“What is the ratio between the highest-paid and lowest-paid employees in food co-ops?”
When evaluating the compensation of their general managers, boards of food co-ops often ask this question. And behind that lies another, sometimes unspoken, question: “What should that ratio be?”
The United States has the greatest gap between CEO and average worker pay of any industrialized country. One model shows CEOs earning 265 times the starting pay for positions in their companies.
Ratio Between CEO and Average Worker Pay in 2018, By Country
Co-ops promote a completely different model, based on values that include equality, equity, and solidarity. For example, the Mondragon federation of more than 250 worker co-ops in the Basque region of Spain has agreed-upon wage ratios between field or factory work, which earns a minimum wage, and executive pay. These ratios range from 1:3 to 1:9 in different cooperatives and average 1:5 across the federation. That is, on average the general manager of a Mondragon cooperative earns no more than five times as much as the minimum base-level pay in their cooperatives.
But what about U.S. food co-ops?
For the first time, with the advent of the Columinate Compensation Database, we have started collecting starting pay rates at participating co-ops and can compare those to the base salaries of general managers (GMs), the highest-paid position in each co-op.
What the data show is that U.S. food co-ops are egalitarian institutions with flat pay scales. It also reveals the following:
The ratio of highest to lowest paid generally correlates with size and number of stores.
Smaller co-ops have simpler organizational structures with fewer layers of management. Very few co-ops with annual sales below $20 million have multiple stores, and those that do have a higher ratio between the starting wage and the GM’s salary than other co-ops of their size.
Above $20 million, the trend reverses. Only a small number of large co-ops are single-store operations, and their pay ratio is a little flatter than their multi-store peers.
Ratio Between Highest and Lowest Paid Employees at Co-ops By Store Sales
What is a “good” ratio?
Sometimes I encounter an unspoken assumption among co-op boards that “flatter is better” when it comes to pay ratios.
But in the context of U.S. CEOs earning 265 times the wages of their lowest-paid employees, how significant is the difference between a ratio of 1:2 at one co-op vs. a ratio of 1:4 at another? For all of the co-ops in our database, the ratio of general manager to entry-level pay is well within the range of the Mondragon federation.
The Columinate Compensation Database is available to NCG member co-ops, small co-ops and non-NCG co-ops, and INFRA member natural independent retailers for an annual subscription of $275. To subscribe or learn more, click here.