A straight across minimum wage of $11 an hour would put the US on the fast track to poverty as millions of jobs would be cut by small businesses.
However, I think the minimum wage should be tiered to reflect the differences between businesses and their available resources. The small business with 50 employees or less should be able to remain at the current levels, as long as that business owner's compensation does not exceed 150 times that of the minimum paid worker.
But the large businesses should be required to pay $11 an hour or even $15 an hour as a minimum depending on their executive to minimum compensation ratio. If their CEO is getting paid over 150 times or more than what the minimum wage worker is currently making, they have to boost the minimum wage at that company to $11 an hour, and face higher corporate taxes -or- reduce the executive pay to a level below the 150 times minimum compensation mark to avoid this.
If the CEO is making over 250 times what the minimum wage worker is currently making, they have to pay $15 an hour, and face higher corporate taxes -or- reduce the executive pay to a level below the 150 times minimum compensation mark to avoid this. This would entice boards, shareholders, and executives to ensure that ratio doesn't go higher than the 150 times level, and protects small businesses from having to do something they don't have the resources to do.
Thomas Piketty has pointed out some intriguing data on this problem, lets use logic to solve it. In the scenario above, I believe, everyone wins.
3 comments:
Way too complicated. Complication keeps government bureaucrats employed and makes it possible for people to cheat. How about the ratio between the CEO divided by the least paid cannot be more than 20. Keep it simple.
The punishment for cheating should be severe.
I don't think it is complicated. It's pretty simple. If an executive of a large business is compensated at more than 150 times that of the lowest paid worker at his company, a higher corporate tax is levied and a minimum wage of $11 per hour becomes required in the next tax year. If the ratio is 300 times, a higher tax is levied and the required minimum wage is $15.
I defined it in one paragraph, which I think is pretty simple. I also think your suggested ratio of 20 times is too low. I don't have a problem with a founder or executive making 100-150 times that of their lowest paid worker. But when it gets above that I think it starts getting exorbitant.
If you calculate it out, an exec could pay $7.50 to the lowest paid worker and would be allowed to make $2.35 million in annual compensation with the 150 times rule. If you cap it at 20 times, you would limit executive compensation to $313,000. I doubt anyone would sign up for a law like that.
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