Why Are CEOs Paid 361 Times More Than Their Average Employees?

In 1980 the average CEO-to-worker pay ratio was 42:1. In 2017 the ratio was 361:1. Total CEO compensation averaged $13.94 million last year, compared to just $38,613 for the average production and non-supervisory worker.

We’ve all seen numbers like this so many times now that we barely even blink at a new set. There is, however, new research that may partly explain why this gap has gotten so wide.

The CEO-to-worker pay data were reported Wednesday morning by the AFL-CIO in an update to the union’s Executive Paywatch database and website. The data were compiled from disclosures by companies of the ratio of CEO pay to the median worker’s pay required for the first time last year in federal financial filings.

New research by Harvard Ph.D. candidate Nathan Wilmers, published Wednesday by the Washington Center for Equitable Growth, indicates that increased pressure from large corporate buyers suppresses wages for the workers in the buyer’s network of suppliers. Thus, large corporate buyers like Boeing and Walmart exercise outsized influence on the wages of their suppliers’ workers.

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