Minimum Wage versus CEO compensation

Marc Brazeau of Blogonaut asks the following question:

The minimum wage expressed in 2000 dollars had a value of $7.80 in 1968, $6.80 in 1979 and $4.75 today.

During the period 1990-1999, corporate profits rose 117.4 percent, the S&P 500 rose 297 percent, and CEO pay rose 535 percent. During the same period, average worker pay rose 32 percent;

According to Fortune magazine, median compensation for chief executives at 100 of the largest companies rose 14 percent — to $13.2 million — in 2002. The average chief executive is now paid 282 times what the average worker is paid, up from a 42 to 1 ratio in 1982. Still, that multiple is down from the peak of 531 to 1 in 2000.

“If the minimum wage, which stood at $3.80 an hour in 1990, had grown at the same rate as CEO pay, it would have been $21.41 an hour in 2001, rather than the current $5.15 an hour,” the (Merill Lynch) report said.

Two common arguments against raising the minimum wage are possible inflationary effects and job loss. Why aren’t these issues raised in relation to executive compensation? “


Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. Rob commented on Sep 25

    Megan Mcardle posted on this here. I think the idea is that a minimum wage sets labor artificially high, like a price floor, while high CEO pay is “naturally” high because it is the market rate. I personally don’t mind them raising the minimum wage slightly, and I actually think it would be good to raise it in more frequent smaller steps that the larger jumps they use ever so often. But, rather than think of it in economic terms, minimum wage to me is an issue of morality. It may be a slight drag on the economy, but all regulation is that way. We are a rich country and we are in the lucky position of being able to help out the less fortunate if we choose.

Read this next.

Posted Under