Americans' wages are lagging inflation — except for CEOs, whose pay jumped 18%
The CEOs of S&P 500 companies earned an average of $18.3 million last year — an increase of 18.2% and more than double the U.S. inflation rate, according to a new report from the AFL-CIO labor union.
The union's annual report on executive compensation, which has become a benchmark for rising inequality in the U.S., found that the ratio between CEO pay and worker earnings reached 324-to-1 last year, up from 299-to-1 in 2020 and 264-to-1 in 2019.
The findings underscore the financial stress that many workers are now experiencing due to inflation, which is outpacing typical wage growth. Although the pay of average workers rose 4.7% last year, their real earnings after inflation fell 2.4%. By contrast, CEOs kept well ahead of last year's inflation rate of 7.1%.
"It's another version of 'more for them and less for us'," said AFL-CIO Secretary-Treasurer Fred Redmond in a statement about the findings. "And it comes at a time when working people's living standards have declined with every increase in the price of food, rent and gas."
The report also pointed "greedflation" as a cause of surging CEO pay. Some experts blame corporate profit-taking, especially as some companies boost prices even higher than their underlying costs, as a driver of inflation.
"During the pandemic, the ratio between CEO and worker pay jumped 23%," Redmond said. "Instead of investing in their workforces by raising wages and keeping the prices of their goods and services in check, their solution is to reap record profits from rising prices and cause a recession that will put working people out of our jobs."
$296 million paycheck
The typical CEO is bolstering their pay with compensation through stock options, restricted stock and non-equity incentives. For instance, the average CEO salary stood at about $1.2 million last year, but the typical restricted stock award amounted to almost $10 million.
The top-earning CEO last year among S&P 500 corporations was Expedia's Peter Kern, whose pay was more than $296 million, according to the AFL-CIO's calculations. Expedia noted that long-term equity incentive awards account for 99% of Kern's 2021 compensation. The bulk of those awards will vest in 2024, according to the company's proxy.
In second place was Amazon CEO Andrew Jassy, with compensation of more than $212 million.
Amazon said Jassy's compensation includes a stock award that will vest over the following 10 years and that was tied to his transition last year from the head of Amazon's AWS unit to the CEO of the company.
"As noted in the proxy, this award is intended to represent most of Andy's compensation for the coming years," a spokesman said.
The AFL-CIO singled out Amazon as having the highest gap between CEO-to-worker pay, at 6,474 to 1. While Jassy's compensation stood at more than $212 million last year, the typical Amazon worker earned less than $33,000 annually in 2021, the union said.
Amazon's warehouses have been the center of unionization efforts, with some successes and some losses. The huge gap between a typical Amazon worker's pay and that of its CEO underscores why some of the e-commerce giant's workers are organizing union drives, the AFL-CIO said.
"But working people are starting to fight back against the economics of greedflation," Redmond said. "From Bessemer, Alabama, to Staten Island, New York, Amazon workers are coming together to form unions and negotiate for a fair return on their work."
Amazon said its jobs have an average starting pay of $18, more than twice the federal minimum wage, and that hourly pay can be as high as $28 an hour in some places. "We're proud to offer compensation packages for our front-line employees that not only include great pay, but also provide comprehensive benefits for full-time employees," the spokesman said.