The gap between the pay of average Canadian workers and Canadian CEOs is wider than ever.
According to a recent study by the Canadian Centre for Policy Alternatives, Canada’s 100 highest-paid CEOs (earning $10.4 million on average) earned 209 times the average worker’s income ($49,738 on average) last year. Last year, that ratio was 193:1.
To emphasize: by 10:57 a.m. yesterday (January 2nd), Canada’s average top-100 CEO will have already made what the average Canadian worker will make all year.
The figure below shows how the gap between CEO compensation and workers’ salary has widened over the past decade:
The findings aren’t trivial, either. The study cites research that found that companies did worse the higher their CEOs were paid. It outlines three reasons why significantly disproportionate CEO compensation is bad for Canadian companies:
- 1. CEOs, driven by their financial obligation to shareholders, were among the strongest opponents to Ontario’s $15 hourly minimum wage. “If shareholders can afford this year’s CEO pay hike, they should be endorsing higher wages at the bottom as well,” reads the study.
2. Employee pension plans are seeing substantial deficits, which means many workers may lose out on a comfortable retirement. Priorities certainly need to be shifted: “Canada’s largest companies paid out four times as much money to shareholders (including corporate executives) than it would have cost to fully fund their worker pension plans,” says the study.
3. Many of Canada’s top paid executives benefit from tax loopholes that prevent tens of billions of dollars in taxes from being distributed to those who need it. Affordable child care, housing, public infrastructure, improved pensions, and employment insurance are just some of the programs the study cites as necessary beneficiaries of these would-be tax revenues. That the use of tax havens should be illegal is something almost every Canadian can agree with.
Some more numbers for perspective:
– On an hourly basis, the minimum wage for the richest 100 CEOs was $1,744.73 an hour in 2015. It rose by $713.88 to $2,489.62 an hour in 2016.
– In 2016, average worker pay rose by 0.5%—a $228 bump from $49,510 to $49,738. With inflation, this is actually a decrease.
– Canada’s top 100 CEOs saw an average pay hike of 8%—from $9.6 million in 2015 to $10.4 million in 2016.
- – CEOs receive a base salary of $1.2 million on average, but this only accounts for 11% of their overall pay package. Bonuses, share-based compensation, option-based compensation, other compensation, and pension value make up the rest.
And yes, there is also a significant gender gap:
Let’s hope 2018 brings some change.