Murray Callaghan, Callaghan Wealth Management Despondent they sat across my office desk. Eyes focused down.…
Ryan Parton, Business Gazette
Jean-Yves Duclos, Canada’s Minister of Families, Children and Social Development, has drawn attention recently for his interest in exploring the idea of a basic minimum income for all Canadians. I wholeheartedly encourage that exploration, but I also wonder if it’s time to pay some attention to the other end of the spectrum.
According to the Economic Policy Institute, the average CEO compensation among the largest US companies in 2014 was $16.3 million. The average ratio between CEO compensation and that of their company’s average worker was 303-to-1.
If that figure doesn’t shock you, it’s time to ask yourself why. Why does a single person need to make $16 million a year – especially when his or her average employee earns just $54,000? Wouldn’t society be a better place if we capped income at, say, $1.5 million a year and require companies to share the wealth by paying their employees more equitably? Or distributing the difference to charitable organizations?
Better yet, perhaps it’s the pay ratio itself that should be legislated. According to human capital consulting firm Payscale, Hewlett Packard CEO Margaret Whitman made just six times the median compensation of her employees in 2014, yet she still took home a comfortable $535,335 a year. Not too shabby.
Let’s imagine we took that ratio (6:1) and passed legislation to make it the maximum ratio allowable between any two workers or shareholders of a given company. Leaders would still have an incentive to grow their business, because the upper limit on their salary would increase accordingly. The most profitable companies would also continue to attract the best talent for that same reason. But suddenly, the proverbial rising tide would lift all boats within each company. No more CEOs dining on caviar on their private jet while their employees clip coupons or even stand in line at the food bank.
It’s time for a corporate wake-up call
We essentially give corporations the same rights and powers as people, and yet these “people” have only one true motivation: profit. What we’ve created is a new class of “person” that is, by definition, sociopathic. We then allow these sociopaths to accumulate so much wealth that they have collectively become the dominant political force in our nation.
One of the many dystopic results of this scenario has been a steady increase in income inequality. Earlier this year, Oxfam stated that just 62 people have more wealth than the poorest 50% of the world’s population. That’s right – 62 people have more money than 3.5 billion. And it’s not just “them.” Here in Canada, the Huffington Post reported at the close of 2014 that the richest 20% of Canadians now control more than 67% of all wealth in the country.
Meanwhile, a 2014 Oxfam report stated that 15% of Canadian children go hungry. That rate rises to 40% among Aboriginal children and 60% in northern communities.
Why do we continue to accept a status quo that allows a handful of people to amass more wealth than they know what to do with while others – often those who are responsible for creating the products that create that wealth – are barely scraping by? Why do we support a system of unfettered capitalism that encourages income disparity and all the social problems it brings?
Tell us what you think
Could mandatory maximum salaries work in Canada? What about a maximum compensation ratio within a given organization? Send your comments to firstname.lastname@example.org or comment below.