The rich - poor gap

Author
Discussion

AA999

Original Poster:

5,180 posts

217 months

Thursday 24th April 2014
quotequote all
avinalarf said:
It seems to me some are missing a most important point.
We live in a capitalist society that relies on the creation of wealth ,the paradox is that those that create the wealth also often create the opportunities for others to have jobs to pay their way in life,whilst providing a safety net for the physically and mentally challenged.
Although flawed it has worked fairly well but in times of crisis,such as in the past 10 years,this model has become strained to breaking point.
I have spoken about a "fair" society,one which values those that are the backbone of that society,the nurses,the teachers,the housewife,the ordinary working man and woman.
We need these people to maintain our society and they are entitled to feel valued and to receive adequate renumeration for their work that allows them a reasonable standard of living.
So either we pay them more and they can then contribute more,or we pay them peanuts and then have to subsidise them to maintain their living standards,it's one or t'other.
We also now live in a global economy and with the ease of migration of labour that also has exacerbated the problems.
It might not and possibly should not mean that the wealthier members of our society should be highly taxed but I just do not know where else the money is supposed to come from.
Would a fairer system to be to always have a 'bandwidth' of earnings within a company?
So that when a company grows and makes higher and higher profit levels, that the top 1% of the boss levels do not cream that up in bonuses and salary, but instead have a distinct percentage gap between the top paid and the bottom paid levels.
In effect say that the gap had to be 80%....meaning that somebody on £20,000 per year at 'bottom level' salary within that company would result in nobody being able to take any more than £100,000 at the 'top levels' (a sustained gap of 80% = £80,000 in this case). If the company does better in the future it is not just a result of the bosses, it is a result of all that work in the company, so that if the bosses wish to increase their take from the company then it would also mean raising the 'bottom level' to keep the 80% gap.
This method would constrain the top whilst also giving incentive for everyone in the company to work hard and bring home a 'balanced' salary.

Just an idea in principal of course!


Siscar

6,315 posts

129 months

Thursday 24th April 2014
quotequote all
AA999 said:
Would a fairer system to be to always have a 'bandwidth' of earnings within a company?
So that when a company grows and makes higher and higher profit levels, that the top 1% of the boss levels do not cream that up in bonuses and salary, but instead have a distinct percentage gap between the top paid and the bottom paid levels.
In effect say that the gap had to be 80%....meaning that somebody on £20,000 per year at 'bottom level' salary within that company would result in nobody being able to take any more than £100,000 at the 'top levels' (a sustained gap of 80% = £80,000 in this case). If the company does better in the future it is not just a result of the bosses, it is a result of all that work in the company, so that if the bosses wish to increase their take from the company then it would also mean raising the 'bottom level' to keep the 80% gap.
This method would constrain the top whilst also giving incentive for everyone in the company to work hard and bring home a 'balanced' salary.

Just an idea in principal of course!
So then you split the company into two, one employing your lower paid people £20k-£100k, the other employing your higher paid £101k to £1m.

It's also meaningless, what is wrong with the person running a company that employs 1,000 people earning £15k a year themselves earning £1m? If by their skills they have 1,000 people in employment that otherwise wouldn't be then what is the problem?

Foppo

2,344 posts

124 months

Thursday 24th April 2014
quotequote all
Siscar said:
AA999 said:
Would a fairer system to be to always have a 'bandwidth' of earnings within a company?
So that when a company grows and makes higher and higher profit levels, that the top 1% of the boss levels do not cream that up in bonuses and salary, but instead have a distinct percentage gap between the top paid and the bottom paid levels.
In effect say that the gap had to be 80%....meaning that somebody on £20,000 per year at 'bottom level' salary within that company would result in nobody being able to take any more than £100,000 at the 'top levels' (a sustained gap of 80% = £80,000 in this case). If the company does better in the future it is not just a result of the bosses, it is a result of all that work in the company, so that if the bosses wish to increase their take from the company then it would also mean raising the 'bottom level' to keep the 80% gap.
This method would constrain the top whilst also giving incentive for everyone in the company to work hard and bring home a 'balanced' salary.

Just an idea in principal of course!
So then you split the company into two, one employing your lower paid people £20k-£100k, the other employing your higher paid £101k to £1m.

It's also meaningless, what is wrong with the person running a company that employs 1,000 people earning £15k a year themselves earning £1m? If by their skills they have 1,000 people in employment that otherwise wouldn't be then what is the problem?
The problem is perception.By their skills becomes everybody's skill to keep a company running succesfull.Is does have meaning when the gap between the top salaries and the bottom salaries become to high.Just my take on it.

Siscar

6,315 posts

129 months

Thursday 24th April 2014
quotequote all
Foppo said:
Siscar said:
AA999 said:
Would a fairer system to be to always have a 'bandwidth' of earnings within a company?
So that when a company grows and makes higher and higher profit levels, that the top 1% of the boss levels do not cream that up in bonuses and salary, but instead have a distinct percentage gap between the top paid and the bottom paid levels.
In effect say that the gap had to be 80%....meaning that somebody on £20,000 per year at 'bottom level' salary within that company would result in nobody being able to take any more than £100,000 at the 'top levels' (a sustained gap of 80% = £80,000 in this case). If the company does better in the future it is not just a result of the bosses, it is a result of all that work in the company, so that if the bosses wish to increase their take from the company then it would also mean raising the 'bottom level' to keep the 80% gap.
This method would constrain the top whilst also giving incentive for everyone in the company to work hard and bring home a 'balanced' salary.

Just an idea in principal of course!
So then you split the company into two, one employing your lower paid people £20k-£100k, the other employing your higher paid £101k to £1m.

It's also meaningless, what is wrong with the person running a company that employs 1,000 people earning £15k a year themselves earning £1m? If by their skills they have 1,000 people in employment that otherwise wouldn't be then what is the problem?
The problem is perception.By their skills becomes everybody's skill to keep a company running succesfull.Is does have meaning when the gap between the top salaries and the bottom salaries become to high.Just my take on it.
I'm not 100% sure what you are saying but much depends on the business, in my case the business would not exist without me, I can say with full confidence that together with my business partner the fact that we employ the people we do is down to our efforts out of all proportion to anyone else's.

Of course we are also the least well paid in the business, there are few employees who would willing swap pay packets with me. But then obviously my income doesn't come primarily through PAYE.

turbobloke

103,854 posts

260 months

Thursday 24th April 2014
quotequote all
There's also the issue of where it is exactly that high becomes too high, as 'too high' is a subjective metric which will vary widely depending on who's asked to define it. Even if there is some sort of pseudo-logic brought to bear, based on percentages or something else, in the end a cap on income will be arbitrary (what percentage, decile or indeed whatever). Ultimately the marketplace decides and this remains true for owners as well as employees.

AA999

Original Poster:

5,180 posts

217 months

Thursday 24th April 2014
quotequote all
Siscar said:
So then you split the company into two, one employing your lower paid people £20k-£100k, the other employing your higher paid £101k to £1m.

It's also meaningless, what is wrong with the person running a company that employs 1,000 people earning £15k a year themselves earning £1m? If by their skills they have 1,000 people in employment that otherwise wouldn't be then what is the problem?
Not sure how it would be splitting in to two.
All employees to be within a certain bandwidth of salary scale with one another. The top levels not being able to split away from the rest through insane bonuses or crazy salaries. And if they wish to get those sorts of huge levels then they would have to be sure the company can support the fact that they would in turn have an obligation to increase the lowest paid levels to be within 80% of the top levels.

The 'split in two' comment more applies to your last sentence, with the top being on £1m and the rest being on £15k.


But again, its just a simple idea, that would most probably never take off.. call it stupid or whatever, but it was just to propose a 'fairer' system possibly.

I am not anti-rich by the way, it would be hypocritical of me to take that position. I do however have concerns over how large the gap is according to common reports that we see in the media.
My fear is that if the gap becomes too large then we may see a proper broken society in the UK. With huge resentment building in to action by the growing amount of those that feel they are being trampled on by the power of the rich.

avinalarf

6,438 posts

142 months

Thursday 24th April 2014
quotequote all
Siscar said:
AA999 said:
Would a fairer system to be to always have a 'bandwidth' of earnings within a company?
So that when a company grows and makes higher and higher profit levels, that the top 1% of the boss levels do not cream that up in bonuses and salary, but instead have a distinct percentage gap between the top paid and the bottom paid levels.
In effect say that the gap had to be 80%....meaning that somebody on £20,000 per year at 'bottom level' salary within that company would result in nobody being able to take any more than £100,000 at the 'top levels' (a sustained gap of 80% = £80,000 in this case). If the company does better in the future it is not just a result of the bosses, it is a result of all that work in the company, so that if the bosses wish to increase their take from the company then it would also mean raising the 'bottom level' to keep the 80% gap.
This method would constrain the top whilst also giving incentive for everyone in the company to work hard and bring home a 'balanced' salary.

Just an idea in principal of course!
So then you split the company into two, one employing your lower paid people £20k-£100k, the other employing your higher paid £101k to £1m.

It's also meaningless, what is wrong with the person running a company that employs 1,000 people earning £15k a year themselves earning £1m? If by their skills they have 1,000 people in employment that otherwise wouldn't be then what is the problem?
So you wish to keep the status quo,well that's ok,but we now have a problem.
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
I understand the thrust of your argument and have sympathy with it. but unless you want to continue with the present ridiculously complicated benefits system,explain to me how you would have it ?
I must strongly reiterate that I have do not have a problem with wealth, but I do not want some of my taxes to subsidise your staff wages. (Nothing personal intended).

Siscar

6,315 posts

129 months

Thursday 24th April 2014
quotequote all
AA999 said:
Not sure how it would be splitting in to two.
All employees to be within a certain bandwidth of salary scale with one another. The top levels not being able to split away from the rest through insane bonuses or crazy salaries. And if they wish to get those sorts of huge levels then they would have to be sure the company can support the fact that they would in turn have an obligation to increase the lowest paid levels to be within 80% of the top levels.
Well if there were 1,000 people on £15k they would be employed by company A. Company A would pay another company, Company B, to provide management assistance to running Company A. Person providing that service would be paid £1m to do it by Company B.
AA999 said:
But again, its just a simple idea, that would most probably never take off.. call it stupid or whatever, but it was just to propose a 'fairer' system possibly.
Too easy to avoid.

But also it's a way to drive the higher paid away from the country. If £100k is the maximum they can earn but they could earn the equivalent of £500k in Australia, for example, they'd move. You then just end up with the mediocre.

Siscar

6,315 posts

129 months

Thursday 24th April 2014
quotequote all
avinalarf said:
So you wish to keep the status quo,well that's ok,but we now have a problem.
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
I understand the thrust of your argument and have sympathy with it. but unless you want to continue with the present ridiculously complicated benefits system,explain to me how you would have it ?
I must strongly reiterate that I have do not have a problem with wealth, but I do not want some of my taxes to subsidise your staff wages. (Nothing personal intended).
I never said we should keep the status quo. But finding a solution is the problem, most things suggested make things worse and not better.

Ozzie Osmond

21,189 posts

246 months

Thursday 24th April 2014
quotequote all
It is impossible to rely on the "market" to the exclusion of all other factors. It's well known that leads to one person/company having everything and everybody else getting fleeced.

The real question is "How can society value a day's work by MrX at 10,000 times the value of a day's work by My Y?".

Dr Jekyll

23,820 posts

261 months

Thursday 24th April 2014
quotequote all
avinalarf said:
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
Social security and tax credits do not subsidise low pay. If there were no benefits at all people would be prepared to work for even lower wages because there would be no other option.

The fact that some people don't have the skills to earn a so called living wage may well mean they have to be subsidised in some way. But surely it's better for 'society' to do this through the tax system than for the entire burden to fall on employers of unskilled labour? If you have to pay unskilled or unexperienced people the same as skilled experienced people, why employ them at all?

avinalarf

6,438 posts

142 months

Thursday 24th April 2014
quotequote all
turbobloke said:
There's also the issue of where it is exactly that high becomes too high, as 'too high' is a subjective metric which will vary widely depending on who's asked to define it. Even if there is some sort of pseudo-logic brought to bear, based on percentages or something else, in the end a cap on income will be arbitrary (what percentage, decile or indeed whatever). Ultimately the marketplace decides and this remains true for owners as well as employees.
Your argument would hold water if we actually lived in a purely market led economy,but we do not.
The taxpayer subsidises the unemployed ,the low paid ,the feckless,etc.
I agree some notional cap on salary is not ideal and not one which I find particularly attractive,but if the many employees find themselves left with the "crumbs" please give me an answer,very eager to hear it.

avinalarf

6,438 posts

142 months

Thursday 24th April 2014
quotequote all
Siscar said:
avinalarf said:
So you wish to keep the status quo,well that's ok,but we now have a problem.
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
I understand the thrust of your argument and have sympathy with it. but unless you want to continue with the present ridiculously complicated benefits system,explain to me how you would have it ?
I must strongly reiterate that I have do not have a problem with wealth, but I do not want some of my taxes to subsidise your staff wages. (Nothing personal intended).
I never said we should keep the status quo. But finding a solution is the problem, most things suggested make things worse and not better.
How would paying employees a so called "living wage" in say London make things worse ?
You admit there is a problem so what is wrong with suggesting that salaries within a company are structured more equably.
Yes it might mean the top directors and shareholders get a bit less but they will still be getting very much more than their employees.

Siscar

6,315 posts

129 months

Thursday 24th April 2014
quotequote all
avinalarf said:
Siscar said:
avinalarf said:
So you wish to keep the status quo,well that's ok,but we now have a problem.
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
I understand the thrust of your argument and have sympathy with it. but unless you want to continue with the present ridiculously complicated benefits system,explain to me how you would have it ?
I must strongly reiterate that I have do not have a problem with wealth, but I do not want some of my taxes to subsidise your staff wages. (Nothing personal intended).
I never said we should keep the status quo. But finding a solution is the problem, most things suggested make things worse and not better.
How would paying employees a so called "living wage" in say London make things worse ?
You admit there is a problem so what is wrong with suggesting that salaries within a company are structured more equably.
Yes it might mean the top directors and shareholders get a bit less but they will still be getting very much more than their employees.
I'm not sure I did say there was a problem but, regardless of that, a cap doesn't work.

In my case you wouldn't a restricting my salary because it's less than most of my employees earn. You might try to restrict my dividends, but I'm not sure how, there are so many ways to structure that it would be very hard.

But then if you do that you may end up with me relocating elsewhere. What does the UK gain from that if I decided to base myself from, for example, our Sydney office and became a resident there?

But even if all of that did work why would the money saved be paid to everyone else? If the jobs can be filled adequately at the level offered why would a lot of employers pay more?

(Playing devil's advocate, to a large extent)

Dr Jekyll

23,820 posts

261 months

Thursday 24th April 2014
quotequote all
avinalarf said:
How would paying employees a so called "living wage" in say London make things worse ?
You admit there is a problem so what is wrong with suggesting that salaries within a company are structured more equably.
Yes it might mean the top directors and shareholders get a bit less but they will still be getting very much more than their employees.
Very very few shareholders will get anything like as much as even the lowest paid employee.

avinalarf

6,438 posts

142 months

Thursday 24th April 2014
quotequote all
Dr Jekyll said:
avinalarf said:
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
Social security and tax credits do not subsidise low pay. If there were no benefits at all people would be prepared to work for even lower wages because there would be no other option.

The fact that some people don't have the skills to earn a so called living wage may well mean they have to be subsidised in some way. But surely it's better for 'society' to do this through the tax system than for the entire burden to fall on employers of unskilled labour? If you have to pay unskilled or unexperienced people the same as skilled experienced people, why employ them at all?
Indeed many countries do not have social security systems e.g. India ,you are not suggesting that's the way to go ?
Our social security system has become over complicated and to expensive to maintain so I am suggesting that we find an alternative way and that way might be to share out company salaries more equably.
Once again, not thinking about a socialist Nirvana,just a little redistribution of wealth.
The talented,the entrepreneurs , the wealth creators , will still get a large slice just not quite as much.

Dr Jekyll

23,820 posts

261 months

Thursday 24th April 2014
quotequote all
avinalarf said:
Indeed many countries do not have social security systems e.g. India ,you are not suggesting that's the way to go ?
No, but you seem to be. Why employ inexperienced people with little skill if you become responsible for their living costs and have to pay them the same as experienced ones?

There was an Italian motor tycoon who spent his infirm old age attended by 'beautiful nurses, because ugly ones cost the same'. How can a school leaver or career changer (or ugly nurse) get started if they have to be paid over the odds from day one?

GT03ROB

13,258 posts

221 months

Thursday 24th April 2014
quotequote all
TopOnePercent said:
Life isn't fair. There, I said it.

If we divided the nations wealth equally among us tomorrow, by 2015 we would again have "the rich" and we'd still have the poor. It may not be the same people that are rich, but it would be mostly the same people that are poor.

Get over the envy of others lives and make the best of your own.
Very true.

Where I'm employed, I earn around 250x what the tea boy earns, this is a rich poor gap. He smiles he's cheerful, he's polite. He's happy he has the opportunity to earn what he does. He does it becasue he's still better off than if he'd stayed at home. He gets paid what he does because there's billions on the planet that can do what he does, I get paid what I do because there maybe tens on the planet that can do what I do & are prepared to. It's an extreme case of supply & demand. But rich/poor is nothing more than supply & demand. Simple basic economics.

avinalarf

6,438 posts

142 months

Thursday 24th April 2014
quotequote all
Siscar said:
avinalarf said:
Siscar said:
avinalarf said:
So you wish to keep the status quo,well that's ok,but we now have a problem.
Because of the rising cost of living we are having to subsidise lower rates of pay with tax credits etc.
So why should some of my taxes be used to subsidise the low wages of some PLC allowing them to give their CEO and directors a huge wedge and shareholders a big dividend.
I understand the thrust of your argument and have sympathy with it. but unless you want to continue with the present ridiculously complicated benefits system,explain to me how you would have it ?
I must strongly reiterate that I have do not have a problem with wealth, but I do not want some of my taxes to subsidise your staff wages. (Nothing personal intended).
I never said we should keep the status quo. But finding a solution is the problem, most things suggested make things worse and not better.
How would paying employees a so called "living wage" in say London make things worse ?
You admit there is a problem so what is wrong with suggesting that salaries within a company are structured more equably.
Yes it might mean the top directors and shareholders get a bit less but they will still be getting very much more than their employees.
I'm not sure I did say there was a problem but, regardless of that, a cap doesn't work.

In my case you wouldn't a restricting my salary because it's less than most of my employees earn. You might try to restrict my dividends, but I'm not sure how, there are so many ways to structure that it would be very hard.

But then if you do that you may end up with me relocating elsewhere. What does the UK gain from that if I decided to base myself from, for example, our Sydney office and became a resident there?

But even if all of that did work why would the money saved be paid to everyone else? If the jobs can be filled adequately at the level offered why would a lot of employers pay more?

(Playing devil's advocate, to a large extent)
You said "finding a solution is the problem".
I am offering one,not ideal I know and especially in our Golbal Marketplace.
Look Siscar ,I don't have all the answers but with respect you and others are not suggesting any.

Dr Jekyll

23,820 posts

261 months

Thursday 24th April 2014
quotequote all
avinalarf said:
You said "finding a solution is the problem".
I am offering one,not ideal I know and especially in our Golbal Marketplace.
Look Siscar ,I don't have all the answers but with respect you and others are not suggesting any.
I'm still not clear what problem you're supposed to be trying to solve.