Chief executive officers' pay exploded in 1990s

The average corporate top executive is paid 419 times as much as the average factory worker, up from a ratio of only 42-to-1 in 1980, according to two Washington think tanks.

Had worker pay risen at the same pace as executive pay over the last decade, the groups said, the average production worker would earn more than $110,000 a year compared with the $29,000 the worker actually makes.

And the federal minimum wage would be $22.08 an hour, not the current $5.15.

The Institute for Policy Studies and the group United for a Fair Economy said the average annual compensation for a chief executive of a large company was $10.6 million in 1998, a fivefold increase from the $1.8 million of 1990. Last year alone, executive pay rose 36 percent, compared with 2.7 percent for the average blue-collar employee.

How much would you be making if your pay had grown as CEO pay has?

Between 1980 and 1998, the average pay of regular working people increased just 68 percent, while CEO pay grew a whopping 1,596 percent. According to Business Week, the average CEO of a major corporation made $10.6 million in 1998, 419 times more than an average blue-collar worker. If runaway CEO pay growth continues at its current exponential rate over the next 50 years, the average CEO will be paid more than 150,000 American factory workers. What would YOUR paycheck be like today if, for the past five years, it had grown at the same rate of increase as an average CEO's?

Here's an example:

1994 annual pay:

$15,000 - Wow! would you be in luck! Today you would be making an amazing $78,355 a year if your pay had grown as much in the past five years as an average CEO's pay. Sounds great, doesn't it? But that's nothing compared with what you would be earning five years from now if that amount of pay kept growing the way a CEO's compensation does. In 2003 you would get paid $297,904!!

$20,000 - $104,747

$25,000 - $130,593

$30,000 - $156,711

$35,000 - $182,830

The projected current and future salaries are estimated by an exponential curve that best describes the existing rate of CEO pay growth. These figures are calculated based on existing 1994-1998 data published in Business Week.

December 3, 1999 issue

Home | About

© Oregon Labor Press Publishing Co. Inc.