Pay-Ratio FAQ

What is the relevance of comparing CEO pay with that of the lower pay grades?

Inequality has been linked to social problems that affect everyone in a society, not just the lowest paid. Inequality lowers trust and reduces social cohesion. Companies have as much – or more -impact on inequality as governments. Inequality is relational not absolute. A pay-ratios project reflects this.

Why are you running a pay ratios project and commenting on people at the top? Why not just continue to work with poverty?

Food-charity once ran on the assumption that there was food in the cupboard, but circumstances meant people could not prepare it (through injury or grief for example). Cooked meals were provided. 

In the 80s and 90s there was a dramatic shift. People who were out of work were able to cook, but the cupboard was empty. Basic food items were provided. 

In recent years budget advisors and food banks have increasingly been seeing people with jobs and empty cupboards. In-work poverty means social service agencies have to rethink their approach again. However, in-work poverty also means questions need to be asked.

The goal of companies is to make as much money for investors as possible. That’s just business.

The goal of many companies is to perform well and ethically, returning sustainable profit to the shareholders. Apps like Sharesies have introduced a huge number of people to being shareholders. Many companies and shareholders care about more than a single bottom line. They also care about behaviour, and the communities they live in.

Senior executives carry personal risk if they are on the board of directors. Surely they deserve good pay?

Most senior executives do a great job. They work hard, manage risk, and like everyone else try to look after their families. Questioning the pay of a CEO on $1.3 million a year when CEOs of similar sized companies are paid $650 000, does not mean we think CEOs should not be paid well. We think the CEOs being paid $650 000 for a similar job are being paid well. But everyone should be paid well for the work they do, and the ballooning of pay ratios along with the rise in in-work poverty suggests that is not the case.

“Priests get paid pretty well and live in bloody nice houses. Wonder what that ratio is?”

I heard this question several times while we were looking into pay ratios. I imagine it was just people looking for a chance to vent, which is fair enough. But thought it was worth an answer anyway. The ratio from priest to a minimum paid worker in Aotearoa is about 1:2. The ratio to a Bishop is slightly less than 1:3.  And we agree, they are paid pretty well.

“You should do a report on how much tax churches pay.”

Agreed. At some point we should have a look at the tax paid by all sorts of institutions and companies in NZ. I suspect there will be a few surprises. 

On the subject of tax, in some cases workers are paid so little that they qualify for benefits and subsidies to meet minimum income levels to take part in society. When a company turns $356 million profit,  tax-payers shouldn’t be required to support their lowest paid workers so that they can afford to live and get to work. That is just tax-payers propping up shareholders.