Key Takeaways
- The gap between average worker wages and Canada’s top-paid CEOs has widened to a record in 2024, with average compensation for the 100 best-paid chief executives hitting $16.2 million.
- The average pay for those 100 CEOs was 248 times more than the average worker in Canada, surpassing the previous record of 246 times more in 2022.
- The top CEOs made $7,812 an hour in 2024, allowing them to make the $65,548 annual pay of the average worker by 9:23 a.m. on Jan. 2.
- The Canadian Centre for Policy Alternatives is pushing for higher taxes on the wealthiest, either through a millionaire’s tax or a wealth tax, to address the widening gap between the highest earners and average workers.
Introduction to the Problem
The gap between average worker wages and Canada’s top-paid CEOs has reached a record high in 2024, according to a new report from the Canadian Centre for Policy Alternatives. The average compensation for the 100 best-paid chief executives hit $16.2 million in 2024, surpassing the previous record of $14.9 million in 2022. This widening gap has led to increased inequality, with the average pay for those 100 CEOs being 248 times more than the average worker in Canada. The report’s findings have sparked calls for higher taxes on the wealthiest to address this issue.
The Widening Gap
The gap between the highest earners and average workers has grown notably over the past decade. In 2024, the top CEOs made $7,812 an hour, allowing them to make the $65,548 annual pay of the average worker by 9:23 a.m. on Jan. 2. This is a significant increase from a decade ago, when CEOs made 184 times more than the average worker. The report’s author, David Macdonald, notes that executive compensation is increasingly tied to company profit and revenue rather than base salary, which has contributed to the widening gap. Canadian corporate profits stood at $630 billion in 2024, well up from pre-pandemic levels of $400 million.
The Highest-Paid CEOs
The report also highlights the highest-paid CEOs in Canada. The highest-paid CEO in 2024 was Shopify Inc.’s Tobi Lutke, who took home $205.5 million in total compensation. His pay was entirely linked to stock and options awards as his base salary is a single dollar. Other top-paid CEOs included Jay Hennick, head of Colliers International Group Inc. at $70.3 million, Patrick Dovigi of GFL Environmental Inc. at $67 million, and Glenn Chamandy of Gildan Activewear Inc. at $36.9 million. The report notes that the number of female CEOs on the list was the highest yet, with five women making the top 100.
Proposed Solutions
Given the widening gap between the highest earners and average workers, the report’s author, David Macdonald, argues that Canada should consider higher taxes on the richest, either through a millionaire’s tax or a wealth tax. A millionaire’s tax would mean a slightly higher tax rate on anything earned over a million dollars. Macdonald notes that the highest marginal tax rates are currently around 50 per cent, depending on the province, while they ran close to 80 per cent in the 1950s and 1960s. A wealth tax of one per cent on anyone with $10 million in net assets, and three per cent on assets over $100 million, could raise over $20 billion a year.
Challenges and Opposition
However, the report’s proposals face challenges and opposition. The most recent and notable move to change taxes on high earners did not last long amid significant pushback. Former prime minister Justin Trudeau’s move to raise the share of capital gains that are taxed like regular income to two-thirds drew fierce criticism, especially from the tech sector, saying it would make Canada less competitive. Prime Minister Mark Carney cancelled the measure last March. A smaller, earlier measure to limit the tax benefits available to the wealthiest remains in place, but it has led to a shift toward direct share awards, said Macdonald.
Conclusion
In conclusion, the gap between average worker wages and Canada’s top-paid CEOs has widened to a record in 2024, with average compensation for the 100 best-paid chief executives hitting $16.2 million. The report’s findings have sparked calls for higher taxes on the wealthiest to address this issue. While the proposals face challenges and opposition, it is essential to consider the potential benefits of a millionaire’s tax or a wealth tax in addressing the widening gap between the highest earners and average workers. The report’s author, David Macdonald, notes that a wealth tax or a millionaire’s tax is a way to have folks, that have far more money than they need, help to provide the basic services that everybody else needs, while excluding the vast majority of the population.