Should there be a maximum wage?


Lauren Orsini-Creative Commons

More and more Americans are getting involved in national economic issues


It does not take an economist to know that we have a serious income inequality problem in America. The simple fact is you cannot survive on minimum wage in this country.

While there have been talks of raising the minimum wage under the Biden administration, there is little talk of another potential solution to this problem: installing a maximum wage for Americans. According to a 2019 report by the Economic Policy Institute, total CEO compensation growth from 1978 to 2018 was 1,007.5%. This is in comparison to average workers’ compensation growing by just 11.9%. If this does not make you outraged, nothing will.

The concept of a maximum wage is not foreign to the United States. In 1942, President Franklin Roosevelt proposed a 100% tax on individuals who earned an income above $25,000 which, adjusted for inflation, would be about $400,000 in 2021. During the 2020 election, eventual winner President Biden repeatedly stated that if elected, he would only raise taxes on the same class of Americans Roosevelt was talking about.

According to the population database Integrated Public Use Microdata Series (IPUMS), 2.23% of the workforce made more than $250,000 in income. Given that .6% of the American workforce made $500,000 or more, it is safe to assume that less than one percent make over $400,000 in income. That would mean that only a fraction of the American population would experience a decrease in pay as a result of a maximum wage.

At the same time, the large amount of money that would be going to CEOs can instead go toward people who actually need it, including those who live paycheck to paycheck and struggle to put food on the table for themselves and their families. Our income inequality has only gotten worse in recent years. Unless we do something about it, it will continue to grow and more people will be unable to support themselves financially. With the way things are trending, that person could be you.