CEO/worker wage gap growing, think tank reports show

Journal Record, The (Oklahoma City), Jun 28, 2006 by Marie Price

The average corporate CEO earns more before lunchtime on the first workday of the year than a minimum-wage worker earns all year, according to a new analysis from the Economic Policy Institute.

Efforts are under way, both in Congress and many states, including Oklahoma, to increase the minimum wage from its current level of $5.15 per hour. The federal minimum wage has not been increased since 1997.

An initiative petition is currently being circulated that would increase the minimum wage by $1 per hour in both 2007 and 2008.

Minimum-wage legislation filed during the recently adjourned special session was not considered. Two measures would have increased the minimum wage to $6.15 per hour, one of them over a two- year period.

A CEO must work a full day to out-earn the average worker, EPI analysts determined.

Lawrence Mishel, EPI president, determined that in 2005 the average compensation for a CEO totaled $10,982,000, compared to $41,861 for the average worker.

According to Mishel's analysis, the ratios of CEO salaries to both minimum-wage and average workers fell in 2002, as the stock market plunge took stock-related CEO pay along with it.

In 2005, Mishel determined, the average CEO's salary, bonus, stock and other compensation was 821 times that of a minimum-wage worker.

Since 1965, the report indicates, the ratio of CEO pay to that of a minimum-wage worker has soared from 51 to 821. Its last previous high year was in 2000, when it stood at 815 times the wages of a minimum-wage employee.

Mishel's research shows that the average CEO's compensation was 262 times that of wages paid to the average worker in 2005, up from 24 times in 1965.

Mishel analyzed CEO pay as outlined in Mercer Surveys conducted for the Wall Street Journal.

Worker pay included the hourly wages of production and nonsupervisory employees, assuming the economy-wide ratio of compensation to wages and a full-time, year-round job.

EPI is a nonprofit think tank based in Washington, D.C., that researches the economic impact of economic trends and policies on working people.