Economic Snapshot | Inequality and Poverty

CEO Pay Has Grown 90 Times Faster than Typical Worker Pay Since 1978

Over the last several decades, inflation-adjusted CEO compensation increased from $1.5 million in 1978 to $16.3 million in 2014, or 997 percent, a rise almost double stock market growth. Over the same time period, a typical worker’s wages grew very little: the annual compensation, adjusted for inflation, of the average private-sector production and nonsupervisory worker (comprising 82 percent of total payroll employment) rose from $48,000 in 1978 to just $53,200 in 2014, an increase of only 10.9 percent. Due to this unequal growth, average top CEOs now make over 300 times what typical workers earn.

CEO pay is up 997% since 1978: Percent change in CEO compensation, stock prices, and typical worker compensation, 1978-2014

CEO pay S&P 500 Typical worker pay
1978 0.0% 0.0% 0.0%
1979 0.0% -2.2% -1.3%
1980 0.0% 1.5% -3.8%
1981 0.0% -0.1% -4.3%
1982 0.1% -11.9% -4.1%
1983 0.1% 13.3% -3.6%
1984 0.1% 8.8% -4.0%
1985 0.1% 22.5% -4.2%
1986 0.1% 52.2% -3.5%
1987 0.1% 78.8% -4.6%
1988 0.2% 59.7% -5.0%
1989 86.2% 86.1% -5.3%
1990 86.3% 83.6% -5.6%
1991 86.4% 99.2% -5.7%
1992 229.9% 114.7% -4.5%
1993 270.0% 127.6% -4.1%
1994 192.8% 127.2% -3.8%
1995 294.2% 161.1% -4.2%
1996 401.4% 214.8% -4.1%
1997 663.0% 301.3% -3.0%
1998 1036.7% 391.9% -0.7%
1999 904.3% 489.2% 0.8%
2000 1270.8% 513.0% 1.4%
2001 668.6% 398.9% 2.9%
2002 579.0% 308.7% 5.0%
2003 768.3% 288.2% 6.2%
2004 854.2% 342.7% 6.0%
2005 1017.2% 357.4% 5.5%
2006 1144.3% 380.7% 5.6%
2007 1163.3% 427.0%  6.5%
2008 792.4% 319.1% 6.5%
2009 611.2% 226.9% 10.9%
2010 751.5% 286.7% 11.9%
2011 765.1% 316.8% 10.5%
2012 908.6% 344.4% 9.5%
2013 956.6% 421.9% 10.1%
2014 997.2% 503.4% 10.9%
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Source: Economic Policy Institute analysis of data from Compustat's ExecuComp database, Federal Reserve Economic Data (FRED) from the Federal Reserve Bank of St. Louis, the Current Employment Statistics program, and the Bureau of Economic Analysis NIPA tables, as seen in Top CEOs Make 300 Times More than Typical Workers.

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Although corporations are posting record-high profits and the stock market is booming, the wages of most workers remain stagnant, indicating they are not participating equally in prosperity. Meanwhile, CEO compensation continues to rise even faster than the stock market.

In order to curtail the growth of CEO pay, we need to implement higher marginal income tax rates and promote rules such as “say on pay.” At the same time, we need to implement an agenda that promotes broad-based wage growth so typical workers can share more widely in our economic growth.

Methodology

Our measure of CEO pay covers chief executives of the top 350 U.S. firms and includes the value of stock options exercised in a given year plus salary, bonuses, restricted stock grants, and long-term incentive payouts. Full methodological details can be found in Methodology for Measuring CEO Compensation and the Ratio of CEO-to-Worker Compensation, 2012 Update.


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See more work by Lawrence Mishel and Alyssa Davis