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News » CEO pay skyrockets while workers’ wages lag behind inflation

CEO pay skyrockets while workers’ wages lag behind inflation

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NEW YORK, UNITED STATES — The divide between CEO and worker pay continues to widen, with top executives raking in massive compensation packages while employees struggle with high inflation. 

According to a recent analysis by Equilar and The Associated Press, the median CEO in the S&P 500 was paid a staggering 196 times more than the median employee in 2023, up from a ratio of 185 the previous year.

CEO compensation soars due to stock market boom

The driving force behind the ballooning CEO pay is the booming stock market. With CEO compensation closely tied to share prices, the median total compensation for S&P 500 CEOs soared to $16.3 million in 2023, a 12.6% year-over-year increase. 

In contrast, the median S&P 500 employee earned $81,467, up just 5.2%.

Hock Tan, CEO of Broadcom, topped the list with a $161.8 million payday, fueled by stock awards after the company’s share price nearly doubled. 

Close behind were FICO’s William Lansing, with a total compensation of $66.3 million. Apple’s Tim Cook came in third with $63.2 million, 672 times the median Apple employee’s pay.

The pay gap is even starker at companies relying on hourly, part-time workers. Barbara Rentler, CEO of Ross Stores, earned $18.1 million, a whopping 2,100 times more than the median Ross employee, a part-time hourly retail associate earning $8,618.

Economic and social implications of pay inequality

The growing wage disparity comes at a time when many Americans are struggling with the high cost of living.

The ASA Workforce Monitor survey shows 53% of American workers feel their pay is not keeping up with rising prices, with 38% reporting increased financial stress compared to last year.

Meanwhile, according to the U.S. Bureau of Labor Statistics data, someone would need to earn $212,000 today to match the buying power of a $100,000 salary back in 1994. 

Experts like Eleanor Bloxham, CEO of The Value Alliance, a firm that advises boards on corporate governance, criticize the excessive CEO pay packages.

“The results show that boards and CEOs remain tone deaf related to outrageous pay packages,” Bloxham told CNN. She warns that ignoring equitable wealth distribution could lead to significant workforce disruptions, as employees might eventually seek better opportunities elsewhere.

Top U.S. firms prioritize shareholders over living wages

An Oxfam report revealed that only ten out of the 200 largest corporations in America have committed to paying employees a living wage. 

At the same time, companies have high CEO-worker pay ratios, trending above a 1,500:1 ratio — Jabil (1,864:1), McDonalds (1,745:1), TJX Corporations (1,604:1), and The Coca-Cola Company (1,594:1). 

The study found that across the top 200 U.S. public firms, a staggering 90% of profits – around $1.1 trillion – are funneled to wealthy shareholders instead of being reinvested in workers. 

Meanwhile, the United Kingdom faces a similar pay gap, with FTSE 100 CEOs already earning more than the average UK worker’s annual salary. 

According to High Pay Centre, a UK think tank that campaigns for fairer pay for workers, FTSE 100 CEOs with hourly pay exceeding the median salary of £34,963 ($44,441) have surpassed the typical employee’s yearly earnings as of January 4, 2024. The FTSE 100 is the collective name for the 100 largest UK companies by value.

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