Minimum Wage and Executive Salaries

The issue of a minimum wage increase has come up again in the Presidents state of the union speech.  Unfortunately, the Democrats only give it lip service and the Republicans oppose it so there is little chance of change.  It is interesting that the main argument against increasing it is that companies will be discouraged from hiring low skilled workers.

What is the minimum wage job doing for these workers?  Minimum wage provides an income that is below the federal poverty level if there is more than one person in the household.  This wage condemns them, and their children, to staying in the unskilled laborer class.  They cannot afford a better education for themselves or their children.  They can’t buy nicer clothes to wear to a job interview.  They can’t afford reasonable transportation to get to work.  They are slaves without chains.

This is at a time when executive salaries are growing at an astronomical rate.  “The highest paid CEO in 2011?  David Simon of Simon Property Group, who owns most of the nation’s top malls,  including Mall Of America in Minnesota was paid $137 million. ”  ( http://www.businessinsider.com/the-50-highest-paid-ceos-in-america-2012-5#ixzz2KnZh7Vwi )

I propose that an executive needs to earn their compensation.  If the executive cannot manage the organization in a manner that will provide the stockholders with a reasonable return and pay the lowest paid employee no less than 1/30 of the highest paid, then the executive has not earned the big salary.  If an executive wants to make one million per year then the company should be able to make a reasonable return for the stockholders and pay the lowest paid employee no less than $33,333 per year.  That’s a little more than double the current minimum wage.

I wonder if the lowest paid employee of Simon Property Group was paid over $4 million in 2011?  Was the lowest paid person at Ford paid $1 million in 2011 (Alan Mullaley, $29.5 million)?

Unfortunately, the solution here means that excessively greedy people need to stop being greedy and we all know that won’t be happening.  The government can’t make that happen no matter how they write the laws but perhaps they could focus on something that could help a little.  At least force companies to pay people a living wage.

A living wage in Dakota county, Minnesota is defined as $9.69 per hour for a single person.  For a family of two adults and one child it jumps to $18.66 per hour assuming that there is no external child care.  That means that family would need to somehow work nearly three concurrent minimum wage jobs to have a livable income and still have someone to watch the child at no cost.

About justjoe

Reader, writer and retired entrepreneur. Enjoying life!
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