The Washington PostDemocracy Dies in Darkness

The pay gap between CEOs and workers is much worse than you realize

America's CEOs are piling it on. (bigstock)

Americans might think they know how bad inequality is, but it turns out they actually have no idea.

A new study conducted at Harvard Business School found that Americans believe CEOs make roughly 30 times what the average worker makes in the U.S., when in actuality they are making more than 350 times the average worker. "Americans drastically underestimated the gap in actual incomes between CEOs and unskilled workers," the study says.

But that underestimation isn't merely drastic—it is also unmatched in the world. The gap between Americans' perception and reality is the most among any of the 16 countries for which the researchers measured both the perceived and actual pay inequality.

Part of that stems from Americans’ comparatively modest estimation. The citizens of four countries—South Korea, Australia, Chile, and Taiwan—estimate a higher pay gap between CEOs and low level workers. In South Korea, the perception is that CEOs make 42 times more than the average worker; in Australia, it’s just over 41; in Taiwan, it’s roughly 34; and in Chile, it’s about 33.

But the reason Americans are so bad at guessing how much CEOs make may also be tied to the fact that American CEOs are significantly better paid than those from just about anywhere else

The average Fortune 500 CEO in the United States makes more than $12 million per year, which is nearly five million dollars more than the amount for top CEOs in Switzerland, where the second highest paid CEOs live, more than twice that for those in Germany, where the third highest paid CEOs live, and more than twenty one times that for those in Poland.

While a handful of countries might perceive larger pay gaps than the United States, none of the ones surveyed have an actual pay gap anywhere nearly as large. In Switzerland, the country with the second largest CEO-to-worker pay gap, chief executives make 148 times the average worker; in Germany, the country with the third largest gap, CEOs make 147 times the average worker; and in Spain, the country with the fourth largest gap, the ratio is 127 to one.

Look no further than a few of America's largest corporations for evidence of the country's exceptionally large pay gap. An analysis from last year estimated that it takes the typical worker at both McDonald's and Starbucks more than six months to earn what each company's CEO makes in a single hour.

What Americans share with the rest of the world is a collective disdain for pay inequality. People of all ages, education levels, and income brackets, the study found, believe that low-skilled workers are getting paid too little and high-skilled workers are getting paid too much. "The consensus that income gaps between skilled and unskilled workers should be smaller holds in all subgroups of respondents regardless of their age, education, socioeconomic status, political affiliation and opinions on inequality and pay," the study says.

One can only imagine what that disappointment would look like if everyone had a better sense of how great the pay gap actually is.