The CEO-to-worker pay disparity is widening once more, as top executives who took pandemic pay cuts more than recovered lost earnings in the previous year.
CEOs made 254 times more than the average worker in 2021, up 7 percent from the year prior.
The Equilar 100, which provides an early look at CEO compensation among the largest companies by revenue filed proxy statements for the fiscal year 2021 by Thursday, March 31.
In 2021, the median CEO compensation reached $20 million, a 31 percent increase from the previous year, owing to significant increases in stock awards and cash bonuses based on market performance and company productivity.
According to Lawrence Mishel, a distinguished fellow at the Economic Policy Institute, CEO compensation includes wages as well as extremely lucrative bonuses, long-term incentives, and, most importantly, stock options, which account for approximately 85 percent of CEO compensation.
For comparison, CEO pay declined by just 1.6 percent between 2019 and 2020 due to pandemic cuts, from $15.7 million to $15.5 million.
Median worker compensation at Equilar 100 companies rose from $68,935 in 2020 to $71,869 in 2021, roughly a 4 percent increase.
This increase is due in part to companies that offered bonuses and other cash payouts in the recovering pandemic economy, which saw increased consumer demand and a tightening labor supply.
Sarah Anderson, an executive compensation expert at the progressive think tank Institute for Policy Studies, said: “Workers many of whom are on the frontlines of the crisis, have not been reaping the rewards.
“They really just let loose in 2021 and were focused on keeping their executives happy and not worrying as much about what was happening on the worker end, In the long run, and even in the short run, it’s not going to be good for the bottom line.”
The Economic Policy Institute estimates CEO pay has increased by 1,322 percent since 1978, compared with an 18 percent bump for the typical worker over this time period.
Typical worker wages have not increased as fast as CEO pay for a number of reasons.
Mishel says high unemployment, globalization, the erosion of unions, low labor standards, the increase in non-compete clauses and domestic outsourcing, like shifting to a workforce of freelancers.
The worker pays improved by about 5 percent in the last year, to $31.58 an hour but wage growth appears to be slowing down while everyday costs continue to increase — the consumer price index rose to 8.5 percent in March.
Meanwhile, at the end of 2021 companies said they were setting aside 3.9 percent of their payroll budgets to raises, according to a November Conference Board survey representing more than 10,000 workers.