A few years back, I discovered that only one of the major think tanks in D.C. is not subsidized by the Gates Foundation. That is the Economic Policy Institute. Unlike other think tanks, which don’t even bother to disguise their ideological preferences, EPI makes its values clear: it advocates for economic and social justice and it is rigorous in its application of evidence.
In this report, EPI finds that the typical CEO is paid 271 times more than the typical worker.
Want a measure of the growth of inequality in our society, the engorgement of the 1%, and the shrinkage of the middle class? Consider this fact:
“While the 2016 CEO-to-worker compensation ratio of 271-to-1 is down from 299-to-1 in 2014 and 286-to-1 in 2015, it is still light years beyond the 20-to-1 ratio in 1965 and the 59-to-1 ratio in 1989. The average CEO in a large firm now earns 5.33 times the annual earnings of the average very-high-wage earner (earner in the top 0.1 percent)….
“Why it matters: Regardless of how it’s measured, CEO pay continues to be very, very high and has grown far faster in recent decades than typical worker pay. Exorbitant CEO pay means that the fruits of economic growth are not going to ordinary workers, since the higher CEO pay does not reflect correspondingly higher output. CEO compensation has risen by 807 or 937 percent (depending on how it is measured—using stock options granted or stock options realized, respectively) from 1978 to 2016. At 937 percent, that rise is more than 70 percent faster than the rise in the stock market; both measures are substantially greater than the painfully slow 11.2 percent growth in a typical worker’s annual compensation over the same period.”
Although this is not a problem that the Trump administration cares about, EPI has some straightforward fixes that a future administration might enact.
Diane Ravitch's blog 
“The CEOs are smarter”
The CEOs are smarter
That’s why they get big bucks
Their job is simply harder
Like shooting sitting ducks
The CEO’s deserving
Of everything they get
It really is unnerving
To think of them in debt
The CEO is better
Much better than the rest
A business-fraud tend-setter
He simply is the best
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We now live in an era of frauds and con men.
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Much of this wealth inequality can be attributed to the constant and never ending war on unions. The over all unionization rate is about 10.7%: from the Bureau of Labor Statistics –
“The union membership rate–the percent of wage and salary workers who were members of unions–was 10.7 percent in 2016, down 0.4 percentage point from 2015, the U.S. Bureau of Labor Statistics reported today. The number of wage and salary workers belonging to unions, at 14.6 million in 2016, declined by 240,000 from 2015. In 1983, the first year for which comparable union data are available, the union membership rate was
20.1 percent, and there were 17.7 million union workers.”
In the 1950s, the unionization rate was in the 30% to 35% range.
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This income inequality does not bode well for the economy which requires a healthy middle class in order to grow. These overpriced CEOs do not create jobs with their wealth. They generally stockpile money into passive investments. A strong middle class will spend much more of their income on goods and services, all of which contribute to the growth of the economy. This is how we built the healthy economy of the fifties.
Privatization is another slap in the face to the middle class. Privatization generally results in lower wages and reduced benefits and pensions. If Democrats genuinely wanted to help the middle class stay in the middle class, they would oppose privatization.
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Well, but, but, CEOs are just 271 times smarter, harder working and all around better than the average worker. Besides, they’re the risk takers and job creators that the rest of us depend on.
Or, at least, I’m sure someone will be along shortly to tell us that’s the case….
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Yes, & when they fail (such as at chain stores, like Sears), THEY get the golden parachute while hundreds to thousands lose their jobs.
And…yes, again…the CEOs are the “risk takers.” But they’re not taking these risks for themselves (re-read prior sentence).
And on it goes…
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This is only one of the indications that the wealthy oligarchy plans to further the agenda of the patricians. The reverse Robin hood mind set. Take from the poor and give to the rich. ALEC writes the laws, Congressional toadies implement them. “The richest nation on earth and about 20% of our children live in poverty.
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Actually that historically would be ALECs daddy the Business Round Table. Even ALEC would be a bit more transparent.
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Well glad to see we are making some progress. But with CEO compensation dropping it must be time for another corporate tax holiday. After all those buy backs do trickle down to the major shareholders .
Yup just what the American people desperately want tax reform . And my Democratic Congressman in NY 2 is determined to work with Republicans till they get it .
Barf time again.
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Make that NY 3 , I must have had the IRA terrorist Peter King on my mind.
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I went to the bank on Monday. The banker told me that RICH students who attend CU bring in HUNDREDS of THOUSANDS of dollars to put into their accounts. He told me that a normal amount they deposit is about $500,000.00. HONEST. Some deposit even MORE money into their accounts.
I have NEVER EVER had that much money. I am a TEACHER.
The wealth GAP has widened … big time. I feel sorry for those rich college kids. They have no clue.
Here’s another one: I hired a plumber to put in a new garbage disposal. He told me that one of his jobs is to fix things in apartments rented by college students. He informed me that some rich college students don’t even know how to change a light bulb. One had no clue that the light bulb needed replacing and didn’t even know how to change a light bulb. Guess these rich students don’t have to do much of anything except give orders and breath.
This is VERY SAD.
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How many spoiled rich brats does it take to change a light bulb?
Zero, silly. Spoiled rich brats don’t change light bulbs. That’s what servants are for.
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Spoiled Rich Brat = #FakePresident Donald Trump, his children, the Walton family, the Koch brothers, Bill Gates (His parents were wealthy enough to send him to an expensive private school), The DeVos family, etc.
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How many spoiled rich brats does it take to turn your stomach?
Only one more than it takes to turn a light bulb.
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Interesting and very informative report. I wonder what the numbers are at more democratic institutions, such as school systems, universities and such.
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The report states that the solutions are
Reinstate higher marginal income tax rates at the very top.
Remove the tax break for executive performance pay.
Set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation.
Allow greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.
I think the general philosophy is that it’s time to talk about setting limits to individual freedoms and choices, since in their present forms, they limit the freedoms and choices for the masses.
People shouldn’t have limitless freedoms in increasing their wealth, their power, and their influence on other people.
The American dream needs to be more democratic, so it needs to be adjusted to be applicable to the 100%, not just to the most ruthless. The dream cannot be just about the selfish individual and its family.
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Given that many companies in the US use Chinese factories and workers as proxies, the real CEO to worker salary ratio is even larger than the 271 to 1 ratio given.
For example, in 2016, Apple’s CEO Tim Cook got paid $8.7 million. If you figure the standard 2000 hours a year, that comes to $4350 per hour.
The average hourly pay in a factory making iPhone in China is $2 per hour or less.
So, Tim Cook makes about 2000 times as much per hour as the people assembling the phones for his company.
If you include the Apple engineers here in the US in the mix, that would bring down the ratio, but the ratio as currently given is actually not an accurate portrayal of the reality. Not at all.
There are a lot of other things about the way Apple and other US companies make their goods and profits that are “under the radar” — and unethical. For example, the workers in those Chinese factories typically have to work 11 hour days just to make ends meet and there are few environmental controls on the factories so there is lots of pollution created for your average iPhone.
But of course, folks in the US and elsewhere who buy iPhones (and other smart phones) don’t care about any of that. As long as they get their cool phone so they can play games, update their Facebook and text while driving and do all the other important stuff.
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Good point, SDP.
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