Did you know that the average CEO compensation at large U.S. public companies now stands at roughly 280 times the pay of a frontline worker?
That represents a staggering shift from the 1960s, when CEOs earned 20 to 30 times what their workers made. Since the 1970s, the CEO-to-worker pay ratio has increased by over 1,000 percent.
This divergence did not occur by accident. One pivotal change came in the late 1970s, when American corporations moved away from a model centered on growth, stability, and shared prosperity toward one focused on maximizing shareholder value. Executive pay was increasingly tied to stock price rather than the long-term health of the firm.
With the rise of stock options and equity grants, CEOs could reap enormous rewards without raising wages, expanding productivity, or strengthening the workforce. Compensation ballooned even when companies stagnated.
Tax policy amplified the effect. In the 1950s and 1960s, top marginal income tax rates exceeded 70 to 90 percent, effectively discouraging runaway executive pay. That restraint largely disappeared in the 1980s, as marginal tax rates fell sharply, making extreme compensation both legal and cheap.
At the same time, labor power collapsed. Union membership declined, offshoring and automation accelerated, and job security eroded. Productivity rose; worker wages did not. Executive compensation absorbed the gains.
Business leaders defend this system by claiming that outsized pay is necessary to attract top talent. In practice, this has produced a self-perpetuating escalation, as boards benchmark CEO pay against ever-rising peer averages. In a globalized economy, profits flow upward, not outward.
Yet America’s extreme CEO-worker wage gap is not an inevitable feature of advanced capitalism.
Consider international comparisons:
Typical CEO-to-worker pay ratios (large firms):
- United States: ~250–350:1
- Western Europe: ~40–90:1
- Japan: ~15–40:1
In much of Europe, workers sit on corporate boards, restraining excess. In Japan, adopting the American compensation model would be seen as collective irresponsibility, not enlightened management.
Public anger is justified—especially amid persistent inflation and decades of wage stagnation. Can the old restraints return?
There are tentative steps. The Tax Excessive CEO Pay Act of 2025, introduced by Rep. Rashida Tlaib and Sen. Bernie Sanders among others, would raise corporate tax rates on companies whose CEO pay exceeds worker pay by extreme margins, beginning at 50-to-1. But meaningful reform would require broad coalitions and a substantial shift in Congress. Change, if it comes, will be slow—and uncertain.
Transparency may be the public’s strongest immediate tool.
What has happened in America is not merely an economic evolution; it is a moral shift. Accumulation has replaced public responsibility as the dominant ethic, not only in corporate life but across society. Its most vivid emblem is the twice-elected billionaire president, Donald Trump, whose politics celebrate wealth while dismantling social safeguards.
Since 1990, the number of U.S. billionaires has grown from 66 to more than 800, while the median hourly wage has increased by only about 20 percent.
This is not efficiency.
It is not merit.
It is not inevitability.
It is obscene.
—rj
Brimmings: up from the well 