June 2019, Dean Baker, Josh Bivens, and Jessica Schieder
There are many facets to the rise in American income inequality over the last four decades, but a particularly salient one is the explosion of pay for top corporate executives. While chief executive officers (CEOs) have always been well paid, the ratio of CEO pay to typical worker pay went from 20- or 30-to-1 in the 1960s and 1970s to 200- or 300-to-1 in recent years. The average CEO at a Fortune 500 firm now makes close to $20 million per year.1 It is not uncommon for a CEO to make $30 or $40 million if their company has an especially good year or if they have a favorable contract.
This paper argues for the desirability of reining in CEO pay and discusses policy strategies that could be part of such an effort.