@CNN: BREAKING: President Greene signs maximum wage bill into law to take effect next year in 2025

@allbetsareoff97: maximum wage passed!!!! does this mean I get to make $600 an hour in 2025????

@DaringDave: Did we learn nothing from the past? Enacting a maximum wage without redistributing current wealth just won’t work! Minimum wage workers need reparations!

@SadSackLeslie: we could have just let unions have prower again or become a socialist country, instead we have to try this wacky maximum wage shit

@Austin54378057: welp america is doomed guess im finally moving to canada

@GoforBroke00: all billionaires are bad and fainally they are banned! party in the USA

WHY SETTLE FOR THE MINIMUM?

Talks of maximum wage gain momentum as failures of capitalism mount.

August 28, 2023

By Shonda Meruki

Over the past century, we’ve had only two go-to ideas about how to solve the growing gap in wealth between haves and have-nots: tax the rich and raise the minimum wage. By now, you’re intimately familiar with arguments for and against these methods. 

Taxing the rich will help us rebuild communities and lower costs on shared utilities! Taxing the rich will result in the loss of tons of jobs! Raising the minimum wage will bring hundreds of thousands out of poverty when they make a liveable wage! Raising the minimum wage will destroy small businesses and result in massive inflation! Do you want your Big Macs to cost $24 instead of $3?

But in recent years, the far left has been trumpeting a new solution that’s gaining ground both on Capitol Hill and in public consciousness: Creating a maximum wage law.

“It’s true that whenever you raise the minimum wage, it causes at least a bit of inflation,” according to Dr. Tony Gomez, a leading economics expert. “And while overall it does bridge the gap between the rich and poor, creating a strong middle class, that bridge is shoddily built. It quickly deteriorates, and then we have to start back at square one. A new bridge is built for an even more astronomical sum, and still falls apart in the same amount of time.”

Experts believe that a maximum wage provides the right balance: It fosters healthy competition while making sure all the company’s workers are provided for. It also means the law doesn’t have to be rewritten and reconsidered with new numbers every year. This (in theory) should be a set-it-and-forget-it formula.

Maximum wage doesn’t work like minimum wage. Instead of setting a hard maximum ceiling – say, $500 million – maximum wage relies on a formula. The CEO can’t make more than 50 times what the lowest-paid employee at their company makes, including interns. (Goodbye, unpaid internships.) You can have varying levels of wages in between there, but the plight of the lowest-paid employee is directly tied to the fortunes of the highest-paid. In theory, this means everyone really is invested in the company’s success, so then, everyone can get a raise.

“Part of the problem with our current minimum wage system and the stock market and everything else is that somewhere along the line, everything became disconnected from how companies were actually doing,” said Sasha Humbert, an economics professor at Wharton. “A company would be failing, and a CEO would be getting a raise. Investors pumped money into stocks based on what would make them the most money instead of actually believing in products.”

The stock market isn’t something that neatly fits into a a world run on maximum wage, and many are most trepidatious about how paying people in equity will work in this future. As with everything else, it probably will work out that CEOs take less of their worth on in equity, while entry-level employees actually end up with more stocks than before.

“The kinks are still being worked out,” Gomez said. “No nation has tried something quite like this before, and America is one that’s been so deeply rooted in that individualistic brand of capitalism. We’re in for quite a change.”

So where did the idea for a maximum wage come from? And why has it taken so long for us to seriously consider it?

According to a New York Times article from 1996, Aristotle believed “no one should have more than five times the wealth of the poorest person.” (That might surprise some tech CEOs who generally revere philosophers.)

It might also surprise others to know that America has seriously flirted with a maximum wage during some of its toughest economic times, notably the Great Depression and World War II. President Franklin D. Roosevelt wanted to make the ceiling $25,000, but it was shot down.

Most people – whether an economic expert or a Burger King cashier – reject a hard salary cap. Recently polls have shown that people are generally in favor of tying the top wage maker’s earning’s to those of the lowest.

During the 1950s – that nostalgic time we all harken back to, even though so few of us were alive then – the average gap between a CEO’s salary and those of their workers was only 20 to 1. By 2020, CEOs made over 280 times the amount of the average worker.

“A rising tide should lift all boats. A maximum wage actually ensures that,” said Gomez.

Many are hopeful this also curbs discrimination and discrepancies in pay based on gender and race, though they acknowledge that those gaps could still persist.

“It’s possible that we find men make, on average, 75% of what all top earners make, while women make 50%,” said Hasanna Matthews, a Diversity, Equity and Inclusion officer for Readwall College. “But overall, everyone should make out better, so the differences should become less stark. We’re on the right path, for sure.”

Whether we’re “for sure” on the right path remains to be seen. Any maximum wage law that’s being worked on now will still face an uphill battle getting passed, and it’s competing with some other big challenges like climate change and health care. It also has to edge out the rising popularity of a universal basic income, where the government provides everyone with a certain base level of money each month.

“The tides turned against UBI once people realized it really relies on robots taking their jobs and, well, their overlords being benevolent. Nobody in America believes in benevolence, I don’t think,” said Humbert.

The only thing that’s certain is that we’re in rough waters right now. Some ships are bound to be lost in the coming years.

Shonda Meruki is an economics reporter for TNV.

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You close your laptop and sit in the dark of your apartment, wondering what, exactly, will happen to you under the maximum wage law. You've read a million articles over the years about it. But it’s impossible to know your fate, so you quickly give up, instead wondering what Elon Musk is going to do with the news. Maybe he’ll finally go to Mars and stay there with all his bitcoins.

Maybe all the billionaires will leave but all the dreamers from other countries will come. Why go to Mars when we really can achieve something great on Earth? All that talk about the potential of anyone and everyone. Finally, the potential would have room to become a possibility, maybe even a reality.

You have never seen a large-scale change happen in your lifetime. You’ve only seen rights that already existed for a large group of people be granted to smaller groups of people. You’ve only seen the erosion of once-great programs — Social Security, Medicare — and the crumbling bones of lofty infrastructure initiatives — roads deteriorating, bridges collapsing, trains falling by the wayside. Anything utopian reveals a dark underbelly. Who knew that access to all human knowledge at your fingertips could end up getting buried under a sea of untruths?

You’re excited to see something new, and you’re tired of media telling you all great changes lead to a dystopia. Tired of the status quo. Tired of nostalgia for mirages. You’re tired of manning this boat that’s headed toward a blazing sun no matter how much renewable energy you use instead of fossil fuels. You’ll let this maximum wage thing happen. You’ll sail slow and see where it leads.