February 20, 2020

The responsibility for wage inequality is on employers’ shoulders

The responsibility for wage inequality is on employers’ shoulders

By: Paul Taylor

In what’s become an annual tradition, Canadians begin each new year reading alarming statistics on CEO pay. In January, the Canadian Council for Policy Alternatives (CCPA) released its annual report on compensation, and we learned that by 10:09 a.m on January 2nd, our nation’s highest-paid executives had already earned more than our average worker would by the end of 2020. 

With the same predictability, defenders argue that these wages are necessary to attract top talent. CEOs possess a rare skill set, they say, one that’s certainly 227 times greater than that of the average worker. I remain unconvinced. 

Their arguments overlook the demonstrable way that this inequality is actually harming our workplaces. Canada now ranks 4th globally for employee turnover and studies show that our nation’s higher intra-corporate pay gaps are a factor. 

We’ve been rewarding CEOs at the expense of employees and the results have been destructive—both to our organizations’ health and the health of our communities. A 2019 report from Feed Ontario found that the proportion of working Ontarians accessing food banks increased by 27% over the last three years. While executive compensation packages skyrocket, wages for workers have stagnated, with increasing food insecurity the predictable result. 

When setting salaries for leadership and senior management teams, we as employers need to start asking ourselves some tough questions. Whose wellbeing is this compensation excluding? And why is attracting and maintaining top staff not an equal priority for us? In the face of government inaction, those of us with the power to influence organizational culture must strive to do better.

At FoodShare, we’ve mandated a lowest-paid to highest-paid wage ratio of 1:3.7. We also introduced a new wage grid which increased compensation among the lowest band by 25%. The highest bands, including senior managers, directors, and the executive director, received a 0% increase. We also committed to providing a $15/hour minimum wage, despite the provincial rollback on this requirement and are exploring strategies to further increase it to a living wage. 

Alleviating inequality within our workplaces isn’t solely about pay discrepancies. We need to look beyond our doors and observe how these gaps manifest in society. The roots of economic inequality are intertwined with other structural barriers that our employees face, including racism, white supremacy, ableism, transphobia and patriarchy. 

To challenge some of these disparities, FoodShare offers a no-interest emergency loan of up to $2,000. Our colleagues can discreetly apply for this program at any time, with repayment terms that they set themselves. For someone who might be struggling to pay the lump sum of first and last month’s rent, this policy can mean the difference between arriving at the office in a state of calm and working alongside the worry of where they’ll sleep next week. 

These policies don’t just improve employee wellbeing and minimize turnover—they expand the talent pool that we’re able to draw from when hiring. For example, access to post-secondary education is not universal, so it’s almost never listed in the qualifications section in our job postings. Likewise, making benefits available on the first day of work, providing a staff lunch per diem, offering a matching RRSP or TFSA program and introducing three new personal days have all resulted in a more diverse and skilled workplace at FoodShare. 

The cost of implementing these initiatives is minimal in comparison to the benefits to both our staff and organization. A recent study by the Boston Consulting Group found that such diversity greatly improves company performance. Looking at 1700 companies across 8 different countries, within varying industries and company sizes, they found that more diverse workplaces led to 19% higher revenue due to innovation. 

Addressing income inequality in our organizations isn’t a buzzword, or a shortcut to employee productivity. It’s a moral imperative and crucial to the health of my colleagues and the long-term stability of our businesses, organizations and communities. 

We need to harness January’s anger about CEO compensation and put it into action throughout the months ahead. If you are in a position of power in your organization, I implore you to examine what you can do better and help us change the conversation in 2021.