Minimum wage/revenue-based

From Issuepedia
Jump to navigation Jump to search


Revenue-based minimum wage is the idea that minimum wage, rather than being the same for all companies, should be set for each individual company based heavily (or entirely) on that company's gross revenues.

Businesses making less money overall should not have to pay their workers as highly as those making more money. This would give small businesses and entrepreneurs a competitive advantage over larger, better-established companies and help encourage innovation, while requiring those companies with a well-established revenue stream to share that wealth with those who make it possible.

During times of crisis, as a company's revenues decrease the minimum wage for that company would decrease also -- allowing companies of all sizes to control worker costs without as many layoffs.

The Current System

The current system does the opposite, making it much more difficult for new businesses to get a toehold without a lot of volunteer or off-the-record labor, while allowing companies with steady large revenues to keep that wealth for themselves or shell it out to executive in bonuses and severance packages. The current system also provides no built-in flexibility for dealing with downturns in a company's fortunes.

Side Effects

One side effect of a strictly linear system in which minimum wage is a fraction of corporate revenues is that it places a theoretical upper limit on the number of employees any one company may have. This may very well be a good thing (see too big to fail); if it is not, however, then it should be simple enough to include a factor in the equation to prevent this, or at least to raise the maximum number of employees to whatever level seems reasonable.


One modification to eliminate this bottleneck might be to base the company's minimum wage on profits rather than gross revenues; a downside to that is that it opens up more avenues for reducing the tax basis by hiding profits in "expenses", and generally makes things more complicated.