Wages have been stagnant or falling for American workers throughout the recovery, but their bosses’ pay has rebounded dramatically. Average CEO compensation hit $14.1 million in 2012, up more than a third from 2009, and the ratio of CEO pay to worker pay hit a staggering 272.9-to-1, according to new research from the Economic Policy Institute. Put another way: the average U.S. worker made 0.3 percent of what the average chief executive did last year.
That’s not a record high. At the height of the dot-com bubble, CEOs earned a bit less than 400 times what workers did:
But it’s a reminder that while the tepid but persistent economic recovery has brought the stock market charging back, it hasn’t changed the trajectory of economic inequality. As the stock market goes, so go the CEOs:
The rising tide for executives isn’t lifting everyone else’s boats, either. Hourly wages took their biggest quarterly hit on record earlier this year, and with unemployment high, workers have steadily increased productivity without being rewarded with a raise in pay.
Previous EPI research showed that the exorbitance of CEO and financial industry compensation packages is driving inequality. Extremely high income inequality isn’t a natural economic state, as the far lower inequality that attended the long post-World War II economic boom attests. And there’s evidence that it actively undermines growth, in part by helping the wealthiest amass political power that they then use to skew public policy in their own favor.
One high-profile effort to curb the ugly divergence of CEO and worker pay from President Obama’s first term has proven a failure, according to Pro Publica’s Jesse Eisinger. Eisinger labels the “Say on Pay” rule in the Dodd-Frank financial reform package – which required companies to get shareholder approval for executive compensation packages – “a bust.”