Facebook Twitter

The new serfdom: While U.S. workers lost money last year, CEO earnings shot up 18%

SHARE The new serfdom: While U.S. workers lost money last year, CEO earnings shot up 18%
Expedia Group CEO Peter Kern on stage at EXPLORE 22 on May 4, 2022 in Las Vegas.

Expedia Group CEO Peter Kern on stage at EXPLORE 22 on May 4, 2022 in Las Vegas. While average workers saw the value of their earnings shrink in 2021, CEO salaries rose, according to a new study.

Business Wire via Associated Press

In 2021, corporate profits and CEO salaries soared while average workers across the U.S. watched the real value of their earnings shrink amid the ravages of record-high inflation, according to a new analysis from the AFL-CIO.

Driving the news: The AFL-CIO’s new Executive Paywatch report found CEOs of S&P 500 companies received, on average, $18.3 million in total compensation in 2021 and CEO pay rose 18.2% over 2020, much faster than the U.S. inflation rate of 7.1% for the year.

In contrast, U.S. workers’ wages fell behind inflation, with worker wages rising only 4.7% in 2021. While those workers’ inflation-adjusted wages fell by 2.4% on average last year, the average S&P 500 company’s CEO-to-worker pay ratio increased to 324-to-1, up from 299-1 in 2020.

“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 latest inflation report from the U.S. Labor Department offers further details into those price increases which rose to a 40-year high of 9.1% in June.

U.S. consumers are now paying for groceries that are up 10.4% over last year, gas that’s up nearly 60% over 2021 and shelter expenses that have risen 5.6% since June 2021.

By the numbers: In the past 10 years, CEO pay at S&P 500 companies increased by more than $540,000 a year to an average of $18.3 million in 2021, according to the Paywatch data. Meanwhile, the average U.S. worker saw a wage increase of $1,303 per year over the past decade, earning on average just $58,260 in 2021.

The top five S&P 500 CEO salaries in 2021, according to the report:

  1. Peter Kern, Expedia Group $296,247,749.
  2. Andrew Jassy, Amazon $212,701,169.
  3. Patrick Gelsinger, Intel $178,590,400.
  4. William McDermott, ServiceNow $165,802,037.
  5. Tim Cook, Apple $98,734,394.

Ratios of median worker salaries-to-CEO salaries at these companies:

  • Expedia 2,897-1.
  • Amazon 6,474-1.
  • Intel 1,711-1.
  • ServiceNow 709-1.
  • Apple 1,447-1.

“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,” Redmond said in a statement.

Jassy’s $212 million in compensation last year when compared to the 2021 median annual earnings for a typical Amazon employee of $32,855 pushed the online giant to the top of the ratio chart for S&P 500 CEO-to-worker earnings ratios.

But, an Amazon spokesperson chalked the extreme pay gap up to financial reporting rules, per CNN.

“We are required to report that grant as total compensation for 2021, when in reality it will vest over the next 10 years,” the spokesperson told CNN. “What this equates to from an annual compensation perspective is competitive with that of CEOs at other large companies and was approved by the Amazon Board of Directors.”

The AFL-CIO report notes that while the disparity quotient between what top executives and their average workers earn isn’t necessarily a definitive metric, the number does offer some insight into a company’s priorities.

“A higher pay ratio could be a sign that companies suffer from a winner-take-all philosophy, where executives reap the lion’s share of compensation,” the report reads. “A lower pay ratio could indicate the companies that are dedicated to creating high-wage jobs and investing in their employees for the company’s long-term health.”