Adrian Volenik
3 min read
Robert Reich, who served as labor secretary under President Bill Clinton, called out what he sees as a glaring contradiction in corporate America: skyrocketing CEO pay alongside stagnant wages for everyday workers.
“CEO pay is up 1,085% since 1978, while typical worker pay is up just 24%,” Reich wrote May 24 on X. “Why do we always hear ‘we can’t afford to pay our workers more’ but never ‘we can’t afford to pay our CEO more’?”
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Reich’s post drew on data from a 2024 report by the Economic Policy Institute, which shows that while CEO compensation dipped in 2023, the long-term trend is unmistakable: executive pay has exploded over the last four decades.
In 2023, CEOs at the top 350 U.S. firms earned 290 times more than the average worker. That's a huge jump from 1965, when the ratio was just 21 to one.
The report also found that CEO compensation has increased far faster than even the earnings of the top 0.1% of wage earners, indicating it’s not just about market competition for talent. “CEO compensation reflects substantial ‘rents’ (income in excess of actual productivity),” the authors wrote.
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One reason for this, the report says, is that CEOs have more sway over their pay than most workers do. Their compensation is heavily tied to stock performance and negotiated with corporate boards that often lack independence. In 2023, stock-related pay made up 77.6% of total CEO compensation.
Meanwhile, average worker pay has only seen a modest increase, just 24% since 1978, despite a 74.8% rise in overall productivity during that time.
The EPI report says this imbalance is a key driver of income inequality. “If very high earners hadn’t pulled away so dramatically, there would be room for broader-based wage growth for the rest of the workforce,” it notes.
To rein in executive pay, the report suggests policies such as raising taxes on top incomes, tying corporate tax rates to CEO-to-worker pay ratios, and giving shareholders more power to approve or reject executive compensation packages.
