LONDON  - America’s chief executives have been losing ground on pay. That may be hard to believe, but facts are facts.

The data come from a study by the Economic Policy Institute, a left-leaning think tank. Their latest report, published on Wednesday, calculates that the average remuneration package for the occupant of the corner office at the largest 350 quoted U.S. companies was 278 times the average U.S. employee typical of the companies they ran in 2018. Remarkably, that ratio has slipped by almost a quarter from a peak of 368 in 2000.

Few people would describe a package of $17.2 million, last year’s average, as meagre. But bosses are high-ego types, so perhaps they deserve a tiny bit of sympathy for their loss of relative standing.

Or perhaps not. After all, the comparable CEO-to-average-worker ratio was 30 in 1978. That was a generation ago, but it is highly improbable that a top corporate job requires a lot more skill now than then. And a boss-to-average-employee pay ratio of 278 still looks like a big number to anyone who thinks a few individuals are too richly rewarded in the United States.

Those malcontents could just sit back and wait. After all, if the post-2000 trend continues, in a mere 50 or so years the ratio will return to the levels of four decades ago. Back then, few people outside of executive suites were concerned about senior executives being underpaid. Yet somehow, since 1978 a big-company CEO pay package has increased 10-fold, while a private-sector worker’s has expanded by only about 12%.

That shows that even if chief executives’ relative pay inflation has slackened since 2000, it’s far from over. It remains one the outstanding examples of income inequality in the United States. With anti-elitism a significant theme in some parts of the Democratic party, bosses might want to consider ratcheting down their compensation faster. Slightly smaller pay packages would cause them no practical pain – unlike a political revolution against them.

CONTEXT NEWS

- The compensation of chief executives at the 350 largest U.S. companies has grown 940% since 1978, while typical employee pay has risen only 12% during that time, according to a report by Lawrence Mishel and Julia Wolfe for the Economic Policy Institute published on Aug. 14.

- Using preliminary data, the report calculated that the average pay of the chief executives at the largest 350 U.S. firms in 2018 was $17.2 million, including stock options at their realised value. The remuneration was 0.5% lower than in 2017 and 7.1% higher than in 2016.

- The researchers also compared CEO pay with the average pay of full-time workers in their sectors. That ratio was 278 in 2018. The peak ratio was 368 in 2000.

(Editing by Richard Beales and Amanda Gomez)

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