Top Executive Pay Increased 72 Percent From 2009 To 2017 In US. American Workers’ Wages? Not So Much
2017 was a good year for top U.S. executives, who saw their average annual pay increase to $18.9 million, up nearly 18 percent from 2016.
U.S. workers, however, only saw an average annual pay increase of 0.3 percent from 2016 to 2017, according to a report by the Economic Policy Institute published Thursday.
That number is part of a larger trend showing that executive pay rose 72 percent — an increase of $7.8 million — from 2009 to 2017, according to the report. For average U.S. workers, the increase was only $1,200, or about 2 percent, during the same eight-year period.
“It speaks to the degree the economic recovery is unbalanced,” said economist Larry Mishel, who co-authored the study, according to the Washington Post.
The Economic Policy Institute drew its numbers from the CEO compensation at 350 of the largest public companies in the U.S. One of the main factors in the major increase is stock market growth, which directly impacts the amount of money that CEOs rake in, since many of them are primarily paid with stock grants and stock options, .
The nearly 75 percent increase in chief executive pay since 2009 dovetails with the long-standing bull market that began in March 2009. The bull market could make history should it last past Wednesday, reported the Miami Herald.
The 2017 CEO-to-worker compensation ratio was 312:1, according to the report. That is barely below the peak compensation ratio of 344:1 in 2000 and five times the ratio of 58:1 in 1989. The disparity between CEO and worker pay reflects a larger trend in American society where 40 percent of the wealth belongs to 1 percent of the population, according to a 2017 Washington Post story.
— Economic Policy Institute (@EconomicPolicy) August 17, 2018
The huge pay gap could also be an economic warning. The most disparate CEO-to-worker compensation ratio in 2000 was due to the short-lived dot-com bubble. And the 2007 ratio of 327:1 “preceded the worst economic catastrophe in a half-century,” according to the Washington Post.
U.S. CEO-to-worker pay ratios reflect a marked difference from European ratios, which are 40:1 in Sweden, 91:1 in France and 94:1 in the United Kingdom, according to the Vlerick Business School in Belgium. (RELATED: NYU Just Announced Its Medical School Will Be Tuition Free. But What Will That Really Mean?)
The report used data collected before the GOP’s 2017 tax cuts went into full effect, reported the Washington Post.
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