CEO Pay Far Outpacing Workers' Meager Gains

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Common Dreams

CEO Pay Far Outpacing Workers' Meager Gains

CEO-to-worker compensation ratio was 296-to-1 in 2013, new study finds.

"The fact that CEOs make almost 300 times what workers make should set off alarms," stated EPI President Lawrence Mishel. (Photo: milfodd/cc/flickr)

CEO pay is massively outpacing that of regular workers, a new study shows.

Released Thursday from the Economic Policy Institute, the analysis looks at CEO compensation at the top 350 publicly traded firms and reveals a staggering pay disparity.

From 1978 to 2013, CEO compensation increased 937 percent. Yet compensation for a typical worker over the same time span increased just 10.2 percent.

CEOs made an average of $15.2 million in 2013. That's a CEO-to-worker compensation of roughly 296-to-1. In 1965, in contrast, CEO-to-worker compensation was just 20-to-1; in 1995 it was roughly 123-to-1.

The study also notes that the CEO compensation grew much faster than compensation for other top earners, indicating that CEO compensation is not based on a special skill set or higher productivity. Because of this, that money could have gone to other earners, and CEO pay could have been reduced without an adverse effect on the economy.

The study left Facebook out of the data as an "outlier." Because its CEO compensation was $2.3 billion in 2012 and $3.3 billion in 2013, the company skewed the results.

"The fact that CEOs make almost 300 times what workers make should set off alarms," stated Lawrence Mishel, lead author of the study and EPI President. "CEO pay has outpaced worker pay, the stock market, and even the wages of other top earners. CEOs are making more and more while workers are making less—even when worker productivity is skyrocketing," he added.

"It’s clear that this is not simply CEOs being fairly compensated for making firms more productive."

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