Tuesday, August 31, 2010

Unintended Consequence: I Have to Think that This Is Going to Result in Less Hiring of Low Paid Workers

FT reports:
US companies face a “logistical nightmare” from a new rule forcing them to disclose the ratio between their chief executive’s pay package and that of the typical employee, lawyers have warned.

The mandatory disclosure will provide ammunition for activists seeking to target perceived examples of excessive pay and perks. The law taps into public anger at the increasing disparity between the faltering incomes of middle America and the largely recession-proof multimillion-dollar remuneration of the typical corporate chief.

Business sees the disclosure provision – buried in section 953(b) of the Dodd-Frank financial reform act – as a bureaucratic headache that may encourage false comparisons.
If I'm the CEO of a publicly traded company, I'm going to do everything I can to move away from businesses that require a lot of low paid workers, to keep my pay ratio comparison low.

This will hurt minimum wage workers and support the hiring of high paid fat cat cronies.

A perfect example of the problems with attempting to micro-manage the economy.

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