Paying the Boss 1,000 Times More Than a Worker Encourages Corporate Recklessness

Back in the 1960s and into the 1970s, few American corporate chief executives pocketed more than 40 or 50 times what they paid their workers. That divide looks quaint by today’s standards, but back then business analysts like the famed Peter Drucker considered even those gaps much too wide.

Drucker called for CEO-worker pay ratios no wider than 20 to 1 or 25 to 1. Average Americans today, according to Harvard Business School researchers, consider an even narrower margin — no more than 7 to 1 — to be ideal.

The contrast between public sentiment and our current reality could hardly be starker.

A new Institute for Policy Studies report reveals that at the 50 publicly traded U.S. corporations with the widest pay gaps in 2018, the typical employee would have to work at least 1,000 years — an entire millennium — to earn what their CEO made in just one year.

Among America’s 500 largest publicly traded corporations, nearly 80% paid their CEO over 100 times what their median worker was paid in 2018. More than a quarter had gaps of 300 to 1 or wider.

Read the full commentary on Marketwatch. 

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies, where Sam Pizzigati is an associate fellow. They’re co-editors of Inequality.org and co-authors of the IPS report “Executive Excess: Making Corporations Pay for Big Pay Gaps.”