Should Your Boss Make More Than You? Wealth Disparity and the Minimum Wage

Bit of a shorter piece this week on the crisis of the middle class in Canada, and the debate over a minimum/maximum wage. It isn’t a whole lot, but it will hopefully get you thinking!

Someone asked me at work the other day, “how much money do you think you should be earning?” Strangely enough, I’ve never thought too much about that question. We often think about the minimum wage, which is now at $11/hr in Ontario, and it is a difficult and controversial issue: how much can we pay people? Are these jobs merely short term, student-summer jobs, or do they help support families? Should the minimum wage be enough for an individual to live on, or to support their children? Or would a high minimum wage discourage individual risk, and prevent individuals from seeking “more”? With the recent announcement that LA would drastically increase their minimum wage, the debate has once more come to the fore of public discourse, though it is by no means anywhere close to being settled.

There is another debate which, strangely enough, to not be taking place at all – should we have a maximum wage? What if we had a society where no one individual could make over, say, one million dollars a year? Would that really cripple growth and discourage innovation?

The wealth gap is a crucial problem we’re facing today: many experts point to a high wealth gap between the richest and poorest in society as being an indicator of economic collapse. In an economy geared around consumption, a relatively large, wealthy middle-class is absolutely vital. In short, middle class consumption keeps the economic engine running, generating profits for the upper classes and helping to create jobs for those at the bottom end. If the large middle class shrinks, and is replaced by a much larger working class and a smaller super-rich elite, we all suffer. Canada in particular has a tradition of a strong middle class, including not only professionals (doctors, lawyers, and managers) but also white and blue collar workers who earned a high enough income for middle class credentials: a house, a car or two, some luxury goods, semi-annual vacations, and college education for their children.

Rather than identifying the middle class as an individual or family which makes X amount of money, I prefer to identify members based on their consumption, life-style, and self-identification. Owning a home is far more important to being “middle-class” than making $32,000 or $95,000. Obviously, the easy access to credit we enjoy makes the accoutrement of the middle class far more accessible to those in the lower end of this scale. The real crisis of the middle-class in Canada then is one of consumer debt and stagnating wages, something that most experts agree on. We have a problem.

Some suggest then that the minimum wage should be raised, as this would allow more Canadians a chance to enter the middle class. Consider the impact on students alone – a higher minimum wage could help severely reduce the extremely high debt loads that students are forced to take on to attend college, and those students will thus be able to enter the middle class earlier, as their discretionary income can focus on consumption rather than debt repayment. There are problems with raising the minimum wage as well that cannot be ignored, most notably the impact on employers, who say they simply cannot afford it, especially in the foodservice industry but also in retail and manufacturing, all sectors which desperately struggle to keep costs low enough to stay in business. Concerns have also been raised about the impact of a higher minimum wage on inflation.

However the major problem is the disparity between the richest and the poorest, and raising the lot of the poorest and the middle class doesn’t do much to affect that gap if the richest keep on getting richer at a far greater pace (which they have been). Wealth needs to be distributed in such a way that there is a large consumption base in the middle-class. Perhaps the solution lays then in creating a maximum wage: not a cap on exactly how much money an individual can earn per hour, but on regulating the difference in wages between the highest and lowest earners within a company. What if the CEO could only make 20 times more in wages than the janitor? That may seem like a lot, but currently the difference is far starker than that, with CEO’s being paid nearly eight-hundred times what an individual on minimum wage is. That disparity is, or at least should be, criminal.

CEO’s should definitely earn more than janitors, and jobs which require more talent, skill, and work should be incentivized. That does not mean the gap in wages has to be so enormous, however. Compensation could change from primarily wages to primarily stock ownership in the company, which allows the potential for great individual profit while also keeping that individual firmly invested in the well-being of the company.

This all may seem radical, and frankly, it is. Implementing this would be nearly impossible as long as our current values prevail: what is really required is a total rethink of what we value as a society. A CEO is not 774 times more valuable to society than my local Tim Horton’s employee, and they will never be twice as valuable as a doctor. Our emphasis must shift from individual gain and corporate profit to sustainability, the common good, and helping one another; the health of our society, especially of a democratic society, depends on it. But are those values consistent with capitalism? That is the real debate we must begin to have.


About ryanmikeorr

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3 Responses to Should Your Boss Make More Than You? Wealth Disparity and the Minimum Wage

  1. ricodilello says:

    Taxation in Canada is by far the most damaging factor to the health of the middle class. Tax freedom day for Canadians was yesterday. The rich are getting richer because the max. capital gains taxes for the ultra rich is between 23% to 25% depending upon where you live in Canada.


    • ryanmikeorr says:

      Hard to disagree with that! Apparently the top income bracket is anything over $139,000 – how does someone with a reasonably high income like that pay the same % of tax as someone with an income over $380,000, or into the millions of dollars? It’s baffling to me, anyway. Corporate tax loopholes are another big concern that doesn’t seem to get much air time in the press.

      Liked by 1 person

  2. Pingback: Things to Read this Week, #4 | doonpress

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