U.S bosses earn in one day what rest of us make in a year

Jun 26 2006 by Nic Paton Print This Article

The average American chief executive earned more last year in one working day than most of their workers would make in a year, new figures have revealed.

The statistical snapshot published by the Economic Policy Institute has calculated that in 2005 the average U.S chief executive earned 262 times the pay of the average worker.

This was the second-highest level of this ratio in the 40 years for which data has been gathered.

This meant that, what the CEO earned in one work day (of which there are 260 in a year) would take the average worker 52 weeks to earn.

The institute said the 1980s, 1990s, and 2000s had all been prosperous times for top U.S. executives, especially relative to other wage earners.

During this time there had been an increased divergence between chief executive pay and an average worker's pay.

In 1965, U.S chief executives in major companies earned 24 times more than an average worker.

This ratio grew to 35 in 1978 and to 71 in 1989. The ratio then surged in the 1990s and hit 300 at the end of the recovery in 2000.

The fall in the stock market reduced chief executive stock-related pay (for example stock options) causing CEO pay to moderate to 143 times that of an average worker in 2002.

Since then, however, chief executive pay has exploded and, by 2005, the average CEO was paid $10,982,000 a year, or 262 times that of an average worker (on $41,861).

U.S. CEO pay is still typically higher than that of other countries, separate research has also concluded.

In 2003, for example, U.S. executives earned 1.6 times what their counterparts did in the UK.

The same year, U.S. CEO incentive payments, such as options were 5.2 times what they were for UK chief executives, according to a University of Pennsylvania study. The U.S Securities & Exchange Commission is expected to release a final plan to revamp executive pay disclosure by the end of this summer.