U.S. CEOs earn in a day what workers make in a year
Canadian pay gap said to be narrower but growing
Last Updated: Wednesday, August 29, 2007 | 6:29 PM ET
CBC News
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Chief executive officers of big U.S. companies earned roughly as much each day last year as the average American production worker did in 12 months, according to a study published Wednesday by advocates of a higher U.S. minimum wage.
The CEOs were paid an average $10.8 million US — including salaries, bonuses and stock options— or more than 364 times the average worker's $29,544, the authors say.
In Canada, an economist calculated last winter that the 100 best-paid CEOs of publicly traded companies earned an average of 240 times the average Canadian worker's pay — or almost as much each regular working day as other people got for a year's work.
The economist, Hugh Mackenzie of the Ottawa-based Canadian Centre for Policy Alternatives, said Wednesday that the 1992 North American Free Trade Agreement helped to enrich Canadian CEOs.
NAFTA became a rationale for comparing Canadian executives' pay packages with those of their American counterparts and giving them raises, he told CBCNews.ca.
"I suspect that the American situation is a bit more extreme than it is here, but we're definitely catching up," he said.
Mackenzie used CEO pay figures from an annual Globe and Mail top 100 survey.
The U.S. study, called Executive Excess 2007, is published by the Washington-based Institute for Policy Studies and a Boston group called United for a Fair Economy.
It uses figures from an Associated Press survey of 386 Fortune 500 companies. That survey was limited to companies reporting pay figures under new U.S. disclosure rules.
CEO pay wasn't always so lavish
American CEOs weren't always so lavishly paid, the study says.
"Back around 1980, big-time corporate CEOs in the United States took home just over 40 times the pay of average American workers," it says.
"Today’s average American CEO from a Fortune 500 company makes 364 times an average worker’s pay and over 70 times the pay of a four-star army general."
After adjustment for inflation, CEO pay increased by about 45 per cent in the past decade, while the U.S. minimum wage shrank by seven per cent, despite a recent increase from $5.15 US an hour to $5.85, the authors add. It was the first increase in 10 years.
In Canada, provincial minimum wages range from $7 to $8 an hour, with lower rates in some provinces for new workers.
Although U.S. CEOs were very well paid, the really big money went to the new masters of the financial universe, the study says.
Using estimates from Forbes magazine, the authors calculate that the top 20 private equity and hedge fund managers — averaging $657.5 million apiece — earned 22,255 times as much as an average U.S. worker.
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