Cap executive pay raises at the raise given to the lowest-paid worker at big companies
In short
- A company's president and top executives can get a pay raise no bigger than the raise of its lowest-paid worker.
- Cleaners, guards and others who come from outside firms and work there every day count as lowest-paid workers too.
- Executive pay above the cap goes to raise the wages of the lowest-paid workers.
- Pay given in company stock counts toward the cap at its value on the day it is handed over.
- The rule covers companies above a certain size, and small companies are left out.
If this comes true
In a break room under an airport, a man who cleans for a contracting company reads a notice saying this year's raise in his hourly pay is the same as the president's, and he trades looks with his coworkers.
Perhaps
An older woman who has washed dishes in the company cafeteria for many years might not get her next contract, because the company has installed a dishwashing machine.
Water so far 💧 0
The proposal in detail
The rule covers companies whose number of workers or sales is above a certain size. Every year, the wages of all the people working for the company are lined up from lowest to highest, and the rate at which hourly pay rose for the lowest tenth is calculated. Here, working people include regular employees and people on fixed-term contracts, and also agency workers and contracted workers who have kept working at the company's sites for six months or more, and the firms that supply them must report their wages. Pay for the president and other executives is counted as the total of base salary, bonuses, and stock or the right to buy stock, with stock valued at the time it is handed over. The rise in that total from the year before must not be larger than the rise in hourly pay of the lowest tenth. Any amount over that is not paid to the person, and is handed out as an addition to the pay of people on the lowest wages. When a new executive takes office, the same cap applies, starting from the predecessor's pay. If the company holds low wages flat in a year when it loses money, executive pay cannot go up either. To stop a company from suddenly cutting the number of low-wage workers to make the figures look better, in a year when headcount falls sharply from the year before, the wages of the people who were there before the cut are included in the calculation. No limit is placed on cutting pay.
BenefitsThose at the top start taking raises for frontline workers seriously
If executives want to raise their own pay, they first have to raise the hourly pay of the lowest-paid person in the company. This turns management's attention to jobs such as cleaning, security, warehouse work and cooking, which tend to be pushed to the back in wage talks. Because contracted and agency workers are counted, splitting low-wage jobs off and wiping them from the books is no way to escape the cap. The way of sharing in which only executives take big pay in a good year and the front line gets a small one-time payment also becomes impossible under the system. It is a big change to cut the habit of pay-setting bodies looking at each other's levels and pulling them up, so that pay comes to be decided in relation to the people who work inside the company. Seen from outside, too, people can tell that in a year when executives raised their pay, frontline workers got a raise at the same rate, so workers' sense of fairness and trust in the company are likely to grow. Unlike a single minimum wage set by the nation, this also has meaning in that it puts the responsibility for narrowing the gap inside the company directly on big companies that can afford it.
DrawbacksThe lowest-paid jobs themselves may be erased or sent away
If the raise of the lowest wage is the ceiling for executive pay, the quickest thing for a company to do is to reduce the low-wage jobs themselves. If it replaces dishwashing or sorting with machines, or moves those tasks to countries or small companies that the rules do not reach, the people in the lowest tenth change, and the hourly pay figure goes up. Even with a system that corrects for a sudden drop in headcount, it is hard to stop a method of shrinking the number little by little over many years, and the very people the rule meant to protect may be the ones who lose their jobs. Also, skilled executives might leave big companies where pay is capped for unlisted companies with no cap, or for foreign firms. To rescue a company in trouble, there are times when it is necessary to bring in a capable person with high pay, and if that path narrows, the company may collapse in the end and everyone who works there may suffer. Furthermore, how pay is set is by nature a matter for the company and its shareholders, and the view that setting a ceiling by law is a strong intrusion into free trade also carries real weight.
Learn the background
Over the past several decades, in many countries the pay of executives at big companies has grown a great deal, while the wages of people who clean the same company's buildings, carry goods in its warehouses, and answer its customers' calls have barely risen, or have failed to keep up with rising prices. When a company does well, the gains flow heavily to executives through pay tied to the stock price, and it is not unusual for the people on the front line to get only a small one-time payment. On top of that, the lower the wage of a job, the more likely it is to be split off to agencies or contractors. On the company's books these workers are treated as people who are not its employees, so even though they work in the same place every day, they are left outside wage talks. The committees that set executive pay are often made up of people close to the executives, and the system works so that they pull each other's pay up, using the pay of other companies' executives as a yardstick. How wide a gap in wages should be allowed is a question that concerns everyone who works at the company, yet today it is decided only by those at the top. The fact that completely different yardsticks are used at the top and the bottom to judge who created the results is what needs to be corrected now.
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This proposal was written in Japanese by AI (claude-opus-5-5, policy version 2026-10-20b) and translated by AI (claude-sonnet-5-5). Nobody has checked the facts. Read the original (日本語) How the AI writes