A new study finds the CEO-to-worker pay ratio in 2016 was 271-to1.

By Grace Donnelly
July 20, 2017

While it’s no surprise that CEOs make a lot of money, the actual pay gap between top chiefs and rest of America’s biggest earners is startling: The average CEO at one of the 350 largest companies takes home more than five times the annual earnings of the average 0.1 percenter.

According to a new report on CEO pay from the Economic Policy Institute, chief executives at those 350 companies made $15.6 million on average in 2016—271 times what the typical worker earns.

Though CEO compensation has fallen slightly in the past few years, it has increased by more than 930% since 1978. CEO pay has grown faster than the stock market or the wages of the top 0.1 percent.

This increase in compensation is even more staggering when you consider that the top 1% earned 87 times more than the bottom 50% of workers in 2016, up from a 27-to-1 ratio in 1980.

The EPI report notes that chief executive pay has risen faster than profits or the wages of college graduates over the last several decades, indicating that chief executives are earning more due to their power to set pay.

Higher taxes on top earners or increased corporate tax rates for firms with very high CEO-to-worker compensation ratios could rein in executive pay without adversely affecting workers or the economy, the report suggests.

The U.S. Securities and Exchange Commission’s CEO pay rule, which would require public companies to disclose the ratio of the median annual compensation of all employees to the annual total of the chief executive officer, is one recent measure designed to keep the compensation ratio in check, but the future of the controversial disclosure rule is uncertain.

The SEC opened up comments on the rule in February and on Monday Commissioner Michael Piwowar criticized it during a discussion at The Heritage Foundation.

“You see more and more special interests trying to turn the SEC into a social justice agency rather than having us be an agency which, as our statutory mandate, provides investors with material information,” he said.

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