CEOs distance themselves from the average worker

By Josh Bivens, Economic Policy Institute, 11/9/11

One of the arguments marshaled by the Occupy Wall Street movement is that corporate executives have seen pay increases far in excess of those enjoyed by typical workers. To be clear, CEOs have always earned much higher salaries than the workers they manage, but the gap between CEO and worker pay has soared in recent decades.

The figure below shows the ratio of average CEO compensation to compensation of the average worker from 1965–2010. In 1978, compensation of CEOs was 35 times greater than compensation of average workers. Since then, this ratio has skyrocketed, peaking at 299-to-1 in 2000. During the Great Recession, CEO pay fell relative to pay of typical workers because much of CEO compensation is directly linked to the stock market, which fell sharply in 2008 and 2009. However, the ratio bounced back during the recovery and stood at 243-to-1 in 2010. At this rate, it likely will not take long for the gap to reach its prior peak.

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Filed under Economy, Labor, Tax

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