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Setting a maximum wage for CEOs would be good for everyone

By Quartz

Under capitalism, the argument goes, it’s every man for himself. Through the relentless pursuit of self-interest, everyone benefits, as if an invisible hand were guidingRead full story

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  • Christina Passarella
    Christina Passarella Project Manager

    I'm definitely on board for a variation of this idea. We have to do something about income inequality and stagnant wages because ultimately it is the middle and lower classes that drive the economy - pouring most of what they earn back into purchases of products and services. However, I think a better approach would be to cap CEO and other executive salaries at a percentage tied either to the lowest wages paid by a company or to the company's median salary. This distributes the profits of a successful

    I'm definitely on board for a variation of this idea. We have to do something about income inequality and stagnant wages because ultimately it is the middle and lower classes that drive the economy - pouring most of what they earn back into purchases of products and services. However, I think a better approach would be to cap CEO and other executive salaries at a percentage tied either to the lowest wages paid by a company or to the company's median salary. This distributes the profits of a successful company to those who worked to make it, incentivizes all worker, and would allow all wages to grow.

  • Ian Myers
    Ian MyersFounder at Country House Enterprises

    Interesting argument for capping CEO pay at $10m. I didn't realize that in public companies, salaries are calculated by looking at a range of similar pay. Obviously, if it's a range, people can keep moving pay higher and higher--which is probably how we ended up in this predicament.

    The biggest payday for CEOs comes in the form of stock options. I think this is a better incentive system than cash. So if we cap salaries, we should still allow for expansive equity compensation, balanced to performance.

  • Maranatha Kure
    Maranatha KureFounder at Olive Arts

    People should effectively pay the agreed taxes and keep the rest of what they earn, absent any nefarious means of attaining it. The article's rationale in breaking this basic understanding is unconvincing, even if well intentioned.

  • Richard Stubbe
    Richard StubbeBloomberg LP

    The top federal tax rate was 91 percent in the 1950s, which essentially had the effect of a maximum wage.

  • Lindsey  Avena
    Lindsey Avena

    People would find even $10 million to be unreasonable and somehow low. The thing is that these same CEOs are comfortable paying their employees a strict minimum wage, or for employees who don't work minimum wage, there's typically an inevitable cap on how much they can make in that same position during their years in it - even if upward mobility is restricted. So, why shouldn't that be the same for CEOs? Why are people making much more money than they can spend, while so many others are making just

    People would find even $10 million to be unreasonable and somehow low. The thing is that these same CEOs are comfortable paying their employees a strict minimum wage, or for employees who don't work minimum wage, there's typically an inevitable cap on how much they can make in that same position during their years in it - even if upward mobility is restricted. So, why shouldn't that be the same for CEOs? Why are people making much more money than they can spend, while so many others are making just enough to pay their bills?

    I guess it's nice to have that security and know that you could retire after, say... a whole year in that position. But this just doesn't represent fairness to me in any way. Reminds me of Jeff Bezos and how much he makes versus how much his standard employees make. They ask you to look at it from a business standpoint, that these employees make what they do to keep business going. Does it make much sense that the CEOs make so much when looking at it from that perspective? If overpaying employees is tanking business, stop overpaying your CEOs and execs as well.

  • James Randorff
    James RandorffMusician, Instructor at US Navy

    "Compensation, like everything else, has what economists call ‘diminishing marginal utility’. More of it has less and less of an incentivizing effect, until eventually it has no incentivizing effect at all – people are already working as hard as they can. At which point capitalism suggests that we should not pay someone even more money, for we are going to get nothing in return."

    This is a VERY important point in this discussion.

    Another important point is that a company with 9,000 employees that

    "Compensation, like everything else, has what economists call ‘diminishing marginal utility’. More of it has less and less of an incentivizing effect, until eventually it has no incentivizing effect at all – people are already working as hard as they can. At which point capitalism suggests that we should not pay someone even more money, for we are going to get nothing in return."

    This is a VERY important point in this discussion.

    Another important point is that a company with 9,000 employees that pays its CEO $10M/year, instead of $100M/year, can raise every employee's salary by an average of $10K/year.

    Every. Single. One.

  • Adam Gross
    Adam GrossThunderbird Plastics

    This is NOT how to fix income inequality. Capping CEO pay -aside from requiring someone to set an arbitrary cap in the first place-doesn’t move money into the pockets of poor people. It moves the money into the pockets of shareholders. The way to fix income inequality is to tax very high incomes at a proportionately high rate and give that money to poor people.

  • Jay Npicks
    Jay Npicks

    Not in favor of a cap per se - but something needs to change when corporations are training their employees how to sign up for government assistance as part of their onboarding process. Why not tie top executive’s pay to the lowest wage paid by the company? For example, a rule such as a CEO cannot make more than 100x the salary of their lowest paid employee - including incentives such as stock options.

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