Across the pond, in the UK, the idea of capping income is suddenly starting to make a respectable splash.
The Great Depression gave us the minimum wage. Might we now see a “maximum wage,” thanks to the Great Recession? That prospect now seems to have entered into the realm of political possibility. Last week, in a top British daily, 100 progressive luminaries published an open letter that has shoved the notion of a maximum wage onto the global public policy radar screen.
These 100 leaders — a group that included nationally known members of Parliament, Britain’s top labor union official, scholars, journalists, and widely respected human rights activists — called on the UK government to “take the moral lead” and establish a “High Pay Commission” to end the “unjust rewards” still relentlessly cascading into the pockets of Britain’s financial and corporate elite.
“Banking and executive remuneration packages have reached excessive levels,” read the open letter. “We believe now is the time for government to take decisive action.”
What sort of action? The High Pay Commission, the letter urged, “should consider proposals to restrict excessive remuneration” via “maximum wage ratios and bonus taxation.”
In Britain, as in the United States, billions in taxpayer dollars have gone to bail out banks whose top executives recklessly drove their enterprises straight into the ditch as they chased after personal pay windfalls. Those same banks, buoyed up by bailout subsidies, are now restuffing power-suit pockets.
Virtually every leading politician in the UK is “talking tough” against this new bonus binge. But in Britain, again as in the United States, the tough talk has generated little action.
Earlier this month, for instance, Britain’s top bank regulator backed down on bonus restrictions announced this past February. The original rules would have mandated banks to defer two-thirds of all bonus outlays for three years. The new rules redefine that mandate into a “guidance” banks can park in some obscure file cabinet and ignore.
This continuing failure to challenge rewards at the top can only spell trouble, notes the organizer of last week’s call for a High Pay Commission.
“I think all of us understand that greed and excess fueled the economic crisis and brought down the whole economy,” explained Gavin Hayes, the general secretary of the London-based Compass think tank, on a BBC national broadcast. “Now is the right moment to rein in high pay. Otherwise months, years down the line, we could end up having another crash.”
British banking and corporate leaders are, predictably enough, already scoffing at the Compass-organized pay limit call.
“As for implementing an arbitrary maximum wage ratio across the board,” one writer for Britain’s Management Today observed, “we have no idea how that would work.”
The Compass statement actually suggests several possibilities. One example: The government could insist that companies, to qualify for a government procurement contract, must limit executive pay to a specific multiple of what their lowest-paid workers are making.
But the 100 signatories behind the Compass statement purposefully did not propose a specific maximum wage ratio.
“It would be wrong to pre-empt the findings of any commission,” Compass general secretary Gavin Hayes noted last week. “We believe a High Pay Commission could play a crucial role in coming up with the evidence-based solutions we need to curb excessive pay and ensure an economy run for the many, not just the few.”
A High Pay Commission, the Compass campaigners believe, would have the potential to make as valuable an impact on British life as as a widely praised “Low Pay Commission” made back in 1997. That independent official panel came up with the specifics for the UK’s first national minimum wage.
The drive to establish a “High Pay Commission” will now move to the September national conference of the UK’s governing Labor Party. The goal: getting a party endorsement of the commission notion.
In the weeks ahead, Compass will also be conducting extensive polling on the level of “public support for ideas like maximum wage ratios.”
Top government officials on Downing Street, meanwhile, have so far “reacted coolly,” to the call for a High Pay Commission. But government ministers, the daily Independent reports, also believe the commission “would be popular with most voters.”
Popular for a reason, notes sociologist and Compass statement signer Ruth Lister.
“The growing gap between high earners and the rest of society is politically, socially, and economically damaging,” sums up Lister, the former director of Britain’s Child Poverty Action Group. “Inequality must be addressed at the top as well as the bottom.”
Sam Pizzigati edits Too Much, the online weekly on excess and inequality.