BUSINESS

Canadian CEOs Earn 206 Times As Much As The Average Worker

10/02/2014 12:15 EDT | Updated 10/02/2014 12:59 EDT
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The gap between CEO earnings and workers’ pay is wider in Canada than almost anywhere else in the world, according to data from the AFL-CIO.

The U.S. labour group’s database shows Canadian CEOs on average earn 206 times as much as the average worker. That's the second-largest gap among the 17 countries surveyed.

The U.S. is number one, of course, with CEOs there taking home 354 times as much as workers. But in Britain, for example, CEOs take home 84 times as much as workers.

The CEO-to-worker pay ratio is a popular tool for economists who are trying to show how income inequality has grown in recent decades.

The ratio has exploded in most countries in recent decades. For years until the 1970s, CEOs earned around 20 times as much as workers. The ratio began to rise slowly in the 1980s, before shooting up exponentially starting in the 1990s.

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CEO-To-Worker Pay Ratios By Country

A 2005 paper from the U.S. National Bureau of Economic Research chronicles one generally accepted reason for the explosion in CEO pay: Thanks to CEO pay being tied to stock performance, CEOs have seen their pay explode through the long (though interrupted) stock market run-up in recent decades. And since shareholders are also getting richer, they don't mind.

But many economists argue it’s precisely these sorts of decisions about pay for top earners that are causing the widening income gap seen in most developed economies today.

Some companies have faced criticism from activists and shareholders over their CEO pay policies. JCPenney was crowned the single most unequal publicly traded company in the U.S. last year; its CEO earned 1,795 times as much as the company’s average worker.

CEO pay in Canada jumped 11 per cent in 2013, according to a recent survey, quadrupling income growth for the country as a whole.

The median pay for a CEO of a publicly-traded company in Canada was $5.6 million, which is actually still short of the peak reached before the Great Recession of 2008-09, when it reached $5.8 million.

(H/t: Macleans and Press Progress)