A maximum wage – Franklin D Roosevelt first called for it, Bernie Sanders called for it, and now 75 years after Roosevelt, Jeremy Corbyn, leader of the UK Labour Party, has called for it. It’s long overdue.
Corbyn says, “What we cannot accept is a society in which a few earn in two and a bit days what a nurse, a shop worker, a teacher do in a year. That cannot be right.”
Corbyn calls out in particular, organizations undertaking government-funded work that pay excessive salaries to their top management. He suggests that no funding be given to organizations that will not accept a capped top salary of 20 times the average wage of their workers.
This is fighting talk. It takes a brave person to stand between the mega-wealthy and their money. Already the right wing think tanks are near hysterical. As usual they question the messenger’s sanity (he’s ‘gone bananas’) rather than provide any credible reasons why multi-million-dollar salaries are needed – because there aren’t any.
Inequality has been identified as the cause of most of the ills of society. There is a consensus that inequality must be dealt to if we are to achieve a healthy, safe, prosperous, and sustainable lifestyle for ourselves and for future generations. But inequality needs to be attacked at both ends. Everyone needs a liveable income. Incomes for those at the bottom need to be raised up. However the very highest earners need their incomes capped as well to narrow the gap. Very high earners should be able to work out when they are taking too much out of their organizations for themselves. But clearly they can’t. The state has no choice but to set a greed line for them.
Corbyn’s suggestion of a one-to-twenty ratio for salaries based on the average worker’s wage would still result in an eye-watering salary for top earners. The average wage in New Zealand in 2016 was approximately $30 per hour ($62,000 a year). The CEO of a firm with an average hourly rate for workers of $30 an hour would be entitled to $600 an hour, or $1,248,000 a year. And if top management felt that was not enough to live on they could improve their own salary by increasing the average wage they pay their workers.
Establishing a pay rate ratio for government departments, State Owned Enterprises, Local Bodies, and companies wishing to tender for government or local body contracts would be easily achievable. It would likely be hugely popular with members of the public. There is every chance the public, if asked, would say something far less generous than what Corbyn proposes was perfectly adequate – like a 1 to 12 ratio based on the wage of the lowest paid worker in an organization. Especially if taxpayers’ money was involved.