

    The Class, Terror and Climate Wars are indivisible and the short-term outcome will affect the planet for centuries. -WiA "When you triangulate everything, you can't even roll downhill..." - PhilJD

    by Words In Action on Mon Jan 21, 2013 at 08:58:04 AM PST

    •  Also, a differential for the size of the company (0+ / 0-)

      You know, CEO of a $200Bn multi-national with hundreds of thousands of employees SHOULD be compensated differently from the guy who runs the regional bank chain or the local 6-store pizza chain.

      Still, a few million -- instead tens of millions with additional stock-option upside, AND 8-figure golden parachutes -- should suffice.

      The banker,  maybe $600K to $1.5M, depending on the size of that chain.

      The pizza guy, somewhere in the 5-10X range.

      The Class, Terror and Climate Wars are indivisible and the short-term outcome will affect the planet for centuries. -WiA "When you triangulate everything, you can't even roll downhill..." - PhilJD

      by Words In Action on Mon Jan 21, 2013 at 09:07:48 AM PST

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site