There Is a Minimum Wage, But Should There Be a Maximum Wage a Person Can Earn?
The debate on minimum wage and salaries has resulted to another debate about whether we should have a maximum wage or salary in the US. The high salaries and allowances of top executives in the US have raised eyebrows on what would be a fair pay for all the citizens. “The wage gap between working Americans is widening, for instance, in 2006, the average person in the top 0.1% of wage earners made $2.1 million, seventy-seven times as much as the average person in the bottom 90 %” (Coy, 2008). Indeed, it took that top earner just a little effort as compared to low-income earners to be able to kind make such an amount of money. A number of people support the enactment of laws that spell out the maximum wage whereas others are opposed to the idea citing various reasons. Minimum wages go back to 1938, during the great depression, when the stock market crash and bank loan were failing and thus the congress pegged the minimum wage at twenty-five cents per hour (Lemieux, 2014). There are two sides to the debate over minimum wage increases in which one side feel that low-income workers need some incentive to earn a sufficient living whereas the other side believes that changing the minimum wage does not always help workers and can hurt businesses. Laws and policies on maximum wage will aid in reducing the gap that exist between the rich and the poor thus bringing a sense of belonging to all classes of people. The essay is an argument for and against the necessity of having a maximum wage and salaries of all the citizens.
There is need for a maximum salaries and wages in our country, the country needs maximum pay ratios within firms to put an end to top executives being paid more than hundred times what the cleaning staff earns in order to enhance equality. The lack of a scheme and policies that define the maximum wage has led to inequalities in our country that has come as a result of the disparities between high and low income earners. This in turn results to unwanted rivalry at workplaces since some of the top paid employees may feel more proud and superior compared to the rest of his/her colleagues. There should be a maximum wage that a person can earn in our nation because of the inequalities that still exist between different groups of people. Socioeconomic inequality in our country has been an issue that has plagued civilizations over the past years. Although the US has been a global trendsetter, it is time that it learns from the patterns of other nations that have achieved far greater in this regard, such as Japan, and in contrast, countries like Brazil, which have ignored these issues, and, as a result, are facing grave consequences. Other countries that have embraced the idea of maximum wage have taken giant leaps in terms of economic development for the past few years.
Classes of lower, middle, and upper class income brackets, segregation has beset itself upon our society, dividing them only based on their wealth, and many times the lottery of birth. In the coming years many firms in the US enterprises will need to behave responsibly and consume resources sustainably. Unfortunately, America’s most prominent enterprises appear to be falling a bit short on the wisdom front because of the inequalities that characterize our society. As a group, over recent years, they have come across as anything but effective and efficient. Different scholars have opined that the high salaries that are paid to the executives give them the incentive to behave outrageously not just in high finance, but also throughout the economy.
The social classes on income inequalities that exist in our country can only be eliminated if the government comes up with policies that will ensure that there is a maximum and minimum wage. Other countries like India where the problem is so rampant are currently facing grave consequences because of the wide gap that exist between the low-income earners and the high-income earners. This problem can only be avoided in our country if a maximum wage is set by laws. If The United States is to truly be, the land of equal opportunity that it touts itself to be then something must be done to eliminate the large wage differences that exist between low-income earners and high-income earners. Large inequalities as a result of the huge salaries and allowances of the top executives have negative effects on the economy in many ways. Inequalities that exist in our society may make collaboration more difficult and disincentives people from working hard for the common cause if something is not done.
The rising inequalities that are being experienced in our country make it necessary for a maximum wage. A research has indicated that some executives earn more than two hundred and fifty times of what is earned by the subordinate stuff. This inequality can only be wiped away if the government implements a maximum wage policy. The laws and policies that have been implemented on the minimum wage and salaries in the US have proved not to be able to bridge the inequalities that exist in our society. Rising wage disparities that has characterized our country for the past few years is one of the key drivers of inequality and the high rate of crime. Having a maximum and minimum salary that a person can earn will aid in making sure that the living standards of all the Americans have improve and thus reducing problems that have come as a result of the inequalities like higher crime rate, poorer public health of living in a highly unequal society. The main concern is the Liberty based economics that of a free and unregulated trade industry versus the redistribution of wealth through taxing the rich or middle class and giving it to the poor through welfare and unemployment which is also known as Socialism, Communism, or even Marxism. Socialism and communism have always failed due to defense budgets and other aspects that have been seen to be more important than bridging the existing inequalities. The economy of our country would fix itself if we stopped our government from wasting trillions rewarding top executives who already have more than enough money to spend. The issue is with our leaders wasteful spending on payment of people who already have more wealth and thus ruining our economy. The money that is paid to top executives does not stir our economy for the reason that most of the cash is lying idle in the banks.
A maximum wage would limit the influence that the rich have in our country and thus enable a stronger civil society and democracy, which has always been hindered by the wealthy. The US boosts of being a democratic society and providing a conducive environment that enables the entire citizen to access opportunities equally. Those who earn millions have the influence that enables them to interfere with our democratic institutions. A maximum wage will help in reducing this influence and making all the people to have equal access to opportunities in our country. “The greater the potential reward, the greater the temptation to grab that reward by any means necessary by wild wheeling and dealing, by shortchanging worker training and by hammering consumers and cooking the books” (Pizzigati, 2015).
The maximum wage will also help to reduce the overspending that is evident in the contemporary society. Many companies are using a large percentage of their profits in paying their top executives at the expense of the subordinates. This has ruined the economy because most of this executives stash the money in overseas accounts. Most of the subordinates who are paid less are the one actually who drive the wheels of production in such firms. Even though they are protected by the minimum wage laws that were passed by the congress, they are discouraged by the amount of money the top executives earn in relation to the type of the work that they do. Most of the top executives only do the white-collar jobs within very few hours and end up getting millions of dollars because of the lack of laws that are to be used in determining the salaries of different people.
There is a need to tame executive pay that can only be achieved through the making of laws that defines the maximum wage that a person can earn. The high amount of money that is received by top executives has encouraged risk-taking behavior in our country which has led to the banking crisis. The top executives who are paid millions of dollars per month reduce the productivity and the profits that are made by any company because the firm strains to maintain their services by overspending on them. Excessive rewards are detrimental to performance of any firm; the way some top executives are remunerated in our country and other countries around the world is an issue of concern which makes maximum wage policies to be a necessity. The market failure that is caused by the excessive salaries that people are paid has negatively affected our economy. Maximum wage does not mean a drop in wellbeing or productivity; it can also be used to demonstrate what is excessive and what is not. A salary limit will aid in reducing the money that is wasted on some few individuals and thus the excesses can be put in other activities, for instance, they can be used to uplift the poor.
A maximum wage is also necessary because it will help to tackle over-consumption and debt because as human beings we always want to emulate the way others live not putting into consideration their capabilities. A minimum wage is justifiable for the reason that it acts as a safe guard to ensure that laborers are not over exploited and are able to achieve a basic subsistence from their labor at the very least. There is, quite obviously, no equivalent problem of living standards at the other end of the spectrum because of the amount of money that they are able to get. It is clear that the state has a role in advocating for the weak against the strong; however, it is not fair for the state to curtail the living standards of any group even if they are already very well off and even if it will produce some other perceived social benefit. Top executives that are paid more than they are worth should bring their salaries in line with new overseas competitors so as to benefit our economy.
Some advocates argue that maximum salaries should only apply to businesses that are supported by the government but not in that private business that run their own activities (Engler, 2013). All forms of compensation need to be included in the disclosure and the formula for determining the gap between low-income earners and high income earners need to be standard.
Our contemporary society is characterized by pay progression whereby some people who have the same skills and qualifications earn ten times more than their counterparts in the same field are. This pay progression between different groups of people arises from promotions, annual incremental rises, cost-of-living awards, and merit pay awards. Merit-pay schemes, though increasingly popular have been criticized in relation to their impact on payment equality on the grounds that their subjectivity gives expression to preexisting prejudices or that the way that merit is conceived serves to exclude disadvantaged groups from access to it legitimizing and reinforcing existing hierarchies. Top executives are getting paid millions that could be used to develop our economy and create employment for the youth while the junior employees are left with little pay that is never enough. The maximum wage should be high but not ridiculously high as it is evident from the pay slips of some of the top executives in some companies. There will always be competition in our society making it hard for individuals to accommodate the great pays that are too high while all your subordinates are taking half your pay when in real sense they are the ones doing the greatest work. It is however important to note that though there is little or no benefit for awarding the top executive more money since they have enough while the junior employees who are seen as the most in need are left with little or nothing at all. The effect of accumulation of disadvantaged identities on pay has been in many cases greater than would arise from simply adding the pay penalties arising from single identities and this effect has tended to be more marked among multiple-disadvantaged identity groups. In the recent past, attention has turned to the impact of systems of payment progression in different firms and their role in differential wage growth and thus the diminution of pay gaps. Increased attention paid by companies to equality good practice has improved opportunities for development, promotion and pay rises. The performance of workers in most firms is premised on the internal pay structure of such a firm. Workers are likely to put in more effort if the pay structure of the company reflects fairness and equity whereby people are remunerated based on their qualifications and capabilities. Firms whose pay structures have disparities and wide salary differences between the top executives and the subordinates have been found to perform poorly. This is because the subordinate workers like the cleaners are discouraged because they see their work as not appreciated in the company because of the amount of money that they are paid in comparison with the top executives. The subordinates feel that they don’t belong to such a company and their services are taken for granted even if their qualifications are poor, they feel that the differences should not be that wide. Firms which have harmonized salaries and wages for all the workers based on their qualifications and experience have been found to perform better and make large profits. This shows that a maximum wage will reduces the inequalities that exist in many companies as a result of the large wage differences between the subordinates and the top executives.
On the other hand, there should be no maximum wage because of the disadvantages that the move will come with, for instance, a maximum wage will have a negative impact on our economy for the reason that it will encourage laziness. While we may look at bankers, footballers and other people who pocket millions of dollars per month it would be unfair to make a law which limits the amount that hardworking people can get. The handwork of such individuals is the one which has driven them to such heights of earning such an amount of money.
Most of the top executives who earn two hundred times more than their subordinates are people who have climbed the corporate ladder for a long period of time with patience and resilience. Setting up a maximum wage will be draconian and a violation of rights of other people with who we share the same values. A maximum wage will not solve the problem of inequality but it will violate the rights of some few people in the society, these issues can only be resolved by insisting upon transparency of pay ratios. The role of determining the salary that a person can receive should be left to the shareholders of companies but not the lawmakers who have some vested interest. The shareholders of companies are the ones that are directly affected by the huge salaries that are given to the top executives and thus they should be given an opportunity to make decisions. Each company or organization should be lefts to make their own decision on the salaries that can be paid to the employees of the company.
In the contemporary society, there is little or no need at all to have a law providing for maximum wages, it is also unconstitutional to have a reduction or a certain on the amount of money an individual should receive as pay for services or duties rendered; this can have a certain negative impact on an individual’s wellbeing or rather the general outlook of a nation’s economic, personal, and the quality of life of the people. Such laws would discourage employees to work harder for the reason that there would be a ‘limit’ placed on how much they can earn in a given period of time. The government can use alternative initiative without violating the rights of industrious people by setting up a maximum wage. The rich deserve the money that they get because they use their skills and experience while the poor people don’t work hard enough and just wait for policies to be drafted in their favor. It is not fair to limit that amount; for the reason that the rich work harder than anyone to get where they are while the poor do not put in enough effort to take them to such heights.
There should be no maximum wage or salary because every individual should be paid depending on the work done and the amount of expertise that is used to perform that kind of work. Top executives are people with great skills, vast knowledge and immense experience, this is, people who have sacrificed the rest of their lives working hard and thus there is the need to reward them with huge salaries. Most of the people who earn more money are people who have the capacity and the qualifications that enable them to earn the money and they use it to drive the economy of our country. Any maximum wage would still be what normal mortals would see as a king’s ransom. All efforts should veer towards the art of the possible, which is to raise the minimum wage to a living wage, there are sound economic reasons for this, and low wages stifle the economy because the ragged masses have no spare cash to spend and its greed that causes low wages, not high wages at the top. Drafting laws that will peg a maximum wage at a certain amount is draconian and will violate the rights of other people whose only problem was to work hard. Maximum wage and salaries is something which is misguided and would result in lower standards of living, not only or even primarily for the wealthy, but also for the poor in our society.
The concept of maximum wage in the US as of now has many flaws and it will probably take many years before we will ever see a price ceiling in the United States of America. However, this is a concept that should be considered to help with the economic crisis because of the inequalities that are widespread in our country, which can be bridged if a maximum wage is set. The social classes that exist in the US are not good for the reason that the US is a country which advocates for equality and equity in the whole world. Such an initiative will lead to the formation of an egalitarian society which will have minimal or no social stratification as it is widespread today. Among the efforts that should be enacted include the change of direction towards the art of the possible, which is to raise the least amount of the wage to a living salary, there are reasonable economic reasons as low wages strangle the cost-cutting measure because the ragged masses have no spare cash to spend and its insatiability that causes low wages. Another important aspect is that the shareholders of companies should directly be affected by the great salaries accorded to top executives giving them the opportunity make decisions thus each company should be left to make their own decision on the salaries that can be paid to the employees of the company
Coy, P. (2008). Working For Maximum Wage. Business week, (4092), 19.
Engler, M. (2013). The case for a maximum wage. New Internationalist, (462), 33.
Lemieux, P. (2014). From Minimum Wages to Maximum Politics. Regulation, 37(2), 26-29.
Pizzigati, S. (2015). The Corporate Pay Gap: Do We Need a Maximum Wage? Members-only Library.