OP-ED: “Maximum Wage Gap”
By Brian Gardner, Chair, WashCo Dems Communications Team
Income and quality of life disparity is one of the biggest problems that still remain in society. As we enter a second “Gilded Age,” the plight of the 99% grows ever more troubling. Especially as protections for environmental, air, and food quality are getting rolled back.
In what economists dub a near-futile attempt to try to create a living wage, a lot of effort has been spent fighting for a $15 minimum wage. That helps in the short-term, but, because of inflation and the real value of money, increases in the minimum wage have a nominal impact on actual prosperity of the lowest wage earners in the long term. It’s a never-ending fight for the next step forward.
The problem with a minimum wage is that it only focuses on one side of the equation. The problem isn’t that 50% of Americans make less than $20k per year. The problem is that the lowest income bracket is making less than $20k per year and the top 10% is making $300k/year.
It doesn’t help that the 40% in the middle is making less than $70k per year, or that the top 1% is making roughly $1,300k/year on average.
That means on average:
- The ratio between the top 10% and top 1% is about 1:4
- The ratio between the top 50-90% and the top 10% is about 1:5, and
- The ratio between the bottom 50% and the top 50-90% is about 1:3
This means that the top 1% of people are making 65 times the amount of the bottom 50%! So, instead of trying to raise the “1,” let’s try to shrink the “65.” The best way to do that is a Minimum Wage Gap. What this means is instead of fighting for a $15 minimum wage, we fight for a 1:20 Maximum Wage Gap.
This would mean top executives couldn’t make more than 20 times what their lowest paid employee makes. Then, instead of driving up inflation, it would drive down prices, because everyone could afford things that are now only available to some.
Given this proposal, the top 1% would make closer to $800k/year, and the lowest 50% would raise up to approximately $40k/year. The 50-90% of earners would average about $80k, and the top 10% of earners would make about $160k. Imagine the increase in consumer spending (our economies largest driver) if the bottom half of American earners started making twice as much!
All of this happens by connecting the income at the bottom of a corporate hierarchy to the income at the top (and vice-versa). The lowest employee would have to make at least 1/20th of what the highest paid employee makes. BAM! A majority of Americans would be pulled out of poverty, and the economy would get a HUGE injection of consumer spending.
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