CEO pay has risen 940 percent since 1978, while over the same period, the average worker has seen a mere 12 percent increase in pay.
“CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills,” wrote economist Lawrence Mishel and research assistant Julia Wolfe.
For comparison, in 1965, the nation’s top CEOs earned $20 for every dollar earned by a worker. In 1989, those numbers became 58-to-1.
What fueled this dramatic increase?
According to Mishel and Wolfe, the rise is “due to a shift in the 1990s and 2000s to compensate CEOs mostly with stock options, restricted shares and other incentive-based pay fueled a spike in their earnings.”
The EPI report suggested remedies to address the ever-growing income gap that include “reinstating higher marginal income tax rates at the very top and setting higher corporate tax rates on companies with higher ratios of CEO-to-worker compensation.”