We all knew that CEOs were making way, way more than the average worker, but we didn’t know the half of it.
Minneapolis Congressman Keith Ellison just published a new report, which includes wage data on almost 14 million workers at 225 United States companies. The average CEO-to-worker pay ratio is 339 to 1, but got as big as nearly 5,000 to 1 (thanks, Mattel). At all but six of those companies, the average employee would have to work at least 45 years to earn what their CEO makes in one.
The most egregious industry is the “consumer discretionary industry” -- basically, clothing and food -- where the average gap is 977 to 1.
That’s the kind of power dynamic we have come to expect from human beings making their own rules in an indifferent universe. But it turns out the United States is a special case. Our CEO-worker gap far outpaces those of other industrialized nations, and the average American CEO makes four times as much as the average CEO abroad.
The reason this is report a big deal: Until now, CEOs haven’t had to disclose anything like this. The only reason we’re getting this information is because Dodd-Frank passed in 2010, two years after the 2008 financial crisis. One of the causes for the crash was CEOs being massively rewarded for taking risks -- which tend to take investors and consumers down with them if they don’t pay off.
So people wanted to know what kind of a cut bosses were taking from their companies’ revenues. The Securities and Exchange Commission dragged its feet for five years, but reluctantly finalized a pay disclosure rule in the summer of 2015 -- thanks in part to pressure from Ellison and other Democrats.
“It is important to remember that many CEOs and top executives didn’t want to release this data, and now we know why,” Ellison said in a statement.
The report includes a few choice quotes from CEOs who were generally baffled as to why they were being asked about their pay.
“Comparing what I do to the median employee is not even apples and oranges,” Ronald Havner, the CEO of Public Storage, said. “It’s more like fruit compared to ‘Star Wars.’”
Alan Johnson, managing director of Johnson Associates, called the disclosure rule “a cooked-up thing to embarrass firms with a lot of part-time workers.”
Ellison doesn’t buy that CEOs earned their astronomical pieces of the pie by being special and talented.
“Truth is, they’re doing nothing except extracting value and wealth from hard working people because they have economic advantages,” he told The Guardian.
Here are the Minnesota Fortune 500 companies to make the list, and their CEO-to-worker pay ratios.
- 3M: 324:1
- UnitedHealth Group: 298:1
- Ecolab: 238:1
- Ameriprise Financial: 223:1
- U.S. Bancorp: 205: 1