The New Data on CEO to Worker Pay is Not Pretty

April 18th 2015

Laura Donovan

CEOs now make nearly 300 times more than the average worker, according to data from the Economic Policy Institute (EPI), a progressive think tank:

CEO vs. worker pay

Economic Policy Institute/Twitter

The EPI's Alyssa Davis and Lawrence Mishel produced the study.

"Income growth since 2007 has also been very unbalanced as profits have reached record highs and, correspondingly, the stock market has boomed while the wages of most workers (and their families’ incomes) have declined over the recovery," the report states.

From 1978 to 2013, CEO salaries spiked 937 percent. CEO compensation steadily increased over the 1980s, boomed in the 1990s, and peaked at roughly $20 million in 2000. Meanwhile, the compensation of regular workers climbed just 10.2 percent in the same time span, according to the findings. 

Although CEO compensation definitely suffered during the recession, their pay made a strong recovery by 2013, when they earned $15.2 million annually. This is still a decrease from their 2000 pay, but it's a lot more than what regular workers make. 

"As the public cried for executives' pay to be tied to performance, that trend has very much happened," Kevin Scott, co-founder/CEO of branding consulting firm the ADDO Institute, said last year. "And now, as their stocks are performing at very high levels, those CEOs are reaping the benefits."

Corporations have fought against releasing this data.

The Securities and Exchange Commission (SEC) has proposed a rule requiring public companies to annually release their CEO to worker pay ratio, but businesses have so far successfully prevented the rule from being implemented, arguing that it would be too expensive and difficult to calculate, according to The New York Times.

“The pay ratio was designed to embarrass, but I think it’s actually a pretty good thing,” Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, told The New York Times. “The CEO’s pay has to have a relationship to the pay scheme of everyone else, and I think it will force companies to rethink how they design their compensation packages.”