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- A new study tracked compensation at the 100 companies in the S&P 500 with the lowest median wages.
- At 51 of those, the Institute for Policy Studies found, CEO pay increased 29% to an average of $15.3 million.
- Meanwhile, the median worker at those companies saw their pay decrease by 2% from 2019.
- See more stories on Insider's business page.
CEOs at most of the biggest companies that pay some of the lowest average wages got a raise last year, according to a new study. By and large, their workers took a pay cut.
The new study from the left-leaning Institute for Policy Studies (IPS) tracked compensation for the 100 companies in the S&P 500 with the lowest median wages for their workers. It found that CEO pay at 51 of them soared by 29% from 2019, averaging $15.3 million. Meanwhile, median worker pay was $28,187 in 2020 – a 2% decrease from 2019. Overall, the pay ratio for CEOs to workers was 830 to 1.
Of those firms, 16 ended the year unprofitably, but they had the highest average CEO pay, at $17.5 million.
"I think everyone suffers when we have the level of inequality that we do now, when people feel like they are working their hardest and not getting a fair reward, and having to worry about paying the rent at the end of the month. I think that has ripple effects throughout our society," Sarah Anderson, a co-author of the study, told Insider.
An April analysis from The Wall Street Journal found that across more than 300 S&P companies, median CEO pay came in at $13.7 million – an increase from $12.8 million the year prior. As Insider's Anna Cooban reported, rocketing CEO pay may be turning off investors, as shareholders move to vote against hiking executive pay.
In an event presenting on the report, heiress, philanthropist, and filmmaker Abigail Disney, a longtime advocate for a wealth tax, said, "The corporation is the lifeblood of American life. And if what's in that blood is poison, we're a mess."
She warned that "If we don't add a soul component to the way we understand business, business will never change. And the people who run our businesses will never ever change."
Legislators have put more pressure on taxing corporations
The report cites the Tax Excessive CEO Pay Act as one potential way to address pay gaps between CEOs and workers. The bill, which was introduced by progressives including Sens. Bernie Sanders and Elizabeth Warren, would levy an additional tax on companies where top executives make 50 times more than their median workers.
Corporate taxes would raise incrementally, starting at 0.5% for companies where there's a 50:1 CEO to worker ratio, and going up to 5% for CEOs who make over 500 times more than their median worker. According to a press release, that measure could bring in around $150 billion over the next 10 years.
San Francisco passed a similar tax as a ballot measure in November 2020. It was projected to bring in around $60 million to $140 million a year.
Portland, Oregon has had a similar measure since 2016. NBC News reported that that tax penalty, which was meant to help combat inequality, ended up bringing in about $4 million in 2018, and was projected to bring in a similar amount in 2019. Some academics in the area were skeptical of the initiative's impact, according to NBC News, and some said that it did not raise significant revenue or bridge a wealth gap.
Disney recently testified at a Senate Finance subcommittee hearing on taxation, chaired by Sen. Warren.
President Joe Biden has proposed upping the corporate tax rate from 21% to 28%, although he's signaled he would be open to a 25% tax rate. Defending the hike, he said he's "sick and tired of ordinary people being fleeced."