Some people believe that to fight poverty, everyone should earn the same comfortable salary. Recently this so-called ‘Universal Salary’ came back in the news again, as Spain wants to use it to fight the poverty caused by the Covid-19 pandemic. I disagree with this idea. I strongly believe that no healthy person should receive something for nothing.
When Calvin Benton started his psychotherapy company Spill, he also had the idea of paying everyone the same amount of money. He thought it would bring harmony to the team. Instead, he was forced to abandon the scheme within a year because of the rancour it created and pay people according to their seniority and expertise.
“We realised that we had to pay attention to market forces,” says Calvin. “Sometimes, traditional practices are there for a reason.”
Another example I encountered personally during my travels in Cuba. Here it was clear that the people who worked for governmental tourist businesses with a set minimum salary were way less motivated to provide a good service than those who managed their own business.
The lack of motivation among people who earn the same salary no matter how hard they work can be explained through evolution. It is called the Hedonic adaptation, or treadmill and means that evolutionary we humans are always looking for ways to improve our lifestyle and be happier. And this is how it should be, at least from an evolutionary perspective, according to psychologists like Martin Seligman. Among our earliest ancestors, those who were perfectly content with what they had may have been left in the dust. Unhappy with the present and dreams of the future are what keep us motivated. Likely, perpetual bliss would completely undermine our will to accomplish anything at all. Like those people who smoked too much marijuana and are perfectly happy lying on the sofa doing nothing. Or even beggars who receive money for doing nothing.
To bring more equality in our economy and still encourage people to perform better, might be the use of a scale system for salaries combined with a social network. What if international law could establish that CEOs, stockholders, managers, etc., do not earn more than a set percentage of their employee’s salaries? Say for example that the lowest-paid employee in a company gains a monthly salary of 2000 USD a month. Now each higher responsibility level in the company isn’t allowed to earn more than 10% extra. So the first-floor manager earns 2200 US$, the second building manager 2400 US$, the third 2600 US$, the fourth 2800 US$, and the fifth layer of responsibility is the CEO with a salary of 3000 US$ a month. If the CEO of the company wants to earn 3600 US$ a month, this will mean a 20% increase in salary. The lowest-paid employee in the company will then also have to receive a 20% increase and receives a 2400 US$ salary a month. If the company is very big, you could lower the percentage to 5%, as long as the increase and decrease of salaries always stay connected. This mutual benefit and responsibility strengthens the structure of a business.
Cover picture thanks to Nattanan on Pixabay.