You say tomato, I say grossly over-fattened capon who would lay off his own mother to protect his stock options.
So we disagree.
On Thursday, one Canadian think tank released a report claiming Canada’s top executives are grossly overpaid.
On Friday, another Canadian think tank released a report arguing they absolutely weren’t.
The sad part is, you knew what both reports were going to say before they were even released — and also that neither of them is necessarily wrong.
The Canadian Centre for Policy Alternatives was the first into the fray, releasing its report pointing out that, “Canada’s 100 highest paid CEOs made 227 times more than the average worker made in 2018, surpassing all previous records.”
The CCPA report, which has been coming out for 13 years, also pointed out that the 100 CEOs at the top of the pay scale in Canada earned, on average, the annual wage of the average Canadian employee by 10:09 a.m. on their first day back at the office, Jan. 2. Those top CEOs saw their pay increase by an average of $1.8 million — or 18 per cent — between 2017 and 2018. Down on the factory floor, the average wage increase was 2.6 per cent, or around $1,300.
Sometimes, what you choose to study is just as important as how you study it.
Not to be out done, the Fraser Institute promptly released a competing study, arguing that CEOs deserve their multimillion-dollar annual salaries, because the jobs of those CEOs are more and more complicated, and fraught with risks of dismissal.
The Fraser Institute study claims, “studies comparing CEO to worker pay are flawed. They compare apples to oranges, for example, the overall compensation of top 100 CEOs with the cash pay of all workers.”
The Fraser Institute study goes on to argue that the proper comparison would be to compare “all senior management workers with all workers,” which, of course, waters down the whole concept of whether Canada’s top CEOs are overpaid, and whether the wage gap between the top and the bottom is growing.
Overall, it’s a bit like debates over minimum wage — people representing workers argue that increasing the minimum wage means a stronger economy, because minimum-wage workers aren’t hoarding the small amounts in increased wages, but spending them. Business groups argue that companies can’t see how they can pay out the increased wages.
Both can be true. Heck, you can probably find business owners who would agree absolutely that increased wages would lift the economy — but are still critically concerned about how those increases would fit into the business plan for their own business.
What’s different is viewpoint.
Think of it this way: we’re sharing a telescope. You look through it and say, “Those birds look very, very big.” You hand me the telescope, I turn it around and look through it the other way, and then say, “No, those birds look very, very small.”
We’re actually both right: depending on the parameters of our research, the birds actually can look very big or very small, without actually changing their size in any way.
And that’s as true for economic research as it is for anything else. Sometimes, what you choose to study is just as important as how you study it.
In the end, you probably won’t be able to convince me that multi-million dollar salaries are necessary.
You certainly won’t be able to convince me that salaries for top executives should rise by 18 per cent in a year when employees’ salaries rise by just 2.6 per cent, any more than you can convince me that it’s fine to pay those senior executives primarily with stock options that let them bypass 50 per cent of the income tax that every other worker would have to pay.
But that’s my telescope — I’m nearer the bottom looking up than at the top looking down.
Russell Wangersky’s column appears in SaltWire publications across Atlantic Canada. He can be reached at [email protected] — Twitter: @wangersky
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