- A new study tracked compensation at the 100 companies in the S&P 500 with the lowest median wages.
- At 51 of those, the study found, CEO pay increased by 29%, to an average of $15.3 million.
- Meanwhile, the median worker at those companies saw their pay decrease by 2% from 2019.
- See more stories on Insider’s business page.
CEOs at most of the biggest companies paying some of the lowest average wages got a raise last year, a new study found. By and large, their workers took a pay cut.
The study, from the left-leaning Institute for Policy Studies, tracked compensation for the 100 companies in the S&P 500 with the lowest median wages for their workers. It found that CEO pay at 51 of them soared by 29% from 2019, to an average of $15.3 million. Meanwhile, median worker pay in 2020 was $28,187, a 2% decrease from 2019. Overall, the pay ratio for CEOs to workers was 830 to 1.
Of those 51 firms, 16 ended the year unprofitably, but they had the highest average CEO pay, at $17.5 million.
“I think everyone suffers when we have the level of inequality that we do now, when people feel like they are working their hardest and not getting a fair reward and having to worry about paying the rent at the end of the month. I think that has ripple effects throughout our society,” Sarah Anderson, an author of the study, told Insider.
An analysis from The Wall Street Journal in April found that across more than 300 companies in the S&P 500, median CEO pay came in at $13.7 million in 2020, an increase from $12.8 million the year prior. As Insider’s Anna Cooban reported, rocketing CEO pay may be turning off investors, as shareholders move to vote against hiking executive pay.
In an event presenting on the institute’s report, the heiress, philanthropist, and filmmaker Abigail Disney, a longtime advocate of a wealth tax, said: “The corporation is the lifeblood of American life. And if what’s in that blood is poison, we’re a mess.”
Disney, who recently testified at a Senate finance subcommittee hearing on taxation, added: “If we don’t add a soul component to the way we understand business, business will never change. And the people who run our businesses will never ever change.”
Legislators have advocating taxing corporations more
The report cited the Tax Excessive CEO Pay Act as one way to address pay gaps between CEOs and workers. The bill, introduced by progressives including Sens. Bernie Sanders and Elizabeth Warren, would levy an additional tax on companies where top executives make at least 50 times what their median worker does.
Corporate taxes would increase incrementally, starting at 0.5 percentage points for companies with a 50-to-1 CEO-to-worker-pay ratio and going up to 5 percentage points for companies whose CEOs make over 500 times their median worker’s pay. A press release said that measure could bring in about $150 billion over the next 10 years.
San Francisco voters approved a similar tax as a ballot measure in November. It was projected to bring in about $60 million to $140 million a year.
Portland, Oregon, has had a similar measure since 2016. NBC News reported that that tax penalty, which was meant to help combat inequality, ended up bringing in about $4 million in 2018 and was projected to bring in about as much in 2019. Some academics were skeptical of the initiative’s impact, according to NBC News, and some said that it did not raise significant revenue or bridge a wealth gap.
President Joe Biden has proposed raising the corporate tax rate to 28% from 21%, though he’s signaled he would be open to a 25% tax rate. Defending the hike, he’s said he’s “sick and tired of ordinary people being fleeced.”