Canadian Law of Work Forum (CLWF)
  • Home
  • About
    • Professor David Doorey
  • Guest Contributors
  • Useful Links
    • Archive
  • Submissions
  • Student Blog Initiative
  • Home
  • About
    • Professor David Doorey
  • Guest Contributors
  • Useful Links
    • Archive
  • Submissions
  • Student Blog Initiative
Canadian Law of Work Forum (CLWF)
Law of Work Archive

Is it Time to Regulate 'Maximum" Pay in Canada?

by David Doorey January 3, 2012
written by David Doorey January 3, 2012

Each year around this time, the Centre for Policy Alternatives releases a report showing the gap between executive CEO compensation the average income of Canadians. This year, the report (entitled Canada’s CEO Elite 100: The 0.01%) notes the following:

* The top 100 highest paid executives in Canada received a 27% pay hike in 2010, despite the failing economy. Meanwhile, the average income of Canadians rose only 1.1 percent. This is lower than inflation, so that the average Canadian is actually worse off this year than last.
* The average income of the Top 100 CEOs was $8.4 million in 2010, compared to only $44,366 for the average Canadian, and only $19,798 for a worker earning the minimum wage.
* Since 1987, one-third of all income gains in Canada has gone to the richest 1 percent!
* There is only one woman on the list of the top 100 highest paid executives.

We have long regulated low pay in this country, with varied success.  For example, we have a wage floor–the minimum wage, which is set very low (as noted in the statistic above).  Because we don’t trust the market to fix wages at the low end at an acceptable level, we impose a legal rule forbidding employers and employees from agreeing to wages below the legal minimum.
However, we do not regulate maximum pay. In fact, as the Centre Report notes, our tax policies actually incentivize paying executives huge bonuses through “stock options”, which we all subsidize by permitting the executives to pay lower taxes than would be the case if the money were paid simply as salary.
Should there be a legislated maximum pay?
Some people have called for it.  They argue that, just as we cannot trust the market to fix wages at the low end at rate that  allows working people to subsist at a standard of living acceptable to Canadian values, nor can we trust the market to fix salaries at the top end.  The process of setting executive salary has been called into question by a broad range of experts.  For example, my colleague here at York, Dr. Richard LeBlanc, has argued that the process by which Boards set CEO compensation are skewed towards ever increasing levels, regardless of actual performance.
If CEO compensation does not reflect performance, and yet CEOs are taking home a huge portion of a corporation’s share of income going to compensation, then the model is broken and indefensible.  If you are concerned about the fast-growing income inequality in Canada, then finding a way to distribute income among more of a firm’s workers would no doubt help.
The most common proposed method for doing this is to tie the highest paid employees to the lowest paid employees in the form of a maximum ratio.  The U.S. (of all places) recently took a modest yet innovative step in that direction when it passed a law requiring public corporations to publish the ratio of the median annual total compensation of all employees of the corporation to the income of the CEO.  The Swiss are considering a law that would cap executive pay at a ratio of 12:1, CEO pay to the lowest paid worker! The theory is that the CEO shouldn’t earn more in a month than the lowest paid worker earns in a year. The ratio of the income of Canada’s 100 top paid CEOs to the average Canadian income is now around 189-1.  They earned the average Canadian income by noon today (Jan. 3rd)!  In 1998, the ratio was only 105-1.  So you can see how the rich are getting richer and richer in Canada.

Would you support a law in Canada that requires every corporation to publish the ratio of its CEO to the average employee income?
Would you support a law that established a fixed maximum ratio that tied the highest paid worker to the lowest paid workers?
What would be an argument against using a mandated ratio like this?

2 comments
0
FacebookTwitterLinkedinEmail
David Doorey

Professor Doorey is an Associate Professor of Work Law and Industrial Relations at York University. He is the Director of the School of HRM at York and Director of Osgoode Hall Law School’s executive LLM Program in Labour and Employment Law and on the Advisory Board of the Osgoode Certificate program in Labour Law. He is a Senior Research Associate at Harvard Law School’s Labor and Worklife Program and a member of the International Advisory Committee on Harvard University’s Clean Slate Project, which is re-imaging labor law for the 21st century

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

previous post
Workplace Law Blog Takes Home Another Clawbie. Thanks Everyone!
next post
Can a Nun Sue to Recover Damages for Unpaid Work Performed in a Monastery?

You may also like

A Cross Country Update on the Card-Check versus...

October 3, 2018

A Successful Strike Vote is All That Stands...

September 16, 2018

Unifor Posts Photos of Replacement Workers as Gander...

September 10, 2018

A Wrongful Dismissal Case and the Absence of...

August 29, 2018

China Said to Quickly Withdraw Approval for New...

August 27, 2018

The Latest Hot E-Commerce Idea in China: The...

August 27, 2018

The Trump Administration Just Did Something Unambiguously Good...

August 27, 2018

Unstable Situations Require Police In Riot Gear Face...

August 27, 2018

Trump’s War on the Justice System Threatens to...

August 27, 2018

Putin Invites Trump to Moscow for Second Meeting...

August 27, 2018

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 218 other subscribers

Follow Us On Social Media

Twitter

Latest Tweets

CLWFFollow

CLWF
Retweet on TwitterCLWF Retweeted
RSandillRicha Sandill@RSandill·
8h

@SCLSclinic and I were so fortunate to represent this client last year. I am thrilled that this decision brings more clarity for family status accommodations rights amidst a pandemic that has tested parents, caregivers, and families like never before. https://twitter.com/CanLawWorkForum/status/1364605259071561730

CLWF@CanLawWorkForum

New from @RSandill (counsel for applicant), discussing important new "family status" discrimination decision from OHRT:

"Kovintharajah v. Paragon Linen & Laundry: When Failure to Accommodate Child Care Needs is “Family Status” Discrimination"

https://lawofwork.ca/13360-2/

Reply on Twitter 1364627677785821185Retweet on Twitter 13646276777858211851Like on Twitter 13646276777858211852Twitter 1364627677785821185
Retweet on TwitterCLWF Retweeted
TheLawofWorkDavid J. Doorey@TheLawofWork·
8h

Here's my latest in @jacobinmag.

If Ontario's labor laws applied in Alabama, the Amazon vote would have been held months ago so workers could get back to their jobs. Instead, the NLRA permits Amazon to conduct a months' long onslaught of anti-union propaganda. https://twitter.com/jacobinmag/status/1364613560425275392

Jacobin@jacobinmag

Amazon workers in Alabama are voting on whether to unionize, but the company is bombarding them with anti-union propaganda. In Canada, by contrast, votes are held quickly, making it harder for companies to stack the deck — a model that can work in the US. http://jacobinmag.com/2021/02/amazon-alabama-canada-labor-law-union-vote

Reply on Twitter 1364623976174092316Retweet on Twitter 13646239761740923168Like on Twitter 136462397617409231613Twitter 1364623976174092316
CanLawWorkForumCLWF@CanLawWorkForum·
9h

New from @RSandill (counsel for applicant), discussing important new "family status" discrimination decision from OHRT:

"Kovintharajah v. Paragon Linen & Laundry: When Failure to Accommodate Child Care Needs is “Family Status” Discrimination"

https://lawofwork.ca/13360-2/

Reply on Twitter 1364605259071561730Retweet on Twitter 13646052590715617304Like on Twitter 13646052590715617304Twitter 1364605259071561730
Load More...

Categories

  • Alberta
  • Artificial Intelligence
  • Australia
  • British Columbia
  • Charter of Rights and Freedoms
  • Childcare
  • Class Action
  • Collective Bargaining
  • Common Law of Employment
  • Comparative Work Law
  • competition law
  • construction
  • COVID-19
  • Diversity
  • Employee Classification
  • Employment Insurance
  • Employment Regulation
  • Europe
  • Financial Industry
  • Fissured Work
  • Freedom of Association
  • frustration of contract
  • Gig Work
  • Health and Safety
  • Health Care
  • Human Rights
  • Immigration
  • Interest Arbitration
  • International Law
  • Labour Arbitration
  • Labour Economics
  • Law of Work Archive
  • Legal Profession
  • Manitoba
  • Migrant Workers
  • Minimum Wage
  • Nova Scotia
  • OLRB
  • Ontario
  • Pension Bankruptcy
  • Privacy
  • Public Sector
  • Quebec
  • Real Life Pleadings
  • Saskatchewan
  • Scholarship
  • Strikes and Lockouts
  • Student Post
  • Supreme Court of Canada
  • technology
  • Transnational Law
  • Uncategorized
  • Unions and Collective Bargaining
  • United States
  • Videos
  • Women and Work
  • Wrongful Dismissal
  • Home
  • About
  • Guest Contributors
Menu
  • Home
  • About
  • Guest Contributors
  • Legal Scholarship
  • Useful Links
  • Archive
Menu
  • Legal Scholarship
  • Useful Links
  • Archive

2020. Canadian Law of Work Forum. All Rights Reserved.