Teresa Lo
Robert ReichThe CEO-to-worker pay gap at America’s largest public companies is now 399-to-1.
In 1965, the ratio was 20-to-1.
Trickle-down economics was always a sham.
CEO pay has skyrocketed 1,460% since 1978: CEOs were paid 399 times as much as a typical worker in 2021
What this report finds: Corporate boards running America’s largest public firms are giving top executives outsize compensation packages that have grown much faster than the stock market and the pay of typical workers, college graduates, and even the top 0.1%. In 2021, we project that a CEO at one of the top 350 firms in the U.S. was paid $27.8 million on average (using a “realized” measure of CEO pay that counts stock awards when vested and stock options when cashed in). This 11.1% increase from 2020 occurred because of rapid growth in vested stock awards. Using a different “granted” measure of CEO pay (which counts the value of stock awards and options when granted rather than realized), average top CEO compensation was $15.6 million in 2021, up 9.4% since 2020. In 2021, the ratio of CEO-to-typical-worker compensation was 399-to-1 under the realized measure of CEO pay; that is up from 366-to-1 in 2020 and a big increase from 20-to-1 in 1965 and 59-to-1 in 1989. CEOs are even making a lot more than other very high earners (wage earners in the top 0.1%)—almost seven times as much. From 1978 to 2021, CEO pay based on realized compensation grew by 1,460%, far outstripping S&P stock market growth (1,063%) and top 0.1% earnings growth (which was 85% between 1978 and 2021, according to the latest data available). In contrast, compensation of the typical worker grew by just 18.1% from 1978 to 2021. Why it matters: Exorbitant CEO pay is a major contributor to rising inequality that we could restrain without doing any damage to the wider economy. CEOs are getting ever-higher pay over time because of their power to set pay and because so much of their pay (more than 80%) is stock-related. They are not getting higher pay because they are becoming more productive or are more skilled than other workers. This escalation of CEO compensation and of executive compensation more generally has fueled the growth of top 1% and top 0.1% incomes, leaving fewer of the gains of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or were taxed more). How we can solve the problem: We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so. Such policies could include reinstating higher marginal income tax rates at the very top; setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation; using antitrust enforcement and regulation to restrain the excessive market power of firms—and by extension of CEOs; and allowing greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.
Dave Neary@rbreich The problem with Trickle Down economics is that people higher up dam up all the streams.
ChicagoDave has moved.@rbreich
"They" talk about the budget and cutting costs, but never about increasing revenue by doing away with the failed economics of Trickle Down theory.
"They" talk about the budget and cutting costs, but never about increasing revenue by doing away with the failed economics of Trickle Down theory.
Jono@rbreich MAGA!
Dr Susi Arnott@rbreich 'Wealth' is hoovered up, not trickled down...
SellaTheChemist@SusiArnott @rbreich We live in a kleptocracy and you and I blew it when we did PhDs instead of applying to Morgan Stanley…
Sune Auken@sellathechemist @SusiArnott @rbreich
Then again, you did retain your souls. There are worse things to keep.
@SuneAuken @SusiArnott @rbreich My grandmother always thought me a half-wit because I did science and didn't know German so couldn't read Faust in the original. Maybe it was my soul she was trying to protect!
I inherited her father's complete Goethe. And I still can't read it!!! 😜
Leonie@atolisglli @sellathechemist @SusiArnott @rbreich
It's so beautiful. The literary scholar in me I absolutely adores it. And then it's a "letzter Hand" edition - which is such a rare thing today. Lovely.
Agreed. I think we spend far too much time speaking ill of one another and not appreciating each others' value between the fields.
As a Humanities researcher, I hugely admire the work done by scientists and love it when my kids study science.
Yugoboy@rbreich stop using facts to try to talk sense to the right.
They only listen to grievance, bigotry, and hate.
#DefendDemocracy
#SmashFascism
They only listen to grievance, bigotry, and hate.
#DefendDemocracy
#SmashFascism
Derek 🌈
Kees van der Leun@rbreich Gush-up economics.
Aviva Gary
Phil Calvin@rbreich Now tell us what the wealth gap is between those groups. Hard to do a ratio when one number is negative.
Clifford DiveHere's a clue — was trickle-down promoted by the workers or the bosses?
Lennie@rbreich sham or scam?
Tofu Golem@rbreich
If only we can make the wealthy people wealthier, then the elites will trickle good jobs all over us! [/sarcasm]
If only we can make the wealthy people wealthier, then the elites will trickle good jobs all over us! [/sarcasm]
1Mar𝒵ipan
Amanda Hugankiss@rbreich And we all watched it happen.
C0ppertop@rbreich but they also have to pay way way way more in body guards too.
Stargeezer Smith@rbreich
I remember it being called a sham when it was introduced. The press never investigated it or called it out.
I remember it being called a sham when it was introduced. The press never investigated it or called it out.
Ty Ross@rbreich Indeed
Sane Thinker@rbreich I have called it piss on you economics forever. How come the Republicans get away with this scam over and over again, Robert?
Patrick McLaughlinThat’s a 20:1 ratio from CEO now to CEO then.
In short… workers should be making (at least) 20 times what they are now, just to restore parity.
IntrospectionException@rbreich
Nonsense. It used to be pour-down economics. Clearly that has been fixed.
Nonsense. It used to be pour-down economics. Clearly that has been fixed.
Patricklee@rbreich as you’re probably aware, they have been trying to sell this “trickle” for about a century and counting now.
Yet Water Was 
@rbreich my understanding is that trickle down economics, like Machiavelli's Prince and the game Monopoly, it was meant to be a cautionary tale of what NOT to do, but then sociopaths took it as the way forward.
G. Knowles
The Doctor Is In@rbreich It's really funnel-up economics: money is taken from poorer people to make rich people richer.
costrike
Kevin Karhan 
@rbreich you wrote #capitalism wrong.
It's a #BiggerFoolsScam!
Kerri Levine
Gary D Lynne@rbreich , yes, and, with no scientific evidence that the 399-to-1 ratio increases company productivity. It is not about incentive, it is about excessive, unethical greed. Need to shift the conversation to just what is an adequate incentive (the 20-to-1) is likely much closer to being so, while everyone else also gets a piece of the pie. It is about "optimal inequality" .. see my Blog https://www.metaeconomics.info/post/adam-smith-on-income-and-wealth-inequality
Too Much Inequality? Time to Move Toward Optimal Inequality?
(Updated April, 2023) Krugman (2022) in the New York Times reminded me of what Adam Smith had to say about the matter of inequality, and, notice, I am talking here about inequality not redistribution. Krugman (2022) also points to the Realtime Inequality simulator developed by Thomas Blanchet, Emmanuel Saez, Gabriel Zucman, Department of Economics, at the University of California- Berkeley. The inequality in the US is unprecedented, and, needs to be dealt with. Also see Krugman, 2023, on the
@rbreich Trickle-down was always (and always will be) a sham because the primal driver in human nature is self-interest. As Adam Smith proposed, while few got and read the memo, it is essential to temper the arrogance of self-love (self-interest) with that which the other can go along with (empathy-based other/shared-interest). Trickle down fails to temper the arrogance.
miriam heddy@rbreich
CEO= Clearly Egregiously Overpaid.
CEO= Clearly Egregiously Overpaid.
C.@rbreich This has bothered me for decades.
If you accept that a great CEO or other executive really can make enough of a difference to be worth a $1M salary, can another CEO truly be 20x more productive? How about 200x?
How about Jeff Green, at 835x that?
Would a top company led by a CEO that "only" made $35M really come out $800M behind the same company if led by Mr. Green?
Exec compensation is out of control because boards no longer represent the shareholders. Just an old-boys' club.