Executive excess | The wage gap between CEOs and US workers rocketed last year

The wage gap between CEOs and US workers rocketed last year

Throughout the pandemic, essential workers have labored heroically. But while workers risked their lives, bosses have reaped the rewards.

In fact, a new study from the Institute for Policy Studies has found that the wage gap between chief executives and workers at some of the US companies with the lowest-paid staff grew even wider last year, with CEOs making an average of $10.6m, while the median worker received $23,968.

The IPS study, called Executive Excess, analysed the data of 300 top US businesses. It found the average gap between CEO and median worker pay jumped to 670-to-1, meaning the average CEO took home $670 for every $1 an average worker earned. This ratio was up from 604-to-1 in 2020. There were 49 firms which had ratios above 1,000-to-1.

At more than a third of the companies surveyed, IPS found that median worker pay did not keep pace with inflation.

Sarah Anderson, director of the IPS Global Economy Project, said: “CEOs’ pandemic greed grab has sparked outrage among Americans across the political spectrum.”

Such examples of extreme corporate pay gaps mean bad news for business. A Harvard Business School study, for instance, has found that companies with overpaid CEOs and underpaid workers see significantly higher levels of employee dissatisfaction and turnover, as well as lower sales.

The corporate-pay disparities are also driving gender and racial disparities ever wider, according to the IPS. Women and people of color make up a disproportionately large share of today’s low-wage workers and a tiny share of corporate leaders. In 2021, less than one percent of Fortune 500 corporations employed Black CEOs, and just eight per cent of these firms had women at their helm.

This executive excess has Americans across the political spectrum fed up. One just-released poll shows that 87 percent of us see the growing gap between CEO and worker pay as a problem for the country. An astounding 62% of Republicans and 75% of Democrats favor a cap on CEO pay relative to worker pay, regardless of company performance.

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