Top CEOs got 189 times the average worker's pay in 2010
Published Tuesday, January 3, 2012 10:01PM EST
The economy may have weathered the recent economic storm, but a scant few Canadians are enjoying the benefits. In fact, the average worker is falling further behind, according to a study that found the average "Elite 100" CEO will have earned more than the average Canadian's annual income by noon on January 3.
According to the study's author, Hugh Mackenzie of the left-leaning think tank Canadian Centre for Policy Alternatives, Canada is "just behind the United States in terms of the degree of inequality, but inequality is growing faster in Canada than it is anywhere else in the developed world."
Data compiled for a newly-released study reveals that one-third of all income gains in Canada between 1987 and 2007 went to the richest 1 per cent of Canadians.
And while the richest among us keep getting richer, Mackenzie says the average Canadian hasn't seen a meaningful pay hike in 40 years.
In an interview with CTV News Channel on Tuesday, Mackenzie said the numbers tell the tale.
While the 100 highest paid CEOs of companies listed in the S&P/TSX composite index earned an average of $8.38 million in 2010, the average full-time Canadian worker was paid just $44,366.
Even more telling, Mackenzie said, is that compensation for the top 100 CEOs was up 27 per cent from the year before, while the inflation-adjusted wages of the average Canadian actually fell in 2009.
"Over 30, 40 years there really hasn't been a whole lot of change in the after-tax adjusted income of the average wage earner in Canada. In inflation-adjusted terms people are being roughly what they were in the late 1970s," Mackenzie said.
The growing divide between the average worker's pay and the compensation afforded the country's most highly-paid executives, he added, is a surefire recipe for discontent.
"It makes people angry because I think people understand instinctively, from their own lives, that they haven't been getting a share of the economic growth that's been taking place in Canada."
Although the current government does not appear keen to tackle the issue, Mackenzie believes it will inevitably have to one day.
"If you look south of the border there's quite an active debate going on about how the government should respond to these gross expansions of income inequality," he said.
"My longer term view is that the kind of growing inequality that these kind of salary figures represent is not very stable."
Highlights from the study, which was based on 2010 income data, include:
- Despite their broad range of expertise and backgrounds, all but one of the most highly-paid CEOs share one characteristic -- they're male.
- The top two earners of 2010 were both from the same company -- Magna International Inc. -- with top-earner Frank Stronach's $62 million take-home coming on the heels of his deal for the auto-parts manufacturer.
- Excluding Stronach's sum from the salaries of the top 100 CEOs would drop their average income by $62,000
- The average "Elite 100" CEO will have earned more than the average Canadian's annual income by noon on January 3, while the lowest paid among them will have to wait until almost 5 p.m. the next day to surpass the average worker.
- The 189-fold difference between the top CEO's pay and salaried workers pales in comparison to the gap between the most highly-paid and the average full-time minimum wage worker who earned just $19,798 in 2010.
Reversing the trend, Mackenzie says, defies simple solutions. Not least because CEOs' pay is typically set by corporate boards on the advice of consultants who only bargain on the basis of what others "in the club" are being paid.
The result is effectively a closed-loop in which pay packets continually grow in a bid to better the competition.