Financial Advice

CEOs Make 300 Times the Average Worker… But It Used to Be Worse

The Economic Policy Institute released its annual roundup of CEO compensation, and it’s full of depressing data. Let’s start with the current state of things: In 2014, chief executive officers of the country’s largest firms earned 303.4 times more than the average workers in their companies. That ratio has been on the rise since 2009, when CEOs made only 195.8 times more than their employees, which was quite the fall from 2007 and 2000, when the differences were 345.3 and 376.1, respectively.

Somehow, it seems unlikely people will find much comfort in the fact that earnings used to be much more disproportionate. Interestingly enough, this triple-digit difference didn’t come about until the 1990s. In 1989, CEOs made 58.7 times more than their workers, and in 1965, they made only 20 times more.

But that was then, and this is now: The average compensation for a CEO of one of the 350 largest U.S. firms (by earnings) was $16.3 million in 2014. Annual compensation for private-sector, production and nonsupervisory workers averaged $53,200, a figure that hasn’t budged much recently. (CEO compensation includes salary, bonuses, restricted stock grants, options exercised and long-term incentive payouts.) Here’s how those changes have played out: Since 2009, CEO compensation rose 54.3%. In the same period, workers in the same industries of those CEOs saw their compensation fall 1.7%.

This is probably not surprising to all the non-CEOs out there, who have endured stagnant wages for several years. This information probably doesn’t do much for you, other than incite a little hand-wringing and consumer rage, as the cost of living generally continues to rise. There’s not much you can do about these statistics, beyond focus on your own situation and how to keep your expenses manageable, no matter how much or little you see your compensation change from year to year. Keep an eye on common costs that increase every year, like rent, taxes or insurance, and make sure you’re continuing to live within your means — it’s one of the best ways to avoid debt and maintain your progress toward stability and other financial goals.

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This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.