April is upon us, bringing with it the promise of summer, the excitement of the new tax year and the joy of the new living wage. Never mind that the National Living Wage Foundation, which bases it's calculations on the cost of living, makes the hourly rate £1.05 higher. Never mind that you have to be over 25, for some reason, to get the full increase. This is a step in the right direction, albeit a small one. For our next step, lets introduce a maximum wage.
For a start there's the question of value for money. Are the top earners really worth that much more than the rest of us? In 2014 CEOs of FTSE100 companies were paid around 130 time more than their average staff. Since a figure of around £3m isn't a huge salary for a top CEO that means they are earning 200 times more than the living wage. Are they 200 times better at their job? Are they working 200 times harder? I honestly think many people (including me) just sort of assume that the highly paid are earning this money. I'm not sure they are.
Consider also the huge amount of money paid to a small number of people. In 2014 the CEO of the spectacularly ineffectual G4S was paid the comparatively modest sum of £2m. I'm going to suggest a maximum wage of £100,00 a year, because you don't need more than that. That means G4S would immediately save £1.9m, enough to give 415 staff the 2020 target wage of £9 per hour now. They'd still be paid five times less than their boss, so he wouldn't be slumming it.
This effective redistribution of wealth (and yes, I know that my assessment of where the money would go might be a trifle naïve) would have other knock on effects. Most notable might be the price of housing. What's the point of having high-end luxury flats nobody can afford? Housing charity Shelter has calculated that even David Cameron's flagship affordable housing will only be affordable to people earning more than £50,000 a year. Introducing a maximum wage would make the pinch on the cheapest home a lot tighter for even the highest paid, and prices would have to come down.
The big argument against capping wages or bonuses remains that if we do that the top talent will go elsewhere. I'm not convinced. In the first place, it isn't demonstrably true that the best paid are also the top talent. Highly paid CEOs have presided over disasters at companies as large and high profile as Tesco. A couple of years ago I was made redundant when the company I worked for collapsed, under the watchful eye of the guy who had previously brought a high profile high street retailer to it's knees. The high street store is still in business. I'm not saying the men (or theoretically women but, let's face it, statistically men) are entirely to blame for these failures, but you can't run a company that completely collapses and then claim you've done a job worth half a million quid annually.
The truth is that promotion at all levels doesn't always go the best people, but always the most willing. Plenty of head teachers have dropped back down the ranks because their preference, and their strength, was in the classroom not the office. Do we need hospital administrators? Yes, but more than doctors? If you are willing to work 60-80 hours a week, drive the length of the country in a day and cancel your family holiday at a moments notice then you may well go further than better, brighter people who have a different idea of a work/life balance. This worries me too, in fact. If you offer enough money you will always find someone willing to work themselves to death for it. Homes, families, relationships may all be sacrificed on the altar of a big bonus. This harms the individuals, of course, but as a society we are worse off with a culture where money is the ultimate prize, rather than simply a means to an end.
We're still a position where plenty of people don't have enough to meet their day-to-day needs. In this scenario, people being paid more than they would reasonably want is simply obscene.Suggest a correction