Compensation

Top CEOs Make 331 Times the Average Worker. Does Anyone Care?


Chief executives of companies in the Standard & Poor’s 500-stock index made an average $11.7 million last year. The average production and nonsupervisory worker: $35,239. That means CEOs are paid 331 times the average worker, according to a report released this week by the AFL-CIO, a federation of trade unions.

The difference may be shocking, especially in the face of a shrinking American middle class. The U.S. Securities and Exchange Commission recently said it wants companies to disclose the CEO-worker pay ratio. But does such information make any difference?

Some observers, such as Bloomberg View columnist Matt Levine, doubt that the SEC proposal, if implemented, will lead shareholders to rise up in anger. As he wrote last year, “Shareholders are not generally in it for the workers,” and the transparency might actually encourage them to offer execs a raise if they’re coming in lower than competitors.

The AFL-CIO has been publishing the report since 1997. This year’s rate is down from 354 times last year—due mostly to lower interest rates moderating executives’ pension plans, rather than to any CEO salary reductions, Bloomberg BNA reported—but it’s still up dramatically from 30 years ago, when execs earned 46 times more than the average worker.

The gap widened even as worker pay increased 136.6 percent since 1983 (about the rate of inflation). CEO pay jumped by 1,603.8 percent, according to numbers from the union group. In an even starker comparison, the AFL-CIO also estimates that CEOs made 774 times more than those who work for minimum wage last year. The minimum wage debate is heating up, but it remains to be seen if outrage spurred by inequality numbers—or anything else—will inspire action.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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