Raise the minimum wage? No.
Instead, let’s establish a relative maximum wage.
A relative maximum wage sets a limit on how much compensation people can receive based on how much everyone in their business is paid. It gives executives incentive to raise wages.
Here’s one way this might work: Suppose the lowest paid employee where you work gets $10 an hour. At 40 hours a week, this person’s annual pay comes to $20,800.
The relative maximum wage for everyone in your company could be, say, 20 times what the person on the bottom makes: 20 times $20,800 equals $416,000. If the CEO or anyone else is compensated beyond $416,000, that extra amount beyond the set limit would be taxed at a rate of 100 percent.
Now, $416,000 is a lot of money. Let’s compare a local example of CEO compensation. According to an article in the Portland Press Herald last summer, the CEO of Acadia Hospital, Daniel Coffey, received a salary of $356,359 in 2011. But he received other kinds of compensation, too. His total compensation was $2,053,154.
If a relative maximum wage of 20 times the lowest-paid employee’s pay had been in effect, and if Coffey didn’t want any of his compensation taxed at 100 percent, the lowest-paid employee of Acadia Hospital would have been paid at least $49.35 an hour.
Lest you think that Coffey is the ultimate money-grubbing corporate executive, compare his paltry earnings with those of the true titans of American industry. Hubert Joly, the CEO of Best Buy, was paid $19,550,692 last year, according to the AFL-CIO. The 2013 compensation received by Walmart CEO Michael Duke was $20,693,545. The head of Walt Disney, Robert Iger, made $34,321,055 in 2013.
Won’t companies respond to a relative maximum wage by relying more on part-time workers? Not necessarily, because part-timers’ pay would figure in the calculations, as if they were paid their hourly rate for a full year’s full-time work.
Won’t more jobs go overseas? No, because all subcontracting everywhere in the world would be included. So if Iger arranged to have Disney World souvenirs made in a factory in Mexico where people are paid $5 an hour, his relative maximum wage will be $208,000 — not bad, but only 0.6 percent of what he was paid in 2013.
What we need is a social contract that recognizes the humanity of employers and employees — a system in which, to use Immanuel Kant’s concept of respect for persons, bosses and workers treat each other not as mere means but as ends. And we need a social contract that incorporates the widespread belief that people should work hard and do good work to earn a good living.
Here is a start: If you hire people for full-time work, you are engaging their complete attention and efforts for the major portion of their productive time to accomplish things you need to be done. You deserve their best efforts. They deserve compensation that can support their families well.
Thomas Hobbes, the 17th-century thinker, posited that, without an ethical and enforced social contract, people would tear each other apart in their battle for survival and security. He believed that the ideal outcome of a proper social contract would be the Golden Rule taught by Jesus: Do unto others as you would have them do unto you.
If you are an employee, do the work you would like to see if you were the boss. If you are an employer, pay your employees what you would want to receive if you were in their shoes.
Opponents will object: Paying all workers decent living wages will mean paying many of them more than the market says their labor is worth. This will cause inflation and wreck the economy.
This argument continues a viewpoint underlying the defense of slavery two centuries ago: Having underclasses of underpaid workers is necessary to sustain economic vitality.
It took courage to argue against slavery. No one knew what would happen to the plantations in the south or the textile mills in the north.
But the ideal that all of us have “certain unalienable rights” inspired people to take a major step toward making that ideal reality by abolishing the slave underclass. We will need the same courage today to oppose the naysayers and establish an equitable social contract for employers and employees.
Will a relative maximum wage establish an equitable social contract? No. But it’s a start.
David Paul Henry was pastor of Lamoine Baptist Church from 1984 to 2009. Since then he has taught ethics courses as an adjunct instructor at Husson University in Bangor.