As corporations laid off millions of workers in response to COVID-19, many announced their CEOs would take pay cuts to help weather the storm, but these cuts turned out to be largely symbolic. CEOs saw their pay increase in 2020, largely from vesting stock awards and cashing out stock options when stock prices were high. 

In 2020, CEO compensation grew 18.9% to $24.2 million on average at the top 350 U.S. firms, while compensation for the typical worker rose just 3.9%—and this wage growth is overstated from high job losses among low-wage workers skewing average wages higher in 2020. 

Today, the CEO-to-worker compensation ratio is 351-to-1, up from 307-to-1 in 2019 and 21-to-1 in 1965. CEO compensation has risen roughly 60% faster than the stock market and it is rising faster than wages for other earners in the top 1.0%. This escalation of CEO compensation has fueled the growth of top 1.0% and top 0.1% incomes at the expense of everyone else, widening the gap between very high earners and the bottom 90%. 

EPI experts recommend several policy solutions that would limit CEOs’ ability to attain increasingly higher pay—without hurting the overall economy—including:  

• Implementing higher marginal income tax rates at the very top of the income ladder to limit rent-seeking behavior and reduce the incentives for executives to push for such high pay. 
   
• Setting higher corporate tax rates for firms with higher ratios of CEO-to-worker compensation. 
   
• Allowing greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation. 

Friend, EPI was created to center the needs of workers and their families in economic policy discussions to ensure that the rich and powerful aren’t the only ones benefiting from policy decisions. Will you contribute $15 to EPI today so we can continue monitoring the divergence between CEO and worker pay while advancing policy solutions to raise wages for everyone, not just the wealthiest few? 

Thank you for continuing to be an active reader and helping EPI by sharing our research and resources with your network. We appreciate everything you do for our collective movement. 


Eve Tahmincioglu 
Director of Communications, Economic Policy Institute