Bill James: This Is Not Capitalism. It Is Organized Theft.

Even that's absurd considering the value to a company of its lowest workers and its highest.
Let's take a look at just your average sports franchise. If your highest-paid player is making $10 million (which is on the low end these days), that means the people in the ticket office -- every single one of them -- has to make at least $100,000.
Is the person running a large, successful hotel chain worth at least $5 million per year? Probably so.
Is the just-hired housekeeper at one of those hotels worth $50,000 per year? Absolutely not.

All a law like that would do is cause the people on the higher end to find even more loopholes that exploit and hurt workers. The "full-time" clause James cited, for instance. Why pay someone $40,000 per year to clean hotel rooms for 40 hours per week, when you can pay them $20,000 a year to do it 35 hours per week?
Like a lot of these ideas, it's a noble concept that blows apart the second you begin to figure out how to turn theory into reality. No one with any aspirations of being successful in this country should take this seriously.

 

Not that pesky little things like facts matter ...

http://www.foreignaffairs.com/articles/139101/steven-n-kaplan/the-real-story-behind-executive-pay

Cue the ersatz statisticians and their "Correlation isn't causation!" trope ...

 

I don't disagree with your point, but just wanted to add that many housekeepers in large cities or higher-end hotels are fairly well paid and $40,000 wouldn't be entirely outrageous.

 

That $50K housekeeper will be able to afford and buy more things than the $20K housekeeper can. Spending more would stimulate the economy more, and put more money in the owners' pockets and they would be able to afford to pay their workers more.

As for your loophole, that can be fixed by making it an hourly wage in which a full-time equivalent would be figured in the 100X.

 

The idea is to share the prosperity a little more.
And you don't have to go all communist to do so.

Salary cap? No. More balance top to bottom? Yes.

 

There used to be a way for people to collectively bargain better wages but the word union has become a dirty word.

 

Profit sharing and merit raises also were dumped in newspapers.

 

It's a recipe for runaway inflation and financial disaster.
If all of the housekeepers and equivalent low-skill jobs are suddenly making $50,000 a year, how long before more skilled middle-class workers start demanding more -- even though they work for smaller companies whose 100x cap is considerably lower than a large corporation's?
And if that's the case, what happens to small businesses? They lose quality employees because they can't afford to keep up with the bigger corporations.
And once wages roughly double, then prices double. If everyone can afford more, everyone will charge more. Before long, we have the same situation just with higher numbers.

 

... a clue should fail to recognize it as anything other than absolute, teeth-aching stupidity. And it's not remotely a noble concept. It's as ignoble as it is asinine.

Suppose I make $100K a year in marketing at some small firm, and let's suppose I'm the lowest-paid employee there. However you want to calculate it, let's assume that that's how much value I bring to the table. And it's also reasonable to assume that for all practical purposes that is the best offer I can get in the marketplace (because if I could do appreciably better elsewhere, why wouldn't I?).

Now, suppose that at present the firm's highest-paid employee/manager (let's say it's the CEO) earns $900K and decides to retire. The owners of the firm find two candidates, A and B. In the owners' estimation, A would be worth $900K to them and B would be worth $1.1M to them.

Yet per this "theory," the owners would be injuring me by paying B $1.1M (because, after all, that's more than 10 times what I earn). Not only that, but by this argument I should be compensated for the harm of being paid at a rate that's consistent with how much value I create.

 

Smaller businesses already can't compete with larger corporations.

And, an exemption loophole could be created, like in Obamacare, for businesses with fewer than 50 employees or certain amount of revenue.

 

Saying you should change your country's entire economic structure by modeling it after any facet of Obamacare is not helping your case.

 

If the original CEO was making $900K, and using your 10X example, you should have only been making $90K. But they thought you were more valuable and gave you the $100K. So, if they decided to pay the next CEO $1.1 million, then they think he's going to be able to generate more revenue to justify that increase, which should enable them to pay you an extra $10K to $110K.