Sunshine List 2014: Ontario's list drives salaries up, not down
Public sector workers earning $100K or more study list and ask for higher wages, say experts
The annual spring Ontario Sunshine List of public sector workers earning $100,000 a year or more might provide good water-cooler fodder about the "fat cats" dining out on the taxpayer's dime, but it's unlikely to have any effect on reining in those wages — and, in fact, might do just the opposite.
Basically, the only thing it's done in Ontario is drive up salaries.— Daniel Cohn, associate professor, York University
"Basically, the only thing it's done in Ontario is drive up salaries, " said Daniel Cohn, associate professor in the School of Public Policy and Administration at Toronto's York University.
Although billed as an exercise in accountability and transparency, the outing of the highest-paid employees at the province's universities, hospitals, utilities, Crown corporations and other government-funded institutions is also a handy bargaining chip for civil service workers, who use the list to compare themselves against colleagues and negotiate higher pay.
"A skilled negotiator will make very good use of that information and will put upward pressure on salaries and total compensation packages as opposed to downward pressure," said Finn Poschmann, vice-president of research at the C.D. Howe Institute.
Ontario pathologists did just that and saw their Sunshine List salaries increase by 20 to 25 per cent between 2011 and 2012, compared with the 2.2 per cent average for the list as a whole, according to an analysis done by data blogger Aleksey Nozdryn-Plotnicki.
Academics, too, have used the list to negotiate higher salaries. A 2010 study by two University of Toronto researchers found university salaries on the list grew at a rate of 6.5 per cent annually and concluded that "salary disclosure has most likely been inflationary."
Cohn has noticed this phenomenon in his own experience teaching at York University.
"I have colleagues at York who regularly harvest the Sunshine List and compare themselves to their colleagues and say, 'Hey, wait a second, I'm worth more than them. Why should I be getting less? I'm going to file a claim for anomalous salary,'" Cohn said.
Nozdryn-Plotnicki found that this inflationary effect is greatest at the upper echelons of the Sunshine List, with the salaries of the 1,000 highest-paid workers rising 7.2 per cent between 2011 and 2012, compared with 2.2 per cent for the bottom half of the list.
The 2010 study found a similar effect, noting that the growth in pay of university presidents "greatly exceeded changes in average public sector pay in Ontario."
Reduce list to decision-makers only, say experts
Although the Public Sector Salary Disclosure Act was enacted in 1996 by the Conservative government of Mike Harris, a precursor to the law was first introduced in the Ontario legislature in 1993 by then opposition Tory MLA Chris Stockwell as a retaliatory move to counter the NDP's new legislation requiring publicly traded companies to disclose the compensation of their top executives.
The key difference in the disclosure requirements that exist for the private sector, however, is that the criterion for whose salary must be disclosed is not defined by the size of the salary but by the position the person holds within the company: only the salaries of CEOs and top executives must be made public.
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The original bill on public sector disclosure also proposed that it apply to executives only, but it never passed, and the later legislation opted for a broader scope.
That, some experts say, was a mistake.
"The idea of a Sunshine List makes a lot of sense provided it's focused on people who have an impact on broader public policy and broader decision making, people in key positions," Cohn said.
There is nothing in the number that says whether it is high or low for a particular person or job.—Finn Poschmann, vice-president, C.D. Howe Institute
"Right now, with just throwing everyone over $100,000 at the wall, the people who can make a difference are buried in there."
Private sector disclosure of salaries to securities regulators is also accompanied by copious financial information that allows salaries to be measured against overall performance of the company. The public sector list, by contrast, tells us nothing about whether a particular agency met its objectives or whether the employees who met specific goals or targets were paid more or less than those who didn't meet them.
"There is nothing in the number that says whether it is high or low for a particular person or job," said Poschmann.
It also doesn't tell us how the salary was earned — whether it includes overtime or bonus pay, for example.
"It's an accurate number, but it's a misleading number," says Ian Lee, an assistant professor in Carleton University's Sprott School of Business.
List will soon take in 25% of high school teachers
The more people that are added to the list, which has ballooned from a few thousand names in its first year to 97,796 in 2014, the murkier the picture gets and the harder it is to compare the performance of the people who can make a difference in the direction of an organization, said Cohn.
It's such a political hot potato. I'd be surprised if any government had the nerve to touch it.— Warren (Smokey) Thomas, president, OPSEU
Cohn expects that if the salary threshold stays where it is — and where it has been since 1996 — and if current collective agreements progress at their regular pace, the list will soon absorb new job categories that are not usually associated with fat cat salaries, such as high school math and science teachers, who have specialized degrees and whose salaries are already close to the $100,000 mark.
"Since they haven't adjusted for inflation, pretty soon, a quarter of the high school teachers in Ontario will be on the list," he said. "And at that point, you say, 'Well, is this list telling us anything?'"
One way to keep that growth in check would be to bring the minimum threshold in line with inflation, which would bump it up to about $140,000.
"That would get rid of most of the police officers below the rank of lieutenant and inspector and most of the firefighters and ambulance attendants who work overtime — and the high school teachers — but keep the superintendents and the regional education directors and so forth," said Cohn.
The president of the Ontario Public Service Employees Union, which represents 130,000 public sector workers, says that short of scrapping the list altogether, he, too, would like to see the threshold raised to reflect inflation, but that he is not holding his breath.
"I doubt that they will ever raise it," said Warren (Smokey) Thomas. "It's such a political hot potato. I'd be surprised if any government had the nerve to touch it."
$100K not 'chump change' for many
Not everyone agrees that the $100,000 minimum is outdated. Armine Yalnizyan of the Canadian Centre for Policy Alternatives points out that more than half of Ontarians reported an income of less than $35,000 on their taxes in 2011 — although that includes non-working people such as students, seniors and those receiving government support.
"One hundred thousand dollars might seem like chump change to a lot of people these days. They should be chastened to know how many people are nowhere near that," she said.
As flawed as it is, the list does get people talking about the relative worth of paid work and the still taboo question: How much do you make? But at a time when global economic growth is slowing, it can also expose cracks in the social fabric, Yalnizyan said.
"The less the pie grows, the more you see who's getting what, and if you're not getting any — if you're actually losing ground and somebody's making more someplace else — it really raises the political friction in the conversation and the need to address this distribution of the gains from growth," she said.
Who should disclose?
Some have argued that it's not enough to hike the $100,000 minimum but that the government should more consistently apply the criteria for mandatory disclosure and expand the list to include other types of organizations that receive government money or tax benefits, such as NGOs and unions.
"I don't think the issue is whether it should be $100,000, $110,000 or $150,000. The issue is should there be disclosure, and what should be the criterion?" said Lee.
"Right now, what we have is a very unfair system because some people get disclosed and other people don't."
Thomas says he'd have no problem seeing his salary and that of other union executives on the Sunshine List — and happily volunteered that he makes $125,000 per year plus a $700 per month travel allowance — but he would also like salary disclosure requirements of some kind to apply to private companies that receive public contracts.
"If you want true accountability, there's about a third of all government spending that makes its way into the private sector," he said. "A company like EllisDon is getting almost every infrastructure project in the province, so why don't they have to disclose?… If there is a taxpayer dollar involved, the ombudsman and public auditor should be able to have a look at it."
Thomas said the Sunshine List has done little to promote accountability within government. Some of the salaries at the top of the list, such as the $1.71 million Ontario Power Generation CEO Tom Mitchell reported, are "totally out of line," he said, and he urged more consistency in how wages are negotiated across the public sector.
"There is no rhyme or reason to how the broad public sector is funded, never mind how they pay their staff," he said. "There does not appear to be a vision for what government is; it changes with political stripes."
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