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Innovation & Job News

A new standard for fair wages

When the question of how to ensure workers are compensated reasonably for their work arises, one standard that is often invoked is the minimum wage: the notion that governments should protect workers from exploitation by ensuring they are paid a rate than covers their basic needs. (Whether or not current minimum wages accomplish that goal is a separate question.)

More recently though, a new kind of question has emerged, namely one about equity within a company--not just establishing a minimum threshold for every worker, but assessing the difference between how much the lowest and highest earners within a company make. Especially in the wake of movements like Occupy, the idea that senior executives make twenty or thirty or a hundred times more than their junior employees strikes many as unfair, unhealthy for corporate cultures, and damaging to the well-being of the economy overall.

Enter Wagemark, a new international standard for this metric. The Wagemark Foundation just launched specifically to promote this standard, one which it suggests should be an 8:1 ratio:  that is, in any company, the top earner should make no more than eight times as much as the lowest earner.

Peter MacLeod, executive director of the Wagemark Foundation, is also the co-founder of MASS LBP, a consultation firm that focuses on increasing public engagement. Explaining the relationship he sees between these projects, MacLeod told us that "at MASS, we're really interested and concerned in issues like trust and confidence in public institution and well being of members of society... how people can be better involved in policy-making, and work with institutions that they will then hopefully be more inclined to trust." However, he goes on, "this only gets you so far if the economic picture is concerning. Inequality is just unhealthy...it affects everything from crime rates to maternal health to mental health.'

Though the greatest wage disparities are found in the largest corporations, Wagemark is in its first stages aimed at small- and medium-sized businesses. MacLeod says that it's important to note that it isn't just a company's size that helps determine the disparities among the wages its workers earn--geography and culture matter as well.

In countries with the lowest overall wage disparities, such as Japan or Scandinavian nations, there are cultural influences (such as an emphasis on the values of modesty or the common good) that "have influenced contemporary compensation structures."

Wagemark's goal in beginning with smaller companies is "to begin to create that as a cultural norm in North America and [western] Europe"--to start shifting our expectations, and then have those expectations begin to percolate up into larger corporate structures.

We asked MacLeod whether it was mere coincidence that a new standard like Wagemark would emerge here. "If there is fertile ground in this country," he replied, "it's because we have a huge middle class that hasn't recovered…and has huge anxiety that we're being sorted out into different groups and income brackets...and I think that's out of step with Canadian values. I hope that Wagemark speaks to Canadian values."

Writer: Hamutal Dotan
Source: Peter MacLeod, Executive Director, Wagemark Foundation
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