CEOs At Corporate Powerhouses Got Paid 276 Times The Typical American Worker’s Salary Last Year

Alan Pyke Deputy Economic Policy Editor, Think Progress

Chief executives at the 350 largest American corporations made $15.5 million each on average last year, roughly 276 times what the typical U.S. worker earned.

CEO pay was slightly down from the year before in both raw-dollar terms and in comparison to worker earnings, according to the Economic Policy Institute’s updated figures. Stock markets struggled in 2015, causing the figures to dip from a $16.3 million average compensation and a CEO-to-worker pay ratio north of 300-to-1.

But CEO pay is still up 46.5 percent from its 2009 levels despite the decline in executive earnings that mostly come in the form of stock options, EPI notes.

Market fluctuations break both ways for heavily invested wealthy Americans. The financialization of the broader economy works wonders for people with a large portfolio. The richest sliver of the nation captured literally all of the total real income gains from 2009 to 2012. Working families have to endure the long-term effects of recessions large and small in ways that simply don’t cut into the financial security of people whose wealth comes from Wall Street rather than from sweat.

That is the real contrast reports like EPI’s draw. Conservatives often criticize this type of comparison because the figures would look radically different if they accounted for all Americans with the job title of “chief executive officer.” But that counter misses the point of figures that left-leaning analysts have begun publishing annually.

It’s not that your boss is paying himself too much and you too little. It’s that American capitalism has tipped so far out of balance between the people who provide work and the people who provide money that the basic social contract is breaking down.

Worker wages are practically stagnant, rising just barely faster than inflation for years. Despite a slight rebound over the past two years, the share of total income that goes to workers rather than company profits and investor returns is much lower than it was in the more prosperous 1990s and dramatically below levels from the post-World War II decades that forged a large and growing middle class.

Many politicians and voters find it morally appalling that a few hundred CEOs are worth 276 times more than a couple hundred million laborers according to the status quo of U.S. capitalism. But there’s something truly frightening lurking beyond the queasy injustice of the EPI data, even for people who can rationalize such yawning income disparities.

The figures on CEO pay and on Wall Street’s share of the national take-home are not sustainable for a democracy. They make it far too difficult for working people to rise up the income ladder and grind their way into economic security for their children and grandchildren. And they jam so much of the national economy into the dizzying turbulence of the financial markets that the consequences of even a mild or contained recession are far more grave — both for investors and for people who work in the real economy.

Such intense concentration of wealth in the financial sector also messes with business behavior. It prompts companies to navigate according to short-term incentives like stock price and investor satisfaction, rather than charting by the longer-term interests of their firms. Such short-termism chops at the nation’s future, robbing attention that should be going to decades-long challenges like product innovation and global competition.

Business leaders, politicians, and scholars alike look at these big-picture consequences of the financialization of the world’s largest economy and see the seeds of calamity. 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.

Policymakers have plenty of levers they can pull to combat these macro trends. It will likely take some mix of carrots — tax incentives for companies that commit to profit-sharing with workers and other structures that combat short-termism, for example — and sticks like higher income tax rates and bespoke tariffs on inherently abusive Wall Street schemes.

But in the meantime, the people those politicians have to rub elbows with at fundraisers are busy denying there’s a problem at all. After all, the billionaires say: the robust middle class of yesteryear didn’t have iPhones.


This has been reposted from ThinkProgress.

Alan Pyke is the Deputy Economic Policy Editor for Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.

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