A Modest Proposal on Executive Salaries

Larry Ellison is CEO of Oracle Corporation. According to SKORCAREER ( http://skorcareer.com.my/blog/the-highest-paid-ceos-in-2008/2008/07/17/ ), Larry Ellison was paid a salary of 2,000,000.00 for his job as CEO of Oracle. This doesn't include any stock compensation he received. If you do the math, Larry Ellison earned an average of ,307.00 per hour. I'm a computer scientist. During 2007, I worked in a cubicle nine hours per day writing software. When I wasn't in my cubicle, I worked at home on other projects as a consultant. I worked very hard. I'm a very bright person. I have two degrees. Nevertheless, I earned less in a year than Larry Ellison was paid in an hour. I am willing to bet that I did a lot more work during 2007 than Mr. Ellison did. I did that work in cramped conditions. I had lousy health-care insurance. I drove a used car. Something doesn't seem right about Larry Ellison earning more in one year than I did in an hour.

As of late, the compensation of greedy bankers receiving corporate welfare from the tax payer has come to the fore. Some of these greedy bankers earn a mere ,000.00 per hour, nearly as much as a minimum wage worker earns in three years. President Obama recently put on a skit for the camera where he feigned outrage at these high salaries. He's even talking about legislation that will force corporations receiving massive handouts to reign in the salaries and bonuses of their overlords, legislation that will not stop these lizards from received less direct forms of compensation. The general attitude in the country seems to be that the government can't limit salaries in the private realm. Such action will be constrained only to those receiving corporate welfare.

I beg to differ. If the government can impose a minimum wage, why can it not impose a maximum wage (or salary)? How can it have the power to do one and not the other? Surely, the government can impose a limit on salaries for private enterprise workers. This brings me to a proposal.

Let us demand that the U.S. Government impose a cap on salaries and that this cap on salaries must be tied to the minimum wage such that the minimum wage and the maximum wage fluctuate together. I propose we set the maximum wage to 100 times the minimum wage. Now, 100 times the minimum wage may sound outrageously high, but that is half of the point. How can anyone argue that an executive is unfairly treated if she or he earns 100 times as much as the lowest paid worker? Moreover, if the CEO wishes to earn more than 5.00 per hour, she or he will need to lobby the congress to raise the minimum wage so that her or his own wage can increase.

Naturally, there will be side effects to such a law. Some of these side effects will be good in an obvious way and others in a not so obvious way. Sociopaths will have a diminished incentive to slither their way up the corporate ladder. The minimum wage will likely increase. A raise in the minimum wage will likely raise the wages of all other workers. These higher wages will be paid by the funds saved on salaries for corporate parasites on the upper rungs. Tax revenues will increase because most CEOs are able to use their outrageous salaries to fund shelters which diminish their tax liability. With more money in their pockets, workers will stimulate the economy by having the means to purchase the things they need.

Clearly, such a law will not solve all of our problems. I personally think a factor of 100 separating the lowest paid from the highest paid is far too much, however, given the current reality, it would go a long way to improving the disparity. There is no constitutional reason why such a law cannot be made. It would stimulate the economy far more than any of the currently considered simulation packages. The only reason it will not be proposed is because, in the United States, it is the rich who make the laws.