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A sign from an Occupy Wall Street protest against income inequality in 2011. (Photo: a.mina/flickr/cc)

Corporate CEO Pay Was 276 Times the Average Worker's Income Last Year

Chief executives at the most powerful corporations in America earned an average of $15.5 million in 2015

Nika Knight Beauchamp

As global inequality skyrockets, CEOs at the 350 largest corporations in America took in about 276 times the pay of the average worker in 2015, according to the latest numbers from the Economic Policy Institute (EPI).

"CEOs are getting more because of their power, not because they are more productive, or have special talent, or more education."
—Economic Policy Institute
CEO pay is up 46.5 percent since a relative low point in 2009, following the 2008 market crash. "Amid a healthy recovery on Wall Street following the Great Recession, CEOs have enjoyed outsized income gains even relative to other very-high-wage earners," EPI observes.

Yet, most of the rest of the country never saw a recovery from the global recession: Middle class jobs have disappeared, the working class has continued to struggle, and child poverty has risen nationwide.

"From 1978 to 2015, inflation-adjusted compensation of the top CEOs increased 940.9 percent," EPI writes, "a rise 73 percent greater than stock market growth and substantially greater than the painfully slow 10.3 percent growth in a typical worker's annual compensation over the same period."

And while the average CEO pay technically declined slightly from 2014 to 2015, it was a result of a dip in the stock market and not because of any widespread changes in how executive pay is determined. For that reason, "CEO pay can be expected to resume its sharp upward trajectory when the stock market resumes rising," EPI notes.

EPI reports that "CEO pay is growing a lot faster than profits, the pay of the top 0.1 percent of wage earners, and the wages of college graduates. This means that CEOs are getting more because of their power, not because they are more productive, or have special talent, or more education. If CEOs earned less or were taxed more, there would be no adverse impact on output or employment."

The problem highlighted by EPI is indeed a grave one, observes Alan Pyke in ThinkProgress. "The figures on CEO pay and on Wall Street's share of the national take-home are not sustainable for a democracy," Pyke writes.

"As working people get locked out of economic mobility, they become less enthusiastic about democracy and more susceptible to authoritarianism. Their political institutions become more and more responsive to the interests of the wealthiest, fraying the fabric of open society even more quickly," Pyke adds.

EPI proposes the following policy changes to remedy the problem of ballooning executive salaries:

  • Reinstate higher marginal income tax rates at the very top
  • Remove the tax break for executive performance pay
  • Set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation
  • Allow greater use of "say on pay," which allows a firm's shareholders to vote on top executives' compensation

Such policy changes are within reach, Pyke argues, but it's not clear given today's political climate whether they will ever be come to pass, since the people "politicians have to rub elbows with at fundraisers are busy denying there's a problem at all."


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