In 2020, the data shows, the average C.E.O. of an S. & P. 500 company made $15.5 million—two hundred and ninety-nine times as much as the median-paid employee. Although we do not have directly comparable numbers going back in time, a forthcoming study by Lawrence Mishel and Jori Kandra of the Economic Policy Institute tracks the average C.E.O.’s pay and the average worker’s pay (and the ratio of one to the other) for the three hundred and fifty largest public companies in the United States. They estimate that, in 1978, the average C.E.O. made $1.7 million, adjusted for inflation, which was 31.4 times the average worker’s pay. Since that time, the share of all wages and salaries collected by the highest-earning one per cent of Americans has almost doubled, reaching its current level of about thirteen per cent. Roughly forty per cent of the people who make up that one per cent are executives, and their escalating compensation, Mishel and Kandra argue, has spilled over to other top managers in for-profit firms and large nonprofits alike. The power of example aside, today’s corporate executives frequently derive financial benefit from actions (outsourcing, downsizing, merging, defeating union drives) that directly or indirectly reduce pay and opportunity further down the line. In this way, too, executive pay has arguably been a significant driver, and not just a symptom, of rising inequality. That insight has led a growing number of local, state, and federal lawmakers to develop policy proposals that would reward or penalize companies based on their pay ratios.

In 2020, the data shows, the average C.E.O. of an S. & P. 500 company made $15.5 million—two hundred and ninety-nine times as much as the median-paid employee. Although we do not have directly comparable numbers going back in time, a forthcoming study by Lawrence Mishel and Jori Kandra of the Economic Policy Institute tracks the average C.E.O.’s pay and the average worker’s pay (and the ratio of one to the other) for the three hundred and fifty largest public companies in the United States. They estimate that, in 1978, the average C.E.O. made $1.7 million, adjusted for inflation, which was 31.4 times the average worker’s pay. Since that time, the share of all wages and salaries collected by the highest-earning one per cent of Americans has almost doubled, reaching its current level of about thirteen per cent. Roughly forty per cent of the people who make up that one per cent are executives, and their escalating compensation, Mishel and Kandra argue, has spilled over to other top managers in for-profit firms and large nonprofits alike. The power of example aside, today’s corporate executives frequently derive financial benefit from actions (outsourcing, downsizing, merging, defeating union drives) that directly or indirectly reduce pay and opportunity further down the line. In this way, too, executive pay has arguably been a significant driver, and not just a symptom, of rising inequality. That insight has led a growing number of local, state, and federal lawmakers to develop policy proposals that would reward or penalize companies based on their pay ratios.