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Post Leadership
Posted at 01:48 PM ET, 05/11/2012

Crazy data point of the day: How much CEO pay vs. worker pay has grown

We’re trying something new here at On Leadership: We’re keeping our eyes open for interesting data points from newly published research around the Web that are worth sharing with leadership readers.

And these numbers from the Economic Policy Institute definitely caught our attention:


Pretty striking, right?

The context: Spring means proxy season in Corporate America, with everyone from governance research firm GMI Ratings to regional newspapers putting together their annual studies on executive pay. And last week, the Economic Policy Institute came out with theirs, charting how much the ratio between CEO pay and average worker compensation has risen and fallen over the last few decades. (Surprisingly, it’s fallen a lot since 2000; not surprisingly, it’s still astonishingly high.)

But the truly eye-popping number in EPI’s study isn’t how much exponentially more CEOs make than their rank-and-file employees. It’s how exponentially their salaries have grown. Average CEO compensation, according to EPI’s calculations, rose 726.7 percent between the years of 1978 and 2011 — more than double the percentage increase in the Standard & Poor’s 500-stock index. Meanwhile, pay for the average private-sector nonsupervisory worker rose a startlingly meager 5.7 percent. (Check out the full explanation of EPI’s methodology and data.)

My guess is that it’s this inequality that really erodes worker satisfaction and guts employee morale far more than the discrepancy between the top and bottom in any one year’s pay. We get it: You’re CEO, and you’re going to make a lot more, no matter what organizational theory or leadership wisdom might say. But shouldn’t the rest of us at least get to see our pay keep up with the times?

By the way, let me know if you find this kind of “data highlight” interesting and I’ll keep them coming.

More from On Leadership:

Inside an overpaid CEO’s head

A research flip on women’s leadership

The art of Mark Zuckerberg’s hoodie

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By  |  01:48 PM ET, 05/11/2012

 
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