Minimum Wage vs “Maximum Wage” in the USA May 26, 2006
During his presidency, Bill Clinton gave states the power to set their minimum wages above the federal level. Since then, 18 states have raised the minimum wage above the federal level of $5.15. On Tuesday, January 17th, 2006, Maryland became the 18th state in the nation to enact a law that will make Maryland’s minimum wage higher than the federal. Santa Fe’s $9.50-per-hour minimum wage is the highest in the nation, and there are plans to increase this wage to $10.50 in 2008.
$5.15 x 40 hours = $206/week x 4 = $824/month x 12 = $9,888 per year.
$5.15 x 60 hours = $309/week x 4 = $1,236/month x 12 = $14,832 per year.
$9.50 x 40 hours = $380/week x 4 = $1,520/month x 12 = $18,240 per year.
$9.50 x 60 hours = $570/week x 4 = $2,280/month x 12 = $27,360 per year.
For comparison, let’s compare that with a first year lawyer associates at a law firm or a physician who makes $150,000 (assume a typical 60 hour work week):
$52 x 60 hours = $3,125/week x 4 = $12,500/month x 12 = $150,000 per year.
And let’s compare that with a Fortune 100 CEO median compensation of $17.9 million (”maximum wage”):
$6,215 x 60 hours = $372,916/week x 4 = $1,491,666/month x 12 = $17,900,000 per year.
That’s over 1200 times more than someone making minimum wage working a 60 hour week and 120 times more than a lawyer or doctor making $150,000/year!
Ref:
- Wikipedia, US State minimum wages
- CEO pay soars in 2005 as a select group break the $100 million mark, USA Today
Comments»
I see this incorrect calculation all the time. There are not 12 4-week months in a year. There are 52 weeks in a year, which is actually 13 4-week periods.
Let’s say the minimum wage worker is not benefited and takes a total of 2 weeks (10 days) off a year. $5.15×40x50=$10,300.
The lawyer who is probably salaried makes $150,000/52 = $2885/wk and if he works 60 hrs a week thats $48 an hour.
Another take on this theme: Lee Raymond, the Exxon Mobil chief executive who retired this past December, earned $144,000 an hour over the course of his years as CEO, news reports last month estimated.
Interestingly, we once had a President of the United States who supported the notion of a “maximum wage” to prevent grotesque corporate awards like this. In 1942, Franklin D. Roosevelt proposed a 100 percent top tax rate on all individual income over $25,000, the equivalent of a bit over $300,000 today.
Kim,
Good point on the number of weeks per year. Either way, $48/hour is much more than someone making minimum wage.
Sam,
Thanks for your interesting take on this post. I can’t imagine making $144,000 an hour. How does one “earn” this much? Also I didn’t realize that “maximum wage” was even a consideration in the USA. I thought this only happened in old communist countries.