According to the latest edition of the AFL-CIO’s Executive Pay Watch report, the gap between CEO pay and worker pay expanded last year. In 2011, CEOs in the Fortune 500 made an average of $12 million, about 380 times what the average worker makes:
The ratio of CEO-to-worker pay between CEOs of the S&P 500 Index companies and U.S. workers widened to 380 times in 2011 from 343 times in 2010. Back in 1980, the average large company CEO only received 42 times the average worker’s pay.
This explosion in pay certainly isn’t justified by corporate performance. In fact, “while the average CEO pay increased 13.9 percent at S&P 500 Index companies in 2011, the S&P 500 Index ended the year at the same level as it started.” Just this week, shareholders at Citigroup voted to reject CEO Vikram Pandit’s pay package (in a non-binding vote), saying that he was collecting millions while the company floundered.
Meanwhile, workers saw their pay increase by just 2.8 percent last year. Already, most of the gains of the nascent economic recovery have been going to the richest Americans (just as they have for recent economic expansions). In 2010, the richest 1 percent captured 93 percent of the nation’s income gains.
The AFL-CIO is calling for regulators to implement a rule included in the Dodd-Frank financial reform law that requires companies to disclose their CEO-to-worker pay ratio. “Astronomical CEO pay is based on the false idea that the success of a corporation is due to one CEO genius. In reality, all employees create value, and CEO pay levels should be more in line with the rest of their company’s employee pay structure. CEOs should be paid as a member of a team, not as a superstar,” said AFL-CIO President Richard Trumka.