What’s going on:
Research firm Equilar published a study on Wednesday that examined 100 CEOs who raked in the highest earnings amongst U.S. public companies earning a revenue of $1 billion or more, and whose financial disclosures were recorded as of the 31st of March.
Despite a turbulent year marked by an 18% dip in the S&P 500 and an economic slowdown fueled by the Federal Reserve’s rate hikes, CEOs managed to come out on top with impressive pay gains.
The study found that the median pay ratio at companies led by the CEOs studied by Equilar increased to 288 times the pay of their median employee, up from 254 times in 2021, according to Reuters.
Why it matters:
This growing pay disparity between CEOs and their workers may negatively impact employee morale, motivation, and overall job satisfaction at larger firms. There have already been major labor strikes around the world in 2023 regarding wage gaps – because the global economy is experiencing high labor shortages on top of high inflation rates.
Addressing the issue of the widening pay gap between CEOs and employees might require a multifaceted approach for businesses that includes reevaluating executive compensation structures, investing in employee well-being, and promoting transparency and communication around pay decisions.
How it’ll impact the future:
A growing wage gap between employers and employees could also contribute to a decline in employee morale and productivity around the world.
As more research gets published – like the findings of the Equilar data – this may lead workers to feel undervalued and underappreciated compared to their top executives. In light of the high inflation rates that are anticipated to continue in 2023, the widening wage gap may provide extra incentives for more employees to ask for higher wages this year.
