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Why Capping Salaries Doesn"t Work

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As many states face tremendous budget deficits, a major point of concern has been salaries. Too many people being paid too much money according to governors. To counter these issues, governors have proposed hard caps to salaries, with people making more than these amounts being forced to reduce their salary to the lower levels. However, when it comes to managing a workforce, it's better to regulate the process of salary increases, rather than stopping them all together.

By forcing salaries to drop to a certain level, the free market is being blocked and people are being told that no matter how good they are, they can't make more than a certain amount. As a result, the best people in a restricted field will simply go somewhere where the caps don't exist in order to get the money they deserve. As such, creating hard caps on salaries simply chases the best people out of an industry, and makes the lowest performers rewards comparable to those of the best.

Perhaps a better way to address the issues of ballooning salaries is to instead look at where they come from. If someone has a salary that doesn't match their contributions to a company or department, the question should be about how they were able to receive such a large salary in the first place. Instead of preventing the person from ever getting that higher salary, it would be more effective to restrict their access.

As such, we should truly avoid income caps all together and instead, create a regulated process for income increases. If superintendents want raises, they should have to apply for them to the board of education, with evidence why they deserve that higher salary. In this manner, we can create a system of checks and balances to block excessive pay increases, but reward the people who make a positive impact in our lives, and are worth every penny they receive.
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