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CEO-worker pay gap stays wide despite wage hikes: unions
[BOSTON] Chief executive officers of S&P 500 companies on average made 335 times more money than US rank-and-file workers last year, down from a multiple of 373 in 2014, according to a union study released on Tuesday.
The figures are issued annually by the AFL-CIO, the largest US federation of labor unions. Pay disparities, which have persisted despite a steady US economy that has reduced the joblessness rate to around 5 per cent and raised wages somewhat, have fueled political debate even as large institutional investors support most executive compensation plans.
The average production and non-supervisory worker made around US$36,900 last year, up from roughly US$36,000 in 2014, according to the AFL-CIO, based on US government reports.
Meanwhile, CEOs of S&P 500 companies made US$12.4 million on average last year, down from US$13.5 million in 2014. An AFL-CIO spokeswoman said the lower average CEO compensation figure reflected how for many, the present value of future pension benefits declined.
Union leaders said the figures showed how pay decisions do not favor the average worker. "The income inequality that exists in this country is a disgrace," AFL-CIO President Richard Trumka said in a statement.
Heather Slavkin Corzo, director of the AFL-CIO's office of investment, said in an interview that recent wage increases are paltry given how worker pay has steadily fallen behind that of top executives.
In 1980, the average S&P 500 CEO made 42 times what the average rank-and-file worker earned, a ratio that by 1990 had risen to 107 times as much.
The high levels of executive compensation have drawn criticism from Democrats Hillary Clinton and Bernie Sanders, as well as Republican Donald Trump, in the current US presidential campaign.
Nonetheless, top shareholders like mutual fund firms have overwhelmingly supported management on executive compensation decisions, according to the advisory "say on pay" votes most public companies hold annually.
James Copland, senior fellow at free-market think tank the Manhattan Institute, called the AFL-CIO study "useless" because it compares two different labor markets that should be evaluated separately.
While most workers could easily be replaced, he said, CEOs are "much harder to substitute." Starting in 2017, the US Securities and Exchange Commission will require public companies to disclose the ratio of the pay of their CEOs to the median compensation of their employees.