At the Worthwhile Canadian Initiative blog, Frances Woolley explains how a couple of data points will work to “bake in” income inequality:
If these are the rules used to determine wages, income inequality will prevail.
It’s impossible for all firms to pay their CEOs above the median salary — by definition, half of executives must be paid below the median. If the majority of firms adopt a compensation policy like the Bell Canada Enterprises one quoted above, CEO salaries will increase inexorably.
At the same time, allowing firms to bring in temporary workers at less than the prevailing market wage prevents the price of labour from being bid up in response to labour shortages, dampening salary growth for workers at the lower wage end of the labour market.
Inequality rules.
