According to the researchers, the exponential growth in CEO pays is not by virtue of their contribution to economic output but by virtue of their position
The average salary of chief executive officers (CEOs) of the top 350 firms in US was $18.9 million a year in 2017, while a typical worker took home $62,431, a study has revealed.
According to a study conducted by the Economic Policy Institute, last year, the average compensation of CEOs in the US rose by 17.6 percent over 2016.
In comparison, the rise in compensation of an average worker remained flat at a mere 0.3 percent.
The wage disparity has particularly been evident in the 21st century. In 2017, the CEO-to-worker compensation ratio was 312:1, five times greater than the 58:1 ratio in 1989 and far more than the 20:1 ratio in 1965.
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"What this means is that the fruits of economic growth are not going to ordinary workers; they're going to CEOs whose pay continues to be very, very high and has grown far faster in recent decades than average working people," researchers Lawrence Mishel and Jessica Schieder were quoted as saying.
According to the researchers, the growth in CEOs' and executives' compensation was the single largest factor in doubling of the income shares of the top one percent and 0.1 percent of US households between 1979 and 2007.
"Over the last several decades, CEO pay has grown much faster than corporate profits, the pay of the top 0.1 percent of wage earners, and the wages of college graduates," they said.
According to Mishel and Schieder, the exponential growth in CEO pays is not by virtue of their contribution to economic output but by virtue of their position.
"Every firm wants to believe its CEO is above average and therefore needs to be correspondingly remunerated. CEO pay could be reduced and the economy would not suffer any loss of output," the researchers said in the report.