Canada’s growing wealth gap exposes systemic inequality fueled by excessive CEO pay, entrenched corporate practices, and inadequate tax policies
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At 10:54 a.m. on Jan. 2 – the first work day of the working year – the 100 top CEOs in Canada had already made the salary of the average Canadian worker of $62,661.
According to a new report by the Canadian Centre for Policy Alternatives, in 2023 (the last year for which such data was available), the top 100 CEOs in Canada received an average of $13.2 million in total compensation. This equates to 210 times the salary of the average worker.
Workers have been fighting back this year, seeing a wage gain of seven per cent over last year. One solution to rapidly rising prices is to get a raise so you can afford those higher prices. On the other hand, corporate boardrooms will shed tears now that inflation has come back to normal. They may never again be able to raise prices as they did in the reopening and reap the bonuses that resulted from those profits.
 Canada’s wealth gap tells a troubling story. |
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CEOs have always made more than the average worker, but the gap has grown tremendously. In the 1980s, CEOs made 50 times the average worker, by the late 1990s it was 100 times and now we’re solidly over 200 times.
CEOs would have you believe they got their position after intense international competition. But the reality is much more mundane. Seventy-six per cent of the top CEOs in Canada were hired into a lower position and worked their way up. On average, they’d been with the company 21 years, or half their careers. They’re company men – yes, 97 per cent are men – whose value is knowing a particular company. Corporate Canada prefers internal hires.
What does it say about Canada that the benefits of economic growth are distributed so unevenly? As record-breaking numbers of people are living in the street, and food banks are being pushed to their absolute limits by increased need, a small class of corporate executives is living like kings.
We’ve made several small wins in the past few years that have helped cap growth on out-of-control CEO pay. In 2021, the federal government capped tax deductions for those paid in stock options, a common form of bonuses for CEOs. This led to a substantial fall in stock-option use by CEOs.
And as of June 2024, people who make massive annual profits on stocks and real estate – over $250,000 – now pay a tax rate slightly closer to what workers pay. Incredibly, only five CEOs on our list owe over $800 million more in taxes due to this one change. This shows not only how concentrated wealth is in Canada, but also how concentrated the impact is of the June change.
Unfortunately, they won’t pay that tax until they sell their shares, so they’ll likely hold out for a friendlier government to cancel the change. This speaks to the need for a wealth tax that charges these amounts annually and attacks entrenched wealth hoarding head-on.
These measures are obviously welcome, as is anything that attempts to make the CEO class pay something closer to their fair share. But there’s still a lot of work to be done to address the growing wealth gap in Canada.
It’s time we asked many of the people who profited the most from Canada’s various crises – the climate, affordability, and housing crises, to name a few – to start financing solutions. Why shouldn’t real estate barons have to help finance a massive public housing construction program, and why shouldn’t fossil fuel magnates have to finance the transition to a green economy?
This article will take the average reader about two minutes to read. By the time you’ve finished reading it, the top CEOs will have about $105 more than they had when you started. Quite a happy new year, indeed.
David Macdonald is a senior economist at the Canadian Centre for Policy Alternatives.
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