Monday, 31 August 2009

Maximum wage is now essential

The minimum wage was 10 years old earlier this year and fantastic though the concept is, the minimum wage is still too low (it is tough trying to live on £5.73 an hour, especially if you have others to support) and we now need to tackle the fat cats with a maximum wage.

While trying to live on £230 per week before tax, assuming that you can get a 40 hour per week job, is difficult, earning more than, say £2300 per week, is simply unnecessary. If £5.73 translates to between £10k and £12k depending on hours and conditions, if the national average wage was £479 in 2008, the gender gap in pay widened in 2008 to 12.8%, and there are £2.4 million people unemployed, is there any rationale for people to continue to earn more than, say, £2300 each week (£120k p.a.)?

The country needs to tackle the super rich. Not only is their income unnecessary but it drives excessive consumption. Fears about a brain drain are simply unfounded, just as fears about the minimum wage were 30 years ago. The smaller the gap between rick and poor, i.e. the more equal a society is, the better the outcomes for health and happiness. The 'brain drain' is likely to be balanced by having a good place to live and if someone wants to earn more than £1m every 8 years rather than live in the UK, then they can leave!

I think that the minimum wage should be increased to £7 per hour and that initially the maximum wage should be set at 10 times the minimum. This would give wage ranges from £15k to £150k. Life would still be hard at the lowest wage and still be excessive at the top but at least the gap would start to close.

5 comments:

thehoatzin said...

I'm fully support your wish to see a more equitable society and less disparity between rich and poor but statements like the one you made, coming from a prospective parliamentary candidate, are amazing.

Just think for a minute of the ramifications.

MarkW said...

I agree with Hoatzin its an amazing idea - keep up the good work!

Have been thining about the ramifications for more than a minute - excellent.

weggis said...

It'll never fly!
Why?
Unearned income!

Cathryn said...

Stuart,

I'd love to see the gap between rich and poor narrowed, but how would you deal with:

Non-wage income - the selfemployed, investors etc.
Excess company profits gained by paying top workers less
People who work less than 40 hours, but charge more than the maximum rate (eg a lot of sole trader professionals)

Stuart Jeffery said...

Hi Cathryn / Weggis,

I suspect the best way of administering this would be through a 100% tax band. This would ensure that the un-earned income was accounted for. Of course there will always be a few people who don't declare stuff...

In terms of company profits going up, profits would either go to share holders or be invested elsewhere. Shareholders are subject to income tax and would lose income over the maximum (and I need to think about the corporate / pension investors a bit more).

There may be be a better way of administering this but I think establishing the principle first is essential!

Stuart