What Is Just When It Comes To CEO-To-Average Worker Pay?

What Is Just When It Comes To CEO-To-Average Worker Pay? 960 639 C-Suite Network

After three years of polling, one of the things we know to be true is that Americans view worker pay-related issues as being at or close to the top of the list when it comes to just corporate behavior. Living wage (am I paid enough to support basic living costs?) and fair pay (am I paid fairly for the job I do relative to others doing the same job?) are the most important, but the ratio of CEO pay to “average worker” is also often mentioned as an additional measure of justness.

Last week, in another effort to reverse Obama-era legislation, the Treasury Department recommended the reversal of a Dodd-Frank rule, due to go into effect next year, that requires companies to disclose the pay ratio between CEOs and average workers. Republicans argued that the rule undercuts the market, aims to shame chief executives, and by extension, discourages companies from going public.

The rule, however, would also serve to shed a clearer light on a core issue that Americans care about, and based on research from the Economic Policy Institute, we already know that the CEOs of America’s largest firms earn far more today than they did in previous decades, with CEO compensation having risen a whopping 807 or 937 percent (depending on how it is measured) from 1978 to 2016. A recent study from The Conference Board showed that the median pay for CEOs of S&P 500 firms was $11.5 million in 2016, up 6.3 percent from the prior year. Compare this with the decades-long stagnation in real wages for average workers and the 2.9 percent increase in average hourly earnings for all employees in the private sector last year.

CEO to Median Worker Pay

JUST Capital’s breakdown of CEO-to-Median Worker Pay ratios for the top 1,000 publicly traded companies in America provides some fascinating context on the issue. Take the industry comparisons, for example. Ratios tend to be much “lower” (between 100 and 150:1) in technology fields, where workers are paid more on a relative basis and many tech CEOs are company founders with high ownership interest, tending to pay themselves less in salary. At the other end of the spectrum, in Retail and…

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