Preliminary data show CEO pay jumped nearly 16% in 2020, while average worker compensation rose 1.8%
Data from large firms filing information on CEO compensation through the end of April show corporations and a strong stock market shielded CEOs from the financial impact of the pandemic.
An examination of the early filings of 281 large firms shows:
- The offer by CEOs to forgo salary increases during the pandemic was largely symbolic. Salaries were stable, but many CEOs pocketed a windfall by cashing in stock options and obtaining vested stock awards, compounding income inequalities laid bare during the past year.
- CEO compensation, including realized stock options and vested stock awards, rose 15.9% from 2019 to 2020 among early reporting firms. Growth in CEO compensation was slightly faster than last year’s strong growth—14.0% between 2018 and 2019—while the annual compensation of the average worker increased just 1.8% in 2020.
- Strong CEO compensation growth and modest growth in worker annual compensation yielded a remarkable growth in the CEO-to-worker compensation ratio, which jumped from 276.2 in 2019 to 307.3 in 2020 among early-reporting firms. In firms that retained the same CEO, the CEO-to-worker compensation ratio rose to 341.6 in 2020, up from 278.9 in 2019.
There is no justification for cutting federal unemployment benefits: The latest state jobs data show the economy has not fully recovered
Key takeaways:
- There are still nearly 10 million people actively looking for work and unable to find it. April state jobs and unemployment data released last Friday show that in many of the 24 states—led by Republican governors—that are cutting federal unemployment insurance (UI) programs, labor market conditions look similar to the national picture.
- The data likely understate the weakness of these labor markets, as labor force participation has fallen since the pre-pandemic level. And nearly all the states cutting UI still have significantly fewer jobs than before the pandemic.
- Those still filing for these benefits are the workers that need them the most, due to care responsibilities, health concerns, or other factors. Governors cutting off these key supports for these workers are not acting in the long-term best interest of any state’s workers or businesses.
Republican governors in 24 states—including Florida and Nebraska just this week—have indicated they will pull out from the federal unemployment insurance (UI) programs created at the start of the pandemic. Some states are ending participation in all federal pandemic UI programs, others only some of the federal supports. These actions are dangerously shortsighted.
UI provides a lifeline to workers unable to find suitable jobs, giving them time to find work that matches their skills and pays a decent wage. Moreover, the money provided through these entirely federally funded programs bolsters consumer demand and business activity in local economies, helping to speed the recovery. In many states, these federal UI programs are providing the bulk of all unemployment benefits to jobless workers. By cutting off these programs—which currently provide an extra $300 in weekly benefits, allow workers who have exhausted traditional UI to continue receiving benefits, and expand eligibility to workers typically not included in existing UI programs—governors are weakening their states’ potential economic growth.
Further, the most recent national jobs and unemployment data show that the country has not yet recovered from the COVID-19 recession. In April, the country was still down 8.2 million jobs from before the pandemic, and down between 9 and 11 million jobs since then if you factor in the jobs the economy should have added to keep up with growth in the working-age population over the past year.
New York included undocumented immigrants in pandemic aid, and 290,000 workers will benefit: Other states should replicate the program
Key takeaways:
- Congress and both recent presidential administrations excluded undocumented immigrants from key sources of pandemic aid: unemployment insurance and stimulus checks.
- In April, New York became the first state in the nation to give undocumented immigrants aid that approaches what others got in unemployment insurance, benefiting an estimated 92,000 people. And New York will give undocumented workers who don’t qualify for the higher level of compensation what others got in stimulus payments, benefitting an additional 199,000 people.
- It hurts all of us if any of us are left out of programs intended to get us through the recession and through a health care crisis. New York’s program could readily be replicated in other states.
This April, New York committed an unprecedented $2.1 billion of the state budget to make up for the exclusion of undocumented immigrants from federal aid during the COVID-19 pandemic.
Over a year ago, the pandemic hit New York early and brutally hard. Hospitals were full, and there were heart-wrenching backlogs in burying the dead as its limit. It quickly became clear that immigrants and people of color were disproportionately among those falling sick and dying. At the same time, the notion of “essential workers” took hold, and New Yorkers applauded the people keeping life going for the rest of us, knowing that many were immigrants, including large numbers who were undocumented. The unemployment rate spiked to 16% and was even higher for people of color and immigrants.
Yet, the first round of desperately needed federal aid very specifically excluded many immigrants. Future rounds of aid under both the Trump and Biden administrations continued to exclude undocumented individuals from expanded unemployment insurance and stimulus checks.
Illinois extended unemployment benefits to school workers in the summer, and Minnesota should follow suit
For over a decade, EPI has documented the significant pay penalty that teachers in our country’s K–12 schools suffer as a result of woeful underinvestment in public education. But it is not just teachers who have been underappreciated: Many other school staff who are essential for providing high-quality, safe, and nurturing learning environments face considerable financial challenges as a result of their decision to serve in public schools. Paraprofessionals, classroom assistants, administrative assistants, custodians, food service workers, bus drivers, and other nonlicensed staff in schools typically receive low pay and inadequate hours during the school year, and no employment from school districts over the summer months—meaning a potential loss of 10 or 11 weeks of paid employment.
In 2020, Illinois took an important step toward fixing this last issue, by making nonlicensed school staff eligible for unemployment insurance during the summer months. Illinois’s experience offers guidance for other states considering similar programs, as in Minnesota where a similar measure is currently under debate. We’ll discuss the Illinois experience later on, but first it’s useful to understand a little more about who nonlicensed school staff are and the pay they receive.
Restaurant labor shortages show little sign of going economywide: Policymakers must not rein in stimulus or unemployment benefits
Recent economic data suggest labor shortages in leisure and hospitality have popped up—but there is little reason to worry about spillover into the rest of the economy and no reason to change policy course.
Yes, last week’s jobs report was disappointing, with employment growth slowing significantly from the months before. It would be a mistake, however, to make too much of a single month’s data—the monthly jobs report data are notoriously volatile, and there are still excellent reasons to believe that coming months will see very strong job gains. Further, as disappointing as last week’s report was, there is nothing in it that demands a reorientation of the general policy stance taken by the federal government. The relief and recovery aid already passed (including the boosts to unemployment insurance) should be continued, and proposed packages (like the American Families Plan and the American Jobs Plan) should be passed.
The argument that last week’s report demands a rethink of today’s policy orientation rests on claims that it contained clear evidence of damaging labor shortages induced by either too-extensive stimulus or too-generous unemployment insurance (UI).
There is not compelling evidence of either of these. In fact, nothing in last week’s jobs report calls for a wholesale change of policy course from the federal government. The key takeaways from the data are:
Job openings surged in March as the economy continues to recover from the pandemic
Today’s Job Openings and Labor Turnover Survey (JOLTS) reports an all-time high number of job openings, surging to 8.1 million for the end of March. This is a positive sign that the economy is moving forward. While hires were little changed, I’m optimistic that in coming months those job openings will translate into filled jobs.
One important indicator from today’s report is the job seekers ratio—the ratio of unemployed workers (averaged for mid-March and mid-April) to job openings (at the end of March). On average, there were 9.8 million unemployed workers compared with 8.1 million job openings. This translates into a job seekers ratio of 1.2 unemployed workers to every job opening. Put another way, for every 12 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 1.6 million unemployed workers.
As with job losses, workers in certain industries are facing a steeper uphill battle. In the construction industry as well as arts, entertainment, and recreation, there were more than two unemployed workers per job opening. In educational services, accommodation and food services, other services, and transportation and utilities, there were more than three unemployed workers for every two job openings.
Unemployment and job openings by industry (in thousands), April 2022
| Industry | Unemployment, three-month average | Job openings, three-month average | Ratio |
|---|---|---|---|
| Construction | 579.7 | 433.3 | 1.3 |
| Educational services | 162.3 | 199.7 | 0.8 |
| Retail trade | 799.7 | 1,076.3 | 0.7 |
| Transportation and utilities | 376.3 | 523.0 | 0.7 |
| Durable goods manufacturing | 326.3 | 528.0 | 0.6 |
| Arts, entertainment, and recreation | 127.7 | 216.3 | 0.6 |
| Mining | 20.7 | 41.3 | 0.5 |
| Other services | 205.3 | 430.3 | 0.5 |
| Nondurable goods manufacturing | 164.3 | 348.7 | 0.5 |
| Real estate and rental and leasing | 70.0 | 151.3 | 0.5 |
| Accommodation and food services | 626.0 | 1,488.7 | 0.4 |
| Finance and Insurance | 148.0 | 356.3 | 0.4 |
| Information | 72.7 | 214.7 | 0.3 |
| Government | 346.0 | 1,038.7 | 0.3 |
| Professional and business services | 681.3 | 2,171.0 | 0.3 |
| Wholesale trade | 90.0 | 301.3 | 0.3 |
| Health care and social assistance | 483.7 | 2,005.3 | 0.2 |
Notes: Unemployment levels represent the average of the unemployment level for the current month and the subsequent month in the Current Population Survey to better line up with the job openings data from the Job Openings and Labor Turnover Survey. Both unemployment data and job openings data are then averaged over three months to smooth for better data reliability. These data are non-seasonally adjusted so caution is warranted when making comparisons across time.
Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey and Current Population Survey.
There has been much bemoaning of labor shortages, particularly within accommodations and food services, even though there are no available jobs for one-third of the job seekers in that sector. Any potential shortage from the recent surge in job openings is likely to be quite short-lived, as before long many more workers will come back into job-search as it becomes increasingly safe to pursue these public facing jobs with improving public health metrics, as childcare and schooling becomes more reliable, and as wages rise to compensate for the extra risk of working in face-to-face places during the lingering pandemic. And, as we saw in the April employment data last Friday, the labor market added 241,400 more jobs in accommodation and food services, so the trend is already moving in the right direction.
It’s also important to remember that all potential workers don’t show up in the official count of unemployed, particularly in this recession as workers sheltered at home to avoid the pandemic or to care for family members. The economic pain remains widespread with 22.1 million workers hurt by the coronavirus downturn. I hope hiring picks up in coming months since the labor market continued to face a significant jobs shortfall likely in the range of 9.0 to 11.0 million jobs.
This Mother’s Day, recognize care work as the work that powers our economy
Mother’s Day is, at its core, about care. When we select Hallmark cards and order flower deliveries, we’re honoring the care provided by moms and other maternal figures. This Mother’s Day, though, marks more than a year into a pandemic that threw the disparities in our care system into stark relief. Women left the workforce in staggering numbers to attend to COVID-related caregiving responsibilities at home. This was disruptive for individual families and the economy at large.
So this year, while of course we should celebrate our mothers, there’s much more to be done. Honoring our caregivers goes beyond individual gestures; it calls for a sweeping investment in care workers and services.
Care isn’t a burden for women and families to shoulder alone. It’s the foundation of our economy, and it deserves to be treated as such. For the tens of millions of workers with care responsibilities related to, for example, young children or elderly parents, having stable, high-quality care services available is what makes it possible for them to hold a job. Put simply, care services are needed for the functioning of our modern labor market.
Workers with care responsibilities need a strong care system in place in order to participate in the workforce. As it stands, our care infrastructure is fragmented and inadequate, which cuts off opportunities for millions of workers. The burdens of our inadequate care infrastructure disproportionately fall on women, who still perform the bulk of care work in this country. Those care burdens are a primary cause of low labor force participation among prime age women in the U.S. relative to our peer countries around the world, even before the pandemic. Poor care infrastructure comes at great economic costs.
While a disappointing jobs report, job gains in leisure and hospitality respond to increased demand in April
A disappointing 266,000 jobs were added in April, and March’s employment number was revised down by 78,000. While the overall growth was far below expectations, leisure and hospitality gained 331,000 jobs, a sign that increased demand has led to significant gains in employment in that sector.
The unemployment rate ticked up in April to 6.1%, in large part due to workers beginning to return to the labor force in search of jobs. The labor force increased by 430,000 workers in April, the largest gain in six months. Likely in response to improving public health metrics and increased expectations of job opportunities, more and more workers are actively returning to the labor force in search of work. While wage growth will be the leading indicator of employers having to bid up wages to attract workers, the significant rise in the labor force runs counter to anecdotal claims of labor shortages.
As of the latest data, employment is still down 8.2 million jobs from its pre-pandemic level in February 2020. But, if we include the likelihood that thousands of jobs would have been added each month over the last year without the pandemic recession, the jobs shortfall is more likely in the range of 9.0 and 11.0 million. Now is not the time to turn off vital relief—including expanded unemployment benefits—to workers and their families.
What to watch on jobs day: An improving labor market, but rising long-term unemployment and a significant jobs shortfall are still causes for concern
When the April jobs report comes out tomorrow from the Bureau of Labor Statistics, I expect another month of strong job growth. Progress on the production and distribution of the vaccine, as well as forthcoming aid to state and local governments and direct assistance to workers and their families, means that the labor market should pick up steam. And that’s much needed, because the U.S. economy is still facing a significant jobs shortfall between 9.1 million and 11.0 million jobs, as I show below.
As of the latest March 2021 data, employment is down 8.4 million jobs from its pre-pandemic level in February 2020. In addition, thousands of jobs would have been added each month over the last year without the pandemic recession.
I consider two plausible counterfactuals for how many jobs may have been created if the recession hadn’t hit, as shown in the figure below. First, we could simply add enough jobs to keep up with population growth. There was a noticeable slowdown in ages 16+ population growth early in the pandemic; however, on average, we still would have needed a minimum of 54,000 jobs a month just to keep up with that growth.
Alternatively, we could count how many jobs may have been added if we took pre-recession growth in payroll employment and extended that forward. Average monthly job growth over the 12 months prior the recession was 202,000. Using these reasonable counterfactuals, we are now short between 9.1 million and 11.0 million jobs since February 2020. When the latest job numbers are released tomorrow, we should not only look at the difference in jobs between now and February 2020, but also what could have been if the economy continued growing over the last year.
When corporations deceive and cheat workers, consumer laws should be used to protect workers
A janitorial company lures low-wage, immigrant workers to become “franchisees,” offering the promise of small business ownership and steady income. An online food delivery company provides a place on the app for customers to tip workers. A training program for jobseekers promises a position at the end of the costly course.
But in reality, the franchisees can barely survive, the company keeps the tips, the training is bogus, and the promised job is nonexistent.
Some public enforcement agencies (and even private lawyers) have recently attacked corporate misconduct of this sort by enforcing laws traditionally used to protect consumers in order to address unfair and deceptive labor market practices that target working people, often immigrants and people of color. More enforcement agencies and lawyers should follow their lead. Public enforcement agencies that focus on enforcing consumer protections, including federal agencies, attorneys general, and state and local consumer offices, should take an expansive view of their mission, and take action to protect worker-consumers in their often-complex relations with large corporations that use abusive and predatory practices.
A few recent cases provide examples of how this can be done.