Wage gap between CEOs and US workers jumped to 670-to-1 last year, study finds

[Hydrogen]

Report on 300 top US companies found CEOs making an average of $10.6m, with the median worker getting $23,968

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.

A study of 300 top US companies released by the Institute for Policy Studies (IPS) on Tuesday found the average gap between CEO and median worker pay jumped to 670-to-1 (meaning the average CEO received $670 in compensation for every $1 the worker received). The ratio was up from 604-to-1 in 2020. Forty-nine firms 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.

The report, titled Executive Excess, comes amid a wave of unionization efforts among low wage workers and growing scrutiny of the huge share buyback programs many corporations have been using to inflate their share prices. US companies announced plans to buy back more than $300bn of their own shares in the first quarter of the year and Goldman Sachs has estimated that buybacks could top $1tn in 2022.

Share-related remuneration makes up the largest portion of senior executive compensation and as buybacks generally boost a company’s share price, they also boost executive pay. Senator Elizabeth Warren has called buybacks “nothing but paper manipulation” designed to increase executive pay.

The report found that two-thirds of low-wage corporations that cut worker pay in 2021 also spent billions inflating CEO pay through stock buybacks.

The biggest buyback firm was home improvement chain Lowe’s, which spent $13bn on share repurchases. That money could have given each of its 325,000 employees a $40,000 raise, according to IPS. Instead, median pay at the company fell 7.6% to $22,697.

“CEOs’ pandemic greed grab has sparked outrage among Americans across the political spectrum,” said report lead author Sarah Anderson, director of the IPS Global Economy Project. She cited one recent poll that showed that 87% of Americans see the growing gap between CEO and worker pay as a problem for the country.

IPS noted that many of the companies in its sample were also the recipients of large federal government contracts. Forty companies in the sample were awarded $37.2bn in government contracts between 1 October 2019 and 1 May 2022.

The biggest recipient was Maximus, a company that manages federal student debts and Medicare call centers, which received $12.3bn in federal contracts. In 2021, Maximus CEO Bruce Caswell collected $7.9m in compensation, 208 times the firm’s median paycheck. Maximus workers have recently staged walkouts over pay and benefits.

Amazon, the second-largest federal contractor in the sample, amassed $10.3bn in federal contracts. Last month shareholders approved a $212m pay deal for Amazon’s CEO, Andy Jassy, 6,474 times the company’s median pay.

This report offers a number of policy solutions, including actions president Joe Biden could take without waiting for Congress. “The president could wield the power of the public purse by introducing new standards making it hard for companies with huge CEO-worker pay gaps to land a lucrative federal contract,” Anderson said. The report also urges Biden to ban top executives at federal contractors from selling their personal stock for a multi-year period after a buyback.


https://www.theguardian.com/us-news/2022/jun/07/us-wage-gap-ceos-workers-institute-for-policy-studies-report

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An update to put the following 2011 statistics into perspective.



https://i.imgur.com/IrBKk5o.jpg

In 2021 the ratio of average worker salary to average CEO salary jumped 670 to 1.

Around 2011 it was 185 to 1.

If the average worker wondered where their wage hikes went. Maybe its not impossible to figure out.

[Upgrade00]

Wage gao between the top 5% or 10% and the rest has been growing for quite a long time now. The rich seems to always find a way to make more money while legally evading financial policies which were originally designed to take from the rich.
One of such policies is taxation; As a concept, taxes were initially implemented to leverage on the wealth ofthe rich, but the rich used loopholes to evade it.

I am not expectant of government policies actually making much of an impact on the wage gap, and especially not for a prolonged period of time.

*insert image tag* https://i.imgur.com/IrBKk5o.jpg *insert image tag*

https://i.imgur.com/IrBKk5o.jpg

Probably an error; you posted the imgur link twice; once with the img tag and the other without it.

[fiulpro]

This is not just a problem with inflation it's also a lot to do with economic disparities and problems that might arise due to the ongoing crisis. The adverse situation does not affect the rich at all- it something that my mum says but it does make sense, one is able to profit off all the situations easily if they have a certain amount of money in their bank and a wide network. The financial policies also seem to favor the rich as well, therefore I do think that taxation, job opportunities, they should all resonate equally with your wealth, people should be not be able to find loopholes like giving charity to church and taking tax reduction on that area and saving millions, these loopholes must be discusses and managed.

[Upgrade00]

- it something that my mum says but it does make sense, one is able to profit off all the situations easily if they have a certain amount of money in their bank and a wide network.

That's a pretty wide quite from your mum and is very apt in my opinion. Opportunities lie in almost every situation, and bad situations usually create more opportunities as there are more problems that one can solve.

The financial policies also seem to favor the rich as well, therefore I do think that taxation, job opportunities, they should all resonate equally with your wealth, people should be not be able to find loopholes like giving charity to church and taking tax reduction on that area and saving millions, these loopholes must be discusses and managed.

The rich can always lobby for such loopholes to be created to give them a sort of leeway which would allow them safe some money and evade stringent regulations

[el kaka22]

The biggest joke of the article is the fact that Lowe, spent 13 billion dollars on repurchasing stocks, instead of giving some of it back to the workers that make 23k a year. I have to say, it is just terrible to see companies caring about their long term profits more than they care about workers.

However, there is a big "nowork" culture growing in the USA because of this, people are leaving their works in bunches, we have seen this becoming a huge huge deal in the past, and I believe that it will create a big trouble for companies as well.

The minimum salary someone can make is still 7.5 dollars an hour if I am not wrong, which is about 60 bucks a day on 8 hours a day, 300 bucks a week if you work 5 weeks and take weekends off like a regular person should, times 52 weeks a year, makes it 15.6k as a minimum wage. That is starvation, not just poverty, but starvation.

[Rruchi man]

Not like i'm trying to justify the decrease in income of workers, but contrary to how many people may see the situation that the workers should earn higher because they do more work, is not completely correct.

You have to give credit some of these CEO's who have devoted time over the years, made sacrifices to set up structures and are ensuring it survives, still manage the mental duress that is associated with running a company and managing people. They deserve a pay rise if need be.

I know it is not easy, but with this sort of development, worker's who are not comfortable should see it as a push to seek to become entrepreneurs/start their own as CEO's of their own company.

[Gyfts]

“CEOs’ pandemic greed grab has sparked outrage among Americans across the political spectrum,” said report lead author Sarah Anderson, director of the IPS Global Economy Project. She cited one recent poll that showed that 87% of Americans see the growing gap between CEO and worker pay as a problem for the country.

So what is the ideal CEO to median worker's wage ratio that would be satisfactory? I've never seen anyone answer the question with any degree of certainty above pulling an arbitrary figure out of thin air. A single CEO can derail a multi-billion dollar corporation, of course they should be compensated for having such responsibilities.

The pandemic made the rich gain wealth because smaller businesses were not allowed to operate due to lockdowns. The most predictable result was large corporations gaining market share and wealth being transferred directly to the top. That isn't greed, that's taking advantage of government ineptitude. People should really hold their politicians more accountable instead of blaming the CEO's for doing what's in their company's best interest.

[Leviathan.007]

The gap and space between the rich people and poor people are increasing all the time in most of the countries and that's not something related to one single country or just one period of the time, as far as I know. I saw in this world, that mostly after any economic crisis the gap between poor people and rich people will increase more. The reason is usually that the rich people know how to become richer while due to a lack of knowledge workers and poor people will lose money over this period of the time.

[Bitstar_coin]

Not like i'm trying to justify the decrease in income of workers, but contrary to how many people may see the situation that the workers should earn higher because they do more work, is not completely correct.

You have to give credit some of these CEO's who have devoted time over the years, made sacrifices to set up structures and are ensuring it survives, still manage the mental duress that is associated with running a company and managing people. They deserve a pay rise if need be.

I know it is not easy, but with this sort of development, worker's who are not comfortable should see it as a push to seek to become entrepreneurs/start their own as CEO's of their own company.

Yeah, i think the hardest part of running a business is sustainability and longevity, anyone can decide to be an entrepreneur today and launch a business but not everyone have that determination to push through all boundaries and nurture it to maturity and by maturity it means operating with same standard for a long period. it takes a lot of effort, sacrifice and courage to to take your business to the top.

Employer shoulder the responsibility of the entire business, good or bad, while employees are only limited to their personal responsibilities to work which is why the gap of wages between CEO's and Workers will always remain.  
  

[Husires]

These numbers will differ due to stagnation and interest rate hikes, but again, stagnation means laying off more workers and reducing the salaries of others. Therefore, the gap between the price will be fixed, and when managers’ salaries decrease, work salaries will follow, and vice versa.

Note how the percentage became high with the global financial crisis in 2008, which may be repeated soon.

Share buybacks have been very profitable in the last couple of years, but they won't last. Even so, CEOs are more immune to that volatility than the middle class and the poor, but the thing that puzzles me is the average salary, I thought it was between 40k and 90k, not 23k.