Comment by Someone1234 | Hacker News Reader

Comment by Someone1234 | Hacker News Reader

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I think the minimum wage is a helpful tool or has been historically. But as others have said when you raise the minimum wage, prices increase, and by far the largest groups that consume the same goods/services are also relatively poor themselves (so essentially you increase pay but also costs to the poorest in society).

More as a thought experiment than anything: What would happen if, instead of increasing the minimum wage, we capped the MAXIMUM wage at companies to 500x the lowest? That would effectively cap the CEO's pay at 6.9 million dollars for ANY business which pays the national minimum wage. That might sound like a lot but a lot of CEOs at larger corporations are getting in the order of 20 million right now (and this would have almost zero impact on small-medium businesses, as their CEOs don't make enough yet).

I guess what I am asking is: Instead of increasing minimum wage, what would happen if we could align the interests of the poorest employee and richest employee in a business?

PS - I am well aware that CEOs often don't take direct pay and instead take other financial instruments, such as stock. Instead of getting sidetracked into all of the potential workarounds, can we discuss the moral/legal/practical of tying the lowest/highest employee pay together?

Your proposal implies that the CEO of a company like Google or Goldman (most employees are high skill) should be paid a lot more than the CEO of Walmart or Amazon (most employees being low skill).

I don't see any obvious reason why this should be the case or would be remotely beneficial - it's not as if Walmart or Amazon deserve a lower quality CEO than Goldman.

Further, this would create huge disincentives for companies to take on new lines of business which involve low skill labor and would create incentives for managers to eliminate low skill labor. I.e., Steve Jobs and other execs would have the personal incentive to NOT open up apple stores, even though opening up such stores would be beneficial for both shareholders and those who would otherwise be employed by such stores.

Serious question (not flippant): what good does that do? Wal-Mart's CEO makes $35m (I think). They employ 2.1m people. He makes $16.66 per person that he manages (indirectly, of course), per year. His salary is a drop in the bucket of what it costs to employ their workforce for a year. Comparing salaries doesn't showcase anything.

How many of these high-paying CEO jobs are there? Not many! The same is true of sports--there are only so many jobs to go around, and if you're one of the rare people who can do the job, you get paid a LOT of money. Comparing salaries of highest and lowest paid people doesn't really seem useful in any way.

Very few companies have such a large, relatively unproductive workforce as Walmart. You've chosen one of the biggest divisors there is for that calculation.

(I'm not thinking of a good way to phrase the relatively unproductive, but the point is that Walmart doesn't pay their workers a lot)

"when you raise the minimum wage, prices increase"

You state that as if it's a fact when it is not. Prices may increase for some goods/services. But many goods/services prices are not set by the costs involved but by what the market will bear. The other option is that profit margins will narrow. Or, as is more typical, a combination of both.

"by what the market will bear. The other option is that profit margins will narrow"

You say this back-to-back, but seem to completely ignore the fact that the market can bear a higher cost once the minimum wage is raised. Sure, $15/hr won't affect the price of Porsches or Lexuses, but the lower-priced goods that someone making minimum wage is buying will likely be affected.

Ben & Jerry's use to do this https://en.wikipedia.org/wiki/Ben_%26_Jerry%27s#Wages

Yep, and they stopped it because the CEO they hired to replace Ben (or Jerry I forget) was horrible and mismanaged the company

>I think the minimum wage is a helpful tool or has been historically. But as others have said when you raise the minimum wage, prices increase, and by far the largest groups that consume the same goods/services are also relatively poor themselves (so essentially you increase pay but also costs to the poorest in society).

Minimum wage hikes first eat into profits before increasing prices. It is primarily a transfer of wealth from the wealthiest to the poorest.

Minimum wage hikes do not always increase prices, either. Especially not meager increases.

I imagine that he would get compensated in other means. High marginal tax rates resulted in so called Cadillac health insurance plans to be added as a form of compensation as well as other (IMO) wasteful non-monetary benefits (housing, company car, etc).

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