We all know about minimum wages, which should provide enough to live on—but what about maximum wages?
Annual figures compiled by the Canadian Centre for Policy Alternatives show average pay for Canada’s top paid CEOs reached $8 million in 2012, or 379 times what a minimum wage worker is paid. Canada’s highest paid CEO, Hunter Harrison of CPR, received $49.1 million in 2012: more than 2,300 times what minimum wage workers were paid. In real dollar terms, CEO salaries have increased by 73 per cent since 1988, compared to just 6 per cent for average workers wages.
In recent decades, the top 1% has grabbed the majority of income gains in Canada and around the world and left little for the rest. It wasn’t always like this. During the 60s and 70s compensation for CEOs averaged just 20 times the average wage; now it’s more than 200 times the average workers wage.
The idea of a maximum wage isn’t new or highly radical. During WWII, American President Franklin Delano Roosevelt proposed a maximum salary of $25,000, or about $350,000 in current dollars. This wasn’t enacted, but the U.S. and Canada introduced progressive tax rates of up to 90% on top incomes through to the 1970s. These slightly less excessive top incomes and higher top tax rates didn’t hurt the economy: in contrast that period was considered the “Golden Age” of capitalism with economic growth and productivity much stronger than our age of corporate greed.
The proposal was revived by U.S. labour activist Sam Pizzigati as a way to ensure that a rising economic tide lifted all boats, and not just the yachts of the affluent. It would mean the richest and most powerful would have a vested interest in also raising the wages of the lowest paid, instead of stomping on them.
A proposal to cap the pay of executives at only 12 times the pay of their lowest paid workers gained enough support to be put to a referendum in Switzerland late last year. It was defeated but still gained substantial support.
The US Securities and Exchange Commission (SEC) has proposed a rule that would require publicly traded companies to report CEO compensation, average worker pay and the ratio of these. Other proposals in the U.S. would set a maximum wage for government officials and contractors at 20 times their minimum wage. A cap in the private sector of 50 times their minimum wage, with a base of $10/hour would mean top pay for executives of at least $1 million a year: easily enough to live on.