The Canadian Centre for Policy Alternatives has published its annual review of the gap between the executives and the rest of us.  Here it is. (And here is a piece on it in the Toronto Star..  I couldn’t find any mention of the report in either the Globe or the National Post)  In 2008, a recession year in which thousands of employees lost their jobs, Canada’s top 100 executives  earned an average of $7.35 million.  Meanwhile the average employed Canadian earned $43,305.  That means that the executives earned 174 times more than the average working Canadian.
Is this a problem for public policy? Â Â For advocates of free-markets and limited government intervention, the idea of ‘overcompensation’ is controversial. Â If the ‘market’ says someone is worth $36.6 million dollars a year (the income of Thomson Reuters CEO Thomas Glocer), then that is what he is worth … dammit. Â On the other hand, is society and the economy better off if Glocer is paid, say, “only” $10 million a year, and the rest of Thomson Reuters’ employees are paid more, and therefore have more disposable income to purchase more goods. Â Would this broader distribution of wealth better fuel economic growth than giving Glocer $40 million per year?
If ‘overcompensation’ is a policy problem, what could be done about it.  In my earlier posting on this topic (Should Governments Regulate Maximum Pay?), I noted that some advocates argue for executive compensation to be tied by a ratio to the lowest paid incomes of the company’s employees.  The Centre for Policy Alternatives argues, among other things, that the government should tax executive compensation and bonuses more heavily to redistributive the wealth in a healthier manner.  Is that a sensible solution?  Or should governments just leave high compensation alone?
