Sunday, June 7, 2009

maximum wage

Working Group on Extreme Inequality » Cap and Save
Meanwhile, in Britain, nine members of Parliament have just introduced legislation to place “a cap on the maximum wage that can be paid to any person in any one year.”

Millions of low-income workers, the measure’s lead sponsor, MP Paddy Tipping, told the House of Commons Wednesday, have benefited from the British minimum wage.
“We need to complete the policy circle,” Tipping urged, “and seriously consider the introduction of a maximum wage.”

A maximum wage set at ten times the minimum, the former social worker observed, “would give a maximum wage of £120,000,” the equivalent of close to $200,000.


  1. As if that would have much effect. People with the highest incomes are owners, and other high-paid people would change the arrangements (e.g. set up their own company, which would provide their services to their previous employer for a fee, and which would pay them a limited salary and give them the rest as dividends for owning the company).

  2. Depends on how you define "income." New wealth of any sort is income, imho.

  3. Notice that the legislation specified a cap on wage, not income. If anything, that would help the very wealthy at the expense of the doing-very-well (e.g. the guy who earns $250K would get cut back to $200K, and the owner of his company who takes home $1 million would keep another $50K).

    As a cap on income, it would start by being gamed (e.g. hiring spouse and children at maximum pay), and then putting money aside by setting up foreign corporations to buy services from, etc. As the loopholes were closed, it would cause production to drop, as people stopped working when they hit the maximum. I'd really hate to need surgery in December under that regime.

  4. Seth, I'm not arguing that we should do what they're proposing. I'm just pointing out that some countries are talking about things the US won't.

  5. The country isn't talking about it, one MP introduced it possibly in an attempt to divert attention from expenses.