{"id":611387,"date":"2026-07-30T09:04:36","date_gmt":"2026-07-30T09:04:36","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/611387\/"},"modified":"2026-07-30T09:04:36","modified_gmt":"2026-07-30T09:04:36","slug":"let-them-eat-crumbs-growing-wage-inequality-is-bad-for-both-workers-and-businesses-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/611387\/","title":{"rendered":"Let them eat crumbs: Growing wage inequality is bad for both workers and businesses \u2013 The Irish Times"},"content":{"rendered":"

Let them eat … crumbs? Workers are feeling the pinch<\/a> as the cost of groceries, energy<\/a> and other household bills increases. The Government\u2019s budget will reduce some of the pain, but we need to look elsewhere to understand why we are having to stretch our euro further and further.<\/p>\n

We are working harder than ever and the data shows workers have never been so productive, but our wages and salaries<\/a> haven\u2019t matched our efforts for decades. <\/p>\n

Worker productivity and earnings were thought to move in tandem. But the gap between worker productivity and earnings versus what chief executive officers (CEOs), shareholders and other owners of capital get through profits, dividends and interest has widened significantly.<\/p>\n

In Ireland, we know that Peter Jackson of Paddy Power<\/a> parent Flutter Entertainment was paid $19.7 million (\u20ac17.2 million) last year \u2013 351 times the median $56,101 wage earned across his group\u2019s staff. Tony Smurfit of Smurfit Westrock earned $16.4 million \u2013 271 times his employees\u2019 median. <\/p>\n

In the United States overall, the average US CEO earned 21 times what the median worker did back in 1965. In 2023, the multiple had grown to 290 times. <\/p>\n

Do extreme ratios like this reflect an extraordinary increase in CEO productivity or are CEOs capturing the wealth created by workers\u2019 productivity gains?<\/p>\n

We know these ratios only because companies listed on either US or British stock exchanges must provide the data. CEO-to-employee pay ratio disclosures were introduced to allow investors a way to evaluate and vote on executive pay and a window into other hard-to-measure indicators of a company\u2019s long-term health, such as the effectiveness of its corporate governance. <\/p>\n

Ireland has no such rules but it should introduce them as soon as possible.<\/p>\n

A crummy deal<\/p>\n

Last week, I compared the pay of Ireland\u2019s 19 highest-earning CEOS against the gender pay and promotions gap<\/a>. Women in the middle are not doing well compared to the top male bosses or even versus their male colleagues.<\/p>\n

But growing gaps are also revealed between all workers\u2019 productivity and how they are rewarded over time. A large gap between CEO pay and the median workers\u2019 wage compounds inequality year on year, meaning workers (and women especially) keep falling behind financially. <\/p>\n

When rewards at the top grow by 9.6 per cent a year and the middle moves barely above inflation, the distance between them accelerates over time. And the taxation system often adds insult to workers\u2019 injury as the wealth at the top is generally taxed more lightly than the wages of those beneath it. <\/p>\n

Let\u2019s start with the most obscene example. Elon Musk\u2019s proposed $158 billion Tesla pay package compares to median staff earnings of just $62,786. Musk\u2019s package is valued at over 2.5 million times what a median worker makes at his company.<\/p>\n

The board clearly thinks he\u2019s worth it. And of course the US government will benefit from a windfall through the tax it collects on Tesla\u2019s $12.58 billion income in 2025. Win-win, right? Nope.<\/p>\n

\"ElonElon Musk’s pay is a cause for concern. Photograph: Mark Schiefelbein\/AP <\/p>\n

\u201cOver the past three years, Tesla paid just 0.4 per cent of its US profits in federal income taxes, which is another way of saying the company reported an effective federal income tax rate of 0.4 per cent. This is a tiny fraction of the 21 per cent tax rate profitable corporations are supposed to pay under the law,\u201d says the Institute on Taxation and Economic Policy, a non-profit, non-partisan tax policy organisation based in Washington.<\/p>\n

The wage and taxation gap trends are so extreme that even the wealthiest and most successful CEOs and founders know something has to give.<\/p>\n

Warren Buffett, the recently retired Berkshire Hathaway chief, spent decades arguing that people like him are undertaxed, famously observing of his secretary that \u201cDebbie works just as hard as I do and she pays twice the rate I pay\u201d. <\/p>\n

He urged Washington to stop coddling the super-rich. Berkshire\u2019s $26.8 billion tax bill for 2024, the largest payment ever made to the US government at that point, was still not enough, he believed.<\/p>\n

Ireland doesn\u2019t have the US\u2019s number of billionaires \u2013 we only have 11 \u2013 but they are collectively wealthier than 3.46 million people in the State, according to Oxfam Ireland. <\/p>\n

Our taxation system is considered to be more equitable and progressive than the US system and the Government uses capital gains and capital acquisitions tax (both at 33 per cent) and local property taxes to move wealth into the public finances. <\/p>\n

Even so, the gap between Ireland\u2019s top-paid CEOs and their workers is widening. It\u2019s a worrying international trend.<\/p>\n

David McCourt, the Irish-American billionaire behind the National Broadband Plan, told the Irish Independent two weeks ago that from the 1970s onward capital came to be valued above people. Companies paid less tax and booked more profit; bosses gave less to their workers and even their communities. <\/p>\n

\"DavidDavid McCourt of National Broadband Ireland. Photograph: Julien Behal <\/p>\n

He thinks big business should share a little. They do not have to take every penny out in profit, he said.<\/p>\n

The Financial Times recognises the dangerous mismatch between workers\u2019 effort and their rewards. Since 1947, we\u2019re five times more productive but real hourly compensation is only about three times greater, economic columnist and data journalist Joel Suss wrote on Monday. <\/p>\n

\u201cProductivity growth is still all that matters for economic wellbeing in the long run; it just needs to be shared around more,\u201d he said. <\/p>\n

When we see a transfer from labour (workers\u2019 wages) to capital (executives, investors and owners), we also see rising inequality and social unrest. Wealth becomes more concentrated among business owners and investors. Workers\u2019 pay stagnates even when the economy grows. Higher corporate profits mean companies have more money to invest in machines, technology or shareholder payouts. <\/p>\n

AI may make things even worse for workers if companies use it to replace or reduce human workers. <\/p>\n

Suss thinks we need a new social contract for the AI era. If the wage gap trend accelerates, he says \u201cthis will only lead us to more fragile economies and more fractured societies\u201d. <\/p>\n

Bad for business<\/p>\n

Many highly paid CEOs and founders deserve every cent they get. They\u2019ve taken risks \u2013 financial, economic and personal \u2013 to build a business from nothing. That endeavour should be rewarded but to what extent? And, do massive pay packets serve the best interests of a company and its shareholders?<\/p>\n

Extensive academic research over many years shows that CEOs who are highly rewarded may behave differently. They might take greater risks, make bigger bets and attempt more mergers and acquisitions to justify larger pay cheques. But higher levels of risk-taking don\u2019t always work out and this can have a direct impact on jobs and growth.<\/p>\n

Stock exchange regulators and governments know this too. <\/p>\n

UK and US markets introduced median worker pay disclosures in an effort to improve corporate transparency, try to curb excessive executive compensation and give shareholders a clearer picture of internal income inequality. So far, it\u2019s working. Research shows transparency may constrain CEOs\u2019 risk-taking incentives. <\/p>\n

[\u00a0Retail sales show no signs of strong improvement as fuel continues to pinch consumersOpens in new window<\/a>\u00a0]<\/p>\n

In Ireland, boards produce long defences of excessive executive pay and not a single line about the number representing the worker in the middle. The fix is easy. Companies in Ireland should disclose the ratio of chief executive pay to median employee pay, as their peers in London and New York do. <\/p>\n

The data exists; payroll systems can produce it in an afternoon. The only question is: does anyone understand why it\u2019s so urgent that we know? Ask Marie Antoinette.<\/p>\n

Margaret E Ward is chief executive of Clear Eye, a leadership consultancy. <\/p>\n","protected":false},"excerpt":{"rendered":"Let them eat … crumbs? Workers are feeling the pinch as the cost of groceries, energy and other…\n","protected":false},"author":2,"featured_media":611388,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[73],"tags":[289,79,2190,18,1647,75457,19,17,45899,55595,163498,1298,163499,80],"class_list":["post-611387","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-artificial-intelligence","tag-business","tag-cost-of-living","tag-eire","tag-elon-musk","tag-flutter","tag-ie","tag-ireland","tag-oxfam","tag-peter-jackson","tag-smurfit-westrock","tag-tesla","tag-tony-smurfit","tag-work"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/117008130412664823","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/611387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=611387"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/611387\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/611388"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=611387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=611387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=611387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}