TORONTO – Chief executives at the largest companies in the U.S. earned 303 times more than the average industrial worker in 2014, according to a new study released Monday.
The report from the Economic Policy Institute, a left-leaning think tank in Washington D.C., found CEOs earned three times more than they did 20 years ago. The average compensation in 2014 for chief executives among the top publicly owned U.S. firms was US$16.3 million including pay, stock options, and bonuses, according to the research by the group that advocates for income equality.
The report showed an increase of 54.3 per cent among the U.S. top executives since the 2009 recovery from the global financial crisis. This compared to the “typical” worker that is still experiencing stagnant wages and a labour market that has seen wages drop by an average of 1.7 per cent since 2009.
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EPI president Lawrence Mishel said in a statement the research shows the rapid increase in pay packages is not indicative of the cost for retaining top talent.
“The fact that executives’ wages have grown faster than those of the top 0.1 per cent of wage earners means that this isn’t a matter of a market demand for talent,” Mishel said. “This growth isn’t happening because CEOs are being exceptionally productive—they simply have more power over what they’re paid.”
The report looked at the average CEO compensation based on data from the top 350 traded firms in the U.S. with the largest revenue each year. The “typical” worker was calculated based on the wages and benefits of a full-time production and non-supervisory employees from each industry.
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CEO compensation also outpaced other highly paid workers and increased income inequality in the U.S. In 2013, the most recent year of data available, the report found CEOs were paid 5.84 times more than the top 0.1 per cent wage earners.
“CEO pay is not a symbolic issue—it has real consequences for the vast majority of wage earners. The rising pay of executives reflects wages that could have otherwise gone to workers and has fueled inequality in the United States,” said Alyssa Davis, one of the authors of the report.
In their recommendations, Mishel and Davis advocate for the U.S. to implement higher marginal income tax rates at the very top and reduce the incentives for executives to push for such high pay. They also recommend an increased tax rate for corporations with high ratios of CEO-to-worker pay scale.
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