Not that it would ever happen, but, using the same legal logic that allows the federal government to set a minimum wage (I’m assuming the Commerce Clause but correct me if I’m wrong), would it be legally possible for Congress to pass a maximum wage law? For example, mandating that the president of a corporation could not receive compensation more than, say, 100 times that of his or her lowest paid worker?
Yes. It would be possible. Under the constitution, Congress is charged with the regulation of commerce between the states. This power could most likely be used in the manner you suggest, especially because it is already used to impose a minimum wage law.
Whether or not such a law could actually get passed and signed into law is a GD question, so I wll not address it here.
Ben & Jerry’s used to do this. The ratio of lowest paid worked to highest paid CEO used to be 1:7, but they got rid of that in 1995.
For whatever it’s worth.
Agree with db4530. IMHO, imposing a “maximum wage” in the same way that there is a minimum wage would be well within the commerce power of the U.S. legislature.
Note that there may be limits, for example it might be that the federal government cannot limit the salaries of state employees. Also, the federal government cannot reduce the salaries of certain judges.
I believe there was some discussion of this at the Constitutional Convention. I think James Madison, or George Mason?, proposed a limit on earnings or wealth or something…obviously didn’t pass…
Anybody else heard of that?
Part of the problem with that becomes defining their compensation, would that number include potential performance bonuses and stock options. Many companies have immense bonuses for upper management that exceed certain percentages of growth or profit. When you are talking about HUGE businesses like Walmart, a small adjustment can make a difference of millions of dollars one way or the other to the company as a whole. Paying a VP of operations a bonus of 1% of monies saved in operating expenses can easily add up to millions in his pocket while saving the company hundreds of millions. Actual plans are far more complex than that but, just tossing a simple example.
How does one forecast this bonus into the wages of employees, its an open ended bonus.
The scary part is when you get someone in this type of position that is not planning to stay. They slash budgets and expenditures to max out the bonus and run with it. Then they don’t have to deal with the backlash later.