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(USA TODAY) (USA TODAY)

(USA TODAY)

Madeline Heim
By Madeline Heim June 2, 2021

Yes, pay for CEOs has far outpaced compensation for average workers

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  • A 2019 report from the Economic Policy Institute found that the average annual compensation for CEOs at America’s top firms had increased 1,007.5% from 1978 to 2018

  • Meanwhile, annual pay for the average worker increased only 11.9% during those four decades, the report found.

It’s not often that you’d ever see Democratic Lt. Gov. Mandela Barnes and Republican U.S. Sen Ron Johnson agreeing with each other.

But on one issue, Barnes joked on Twitter, the two appear to be at least somewhat in sync. 

Johnson, the senior senator from Wisconsin, had said in an interview with Madison-based WKOW-TV that wages are rising too much too quickly, which he argued could lead to inflation. 

Barnes, who is a possible candidate to run against Johnson in 2022, had a different increase in wages in mind.

"He may not know it, and surely didn’t mean to raise the point but in a way, he’s somewhat right?" Barnes tweeted May 23, 2021 of Johnson. "Since 1978, CEO compensation rose over 1,000% and only 11.9% for average workers." 

Is the second portion of his tweet — that wage increases for CEOs have far outpaced increases for the average employee — correct? 

Let’s check it out. 

Report shows wage gains for average workers sluggish compared to CEOs 

When asked to provide evidence for the claim, a staffer in Barnes’s office sent a report from the Economic Policy Institute, a left-leaning think tank based in Washington, D.C. 

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The August 2019 report reviewed pay for CEOs and average workers at America’s top 350 firms through 2018. It calculated findings based on two measures: wages based on stock options realized, which fluctuates with the stock market, and based on stock options granted. 

Under the latter measure, the average CEO’s annual wage grew 1,007.5% between 1978 and 2018, as Barnes said. It grew 940.3% under the "stock options realized" measure.

Comparatively, the wages of the average private-sector employee at those companies increased 11.9% during those four decades, according to the report. 

CEOs out-compensated workers by a ratio of more than 200 to 1 in 2018. It’s not the widest gap in history, which came in 2000 when CEO wages were nearly 400 times that of the average worker. But it is wider than it was a few decades ago, when those wages were about 58 times that of the typical worker. 

CEO pay has escalated like this because the top-ranking executives have the power to set pay, the study’s authors argue, contributing to rising wealth inequality. 

Our rating 

Barnes said CEO compensation has risen more than 1,000% since 1978, while wages for the average worker have only increased 11.9%. 

That’s in line with findings from the Economic Policy Institute report. 

We rate his claim True. 


 

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More by Madeline Heim

Yes, pay for CEOs has far outpaced compensation for average workers

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