The average S&P 500 chief executive made $13.1 million last year, 347 times more than the average US worker, according to a labor group analysis released on Tuesday, up from 335 times as much in the previous year. The widening pay gap reflects a growing income inequality, according to the AFL-CIO, the largest federation of U.S. labor unions, which posted the latest figure on its website. The group used the survey release to highlight slow U.S. wage growth and the outsourcing of jobs to countries with lower wages.
AFL-CIO President Richard Trumka said compliant corporate directors were at fault for enabling top executives’ pay, even when investor returns lag.
“The system is rigged,” Trumka said in an interview with CNBC on Tuesday. “We think shareholders ought to become more active and lower those (executive pay raises), and that workers ought to get a bigger share of the wealth they produce.”
The labor group’s annual study often draws notice as a measure of how U.S. workers largely are not sharing the economic gains of those at the top of the income scale, even as official unemployment remains low. Dissatisfaction among those workers was one reason many backed Donald Trump in last year’s U.S. presidential election.
At the same time U.S. investors do not seem upset with the situation. In the advisory votes that S&P 500 companies held for their shareholders on executive pay last year, they received average support of 91 percent, according to consulting firm Semler Brossy. Only 6 companies received less than 50 percent support in the advisory votes.
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The AFL-CIO found the average CEO of an S&P 500 company made roughly $13.1 million in 2016, a 6 percent increase over the prior year. In contrast the average annual pay of production and non-supervisory workers in the United States was $37,632, a 2 percent increase, the labor group said.
The AFL-CIO’s measure is imperfect because it does not compare executives directly with their own employees. A rule dating from the administration of Democratic former President Barack Obama that is slated to go into effect next year would require most publicly listed U.S. companies to disclose the ratio of their CEO pay to that of the median pay of their workforce.
Michael Piwowar, a Republican member of the U.S. Securities and Exchange Commission, said in February that the agency was seeking comments about whether to delay the rule and whether companies might face challenges with compliance, prompting calls from unions, pension funds and others in support of the disclosure.