The Economic Policy Institute (EPI) recently released a report investigating the rise in CEO compensation compared to that of non-supervisory workers. In light of the holiday on Monday, I wondered what that compensation would look like if the robust growth in CEO pay between 1978 and 2012 was shared by workers, or if the anemic worker wage growth was shared by CEOs.
The following table looks at both of those assumptions as well as what it would look like if the ratio between workers and CEOs remained constant. Due to the nature of CEO compensation, there are two columns for each category: given compensation is what the compensation package was worth when the firm granted the compensation package to the CEO, actual compensation is what the CEO took home according to W-2 forms. The numbers in the following chart include both salary or bonuses and employer-based benefits, such as health insurance.
If workers had shared in the compensation growth that CEOs have enjoyed over the past 34 years, the total worker compensation package would currently be worth $425,736. The BLS reports that the average worker sees roughly 70% of her total compensation in wages, meaning that she would be taking home an annual pay of $299,292.
Or, if the ratio between CEO pay and worker pay remained constant, CEOs would be making a little under $1.5 million a year (about a million of that in take-home pay). The other nearly $12.6 million currently spent on CEO compensation is enough for the average firm to hire another 245 workers at the 2012 average worker compensation level.
I guess that answers where the jobs recovery has gone.