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The economy might be flirting with another downturn, but take heart: the nation’s CEOs are doing alright. Recent research shows the pay gap between executives and their subordinates soared just before the pandemic. Qantas CEO Alan Joyce was paid 126 times the average Australian worker’s salary in 2019, while Woolworths CEO Brad Banducci netted 143 times the average.

The pandemic initially clipped many CEOs’ wings. ASX100 company bosses’ cash pay fell by over a quarter – the biggest hit on record – to an average $2 million. But when options and shares are included, that slide looks far more modest – just 3.6%, to an average $4 million.

There isn’t much solid data for 2021 yet, but several signs point to a return to pre-pandemic highs. Financial markets are roaring again, giving the half of CEOs’ bounty made up of stocks and options a healthy boost. Prominent companies are again shelling out lavish top-end bonuses – take PwC who, fresh from helping the government botch our vaccine rollout, gifted its partners an 18% raise. And CEOs elsewhere in the world are again raking it in; in the US the virus barely halted it.

This reflects a return to a long-term trend. CEO pay in the US rose nearly 900% from 1978-2012, and Australia wasn’t far behind. It has moderated a little since, but so has wage growth for the rest of us.

Few people think CEOs have gotten 900% better at their jobs since the ’80s. And such staggering inequality can undermine social cohesion and trust. So, what can we do about it?

Opening up the account books

Last week, activist shareholders and advisory groups proposed a solution to the ABC’s Daniel Ziffer: require companies to publicly disclose their “CEO pay ratio” (how many multiples of their median worker’s wage their bosses get paid).

This rule is already legislated in the US and UK, and was taken by Labor to the 2019 election. And it’s certainly not a bad idea. Companies already calculate this figure for their remuneration committees, and making it transparent would provide journalists, unionists and shareholders with more information to pressure the nation’s C-suites.

For some CEOs, it could even help them improve their public image. In the absence of an internal comparison, commentators will frequently compare executive salaries to averages across the whole economy (as I did above), whereas many leading companies pay above-average wages.

Shareholders hold the powerful to account – then pocket the windfall

The only problem with this proposal is, while it can help reduce CEOs’ pay packets, workers rarely see any of the savings trickle down to them.

Research from the University of Technology Sydney suggests that shareholders will sometimes react by voting to reject exorbitant executive salary proposals, but they usually take the leftovers for themselves via extra dividends, instead of reinvesting in the firm’s workforce.

As most shares are owned by the wealthiest 10% of Australians, the policy would merely shuffle wealth around between the already-wealthy.

We’ve got a minimum wage. What about a maximum one?

Transparency is fine, but merely knowing how much more than you your boss makes won’t help you earn more. For that, we need redistributive policies.

One option floated by former UK Labour leader Jeremy Corbyn and hard-left French presidential candidate Jean-Luc Mélenchon was to impose a ‘maximum income’, above which individuals would be taxed at 100%.

This might help the pernicious social effects of Gilded Age-like inequality (provided the rich don’t move their wealth offshore or stash it in assets that don’t show up as “income”), but it also wouldn’t ensure workers get ahead.

A better way — tying bosses’ raises to their employees’

An alternative is to impose higher taxes on executive wages that exceed a certain ratio of their workers’ pay. Several US states have done it and US Congress is now considering a bill that would extend these rules nationwide.

This would incentivise top-earning managers who want to keep more of their bonuses to give their subordinates an equivalent raise too. Some organisations already do this voluntarily – take British architect Lord Richard Rogers, whose firm has a maximum pay ratio of 6:1. Shareholder may still object to bumper pay deals dragging on their dividends, but more managers would use their influential voices to urge an equitable across-the-board boost.

Sluggish wage growth is one of the biggest issues facing our economy, and the corporate elite have proven obstinate in their refusal to get it moving again. Perhaps only when their pay is on the line will they start to lift ours too.