I’m a university professor. I make better than your average income. Although ours is not a union shop, our salaries reflect the successes of traditionally strong faculty unions at bigger institutions around us. I’ve also been teaching for more than 30 years, so — thanks to timed-served increases — my name and income now appear on the public web site my university maintains of employees who earn over a certain threshold per year. All of which is to say I do all right.
Still, I was intrigued by the question posed in a recent Globe and Mail interactive online headline. “How long does it take Canada’s top CEOs to earn your entire salary?” You simply plugged your annual pre-tax salary into a box and the Globe’s magic calculator spit back how long Canada’s 10 highest paid CEOs would have had to toil to equal it.
Not long, as it turns out.
Bradley Shaw, who made $12.4 million last year, earned my entire year’s salary in 23 hours and 34 minutes of nose-to-thecorporate- grindstone labour. But Shaw ranks at the barrel-scraping bottom of the Globe’s top 10 CEO hierarchy. Canada’s highest paid CEO, Gerald Schwartz (total pay packet last year: $87.9 million), could rest on my salary laurels before lunch on Day 1 of Week 1 after only three hours and 19 minutes of toil. He’d have had time (and more than enough change) for a leisurely Timmy’s.
But, as I said, I’m among the relatively well to do. If you earned the average Canadian industrial wage of $48,480 a year, Gerry Schwartz could have lapped that in barely one hour and nine minutes. If you took home Nova Scotia’s minimum wage, Schwartz could have phoned in your year’s worth of work during a 28-minute coffee break.
We live in a crazily unequal world where the boss at McDonalds’ can tell investors with a straight face his company pays “fair and competitive wages,” even though he makes more than a thousand times what one of his burger flippers’ earns per hour ($9,247.00 v $9.08). Whatever happened to Reaganomics, trickle-down, Laffer curves, rising tides float all boats?
Whatever happened to mainstream economists? Most are apparently still stuck somewhere on what is known as the Kuznets Curve, a popular 1950s economic theory that posits inequality dissipates as overall living standards rise.
How’s that working for you?
Traditional economic theory, meet reality. Better, meet Thomas Piketty. Piketty is a French economist whose blandly titled 577-page, door-stopper book, Capital in the Twenty First Century, is an unlikely best seller. The book not only documents two centuries worth of economic data from 20 countries to show inequality today is the highest it has ever been anytime anywhere in the world, but it also draws graphs, charts and conclusions, the most striking of which is: “The egalitarian pioneer ideal has faded into oblivion, and the New World may be on the verge of becoming the Old Europe of the 21st century’s globalized economy.” Dicksensian Dickens all over again.
Piketty’s argument is that when the rate of return on capital outstrips the rate of growth, inequality increases. That’s been the norm since the late ’70s, and there’s no reason to believe it won’t continue as governments fall all over themselves to reduce wages, cut corporate taxes, emasculate unions.
Piketty’s prescription: higher taxes on our highest income earners coupled with a global tax on wealth. There’s no sign those will happen anytime soon. So, as we sink deeper into this unequal abyss, it’s worth acknowledging the incredible opportunity we lost. In January, the New York Times published a graph showing the relation among GDP growth, poverty reduction and our current state of affairs. If we’d continued on the course we were on before Reagan et al, the study showed, we could have eliminated poverty (by the usual definitions) by the beginning of this century.
As another economist, Matt Bruenig, noted: “It is hard to imagine that we can live in a world in which all of the gains of the system flow to the top into perpetuity without there being some eventual backlash. At some point, surely those for whom the system is delivering nothing but stagnation and even decline will get fed up and do something.”
Occupy? We ain’t seen nothing yet.