My idea (at least I think it is) would be to have businesses pay minimum wage on a sliding scale like how individuals pay taxes.
Just quick numbers in my head that have no real world calculations:
Businesses with revenue $0 - $1M need to pay $8.50 min
1M - $10M $9.50
10M - 50M $10
Etc etc
I’m not an economist by any means.
But how do you think my idea would work?
I don’t think it would really help anything; assuming your ultimate goal is a quality of life improvement for people at the lower end of the employment compensation scale.
In the first place, there are very few people on minimum wage. In the second place it does not really take into consideration the vast cost of living differences that exist between various regions.
There aren’t many people on minimum wage but there are lots of people within $3 of minimum wage who would see their wages go up due to a minimum wage hike.
Is this purely speculation on your part, or have there been any studies that measure this effect?
What’s the point? Other than making small business more competitive - which may or may not be a desirable goal in itself - is there any reason to base your wage scale on revenues?
By revenue, do you mean income/total sales/etc. or profit?
I would second this, but would have phrased it there are many people’s wages are based on the minimum wage, so it does affect a much larger percent of the workforce then just those who do earn the minimum.
I don’t like the idea of correlating profits to wages. As a business owner I have done this on my own free will.
There are small businesses who aren’t required to pay minimum wage at all. Not to mention restaurant workers who work for tips, and a whole mess of exemptions for youth, handicapped, agricultural, and seaonal employees. I don’t know that it’s giving those industries a competitive advantage.
… and revenue doesn’t equal profit and, when it comes to a good chunk of companies, as is so with individuals, the effective tax rate paid bears no relation to the complained-of statutory tax rate. There are plenty of companies, as we know, that don’t pay any taxes on their profits, in fact are in negative percentage tax rate territory, and get eight- and nine-figure refunds from us every year (if you’re Bank of America, perhaps a ten-figure refund). Not only too big to fail, but too big to tax.
Restaurant workers have to be paid MW from salary + tips. If they don’t make up the difference in tips, they employer has to pay enough to do so.
As for the OP, I don’t think employees want to risk getting a pay cut every time their employer has a bad year. Plus, it makes no sense to base someone’s pay on the company’s revenue. Company A may have twice the revenue as Company B, but half the profits.
Good cite. I find it amusing that minimum wage increase opponents say raising the minimum wage will increase unemployment and drive companies into insolvency, while on the other hand saying it is useless because hardly anyone would be affected.
BTW I don’t like the suggestion in the OP, since it might cause growing companies to split into separate entities below the limit. Let’s at least get back to the levels we had in the 1960s.
I’m as lefty as they come, but I don’t think this is a good idea. With any new proposal, ask yourself, could this system be gamed?
I think it could: businesses who wanted to avoid paying the higher minimum wage would divide themselves into smaller corporations, franchises or some such.
In the book The End of Economic Man, the author has an interesting idea for wages and salaries. Start at whatever entry level wage you want. Say, $10/hour. Now it’s promotion time. In most jobs, like the Olympics, if someone is 10% better than the next person, that’s huge and obvious. It’s like winning the 100 meter dash by a second. Most jobs are similar: the difference between the winner and the runner-up is often tiny. But call it 10%. So they should be paid 10% more. Say there are 10 steps from entry level to CEO… Pay them 10% more at each step. Do the math to calculate the CEO’s salary…
In the book The End of Economic Man, the author has an interesting idea for wages and salaries. Start at whatever entry level wage you want. Say, $10/hour. Now it’s promotion time. In most jobs, like the Olympics, if someone is 10% better than the next person, that’s huge and obvious. It’s like winning the 100 meter dash by a second. Most jobs are similar: the difference between the winner and the runner-up is often tiny. But call it 10%. So they should be paid 10% more. Say there are 10 steps from entry level to CEO… Pay them 10% more at each step. Do the math to calculate the CEO’s salary…
If you’re only willing to pay the CEO of a company that with ten layers of management (I have heard that the entire US army has less) 2.6 times (which is 1.1**10) the salary of your entry level worker, you’re not going to hire anyone capable of running a small company, least of all one that size.
Most jobs are not similar. It requires an entirely different skill set to manage ten truck drivers so as to keep them productively employed than it requires to be able to drive a truck.
I like it - the map is a nice touch also. I’m surprised these findings aren’t heard more often in the debates about minimum wage. Well FTR, maybe they are but I’m just not reading the right articles.
nm
On the other hand, many CEOs of major corporations take home a nominal salary of $1 per year… because their real compensation is in stocks, not salary. You have to look at the whole package for a fair comparison, and that often includes things very difficult to attach a dollar value to.