Last March, Bell Canada Enterprise circulated its 2012 executive compensation policy:
we use three key elements of compensation with an aggregate target value positioned at the 60th percentile of what is paid in the competitive market for similar positions.
A few weeks later, Human Resources minister Diane Finley announced "a more efficient and responsive temporary foreign worker policy". This new policy allows employers to pay temporary foreign workers up to 15 percent less than the prevailing occupational wage rate:
Wages that are up to 15% below the average wage for an occupation in a specific region will be accepted; however, employers must clearly demonstrate that the wage is consistent with that of Canadian workers based on Statistics Canada data.
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.