From today’s PBS News Hour:
Over the past few years, many economic indicators have returned to where they were before the Great Recession — among them, the unemployment rate, which has dropped below the 5 percent mark of 2007, housing prices and the stock market, which has nearly doubled its pre-recession peak.
Another, buoyed by rising stock prices: the enormous pay difference between CEOs of the largest U.S. companies and their employees, who earn more than 300 times less than those at the top, according to new data.
Here’s a closer look at the issue.
How has CEO compensation changed?
In 2000, the average CEO was paid 343 times more than the average worker, according to the liberal-leaning Economic Policy Institute. That number dropped to about 188-to-1 in 2009.
It has since rebounded to 312-to-1 last year, according to a report from the Economic Policy Institute.
From 2016 to 2017, the average pay of CEOs from the top 350 publicly traded firms increased 17.6 percent — to $18.9 million — even after being adjusted for inflation, the group found.
How to close the gap
The reason for the pay disparity between CEOs and employees is relatively simple. Closing the gap is much more complex.
A number of methods have been proposed to close the gap, including a cap on compensation, clawbacks for poor performance or executive misconduct, and, as mentioned previously, mandatory publishing of CEOs’ salaries.
James Galbraith, the director of the University of Texas Inequality Project who also served as an adviser to Sen. Bernie Sanders’ presidential campaign, said U.S. companies should look to other countries where laws encourage business leaders to reinvest in their tangible products instead of their stocks.
Read the complete article here.