CEO-Worker Pay Resource Guide - Inequality.org
Topics
Corporate Power
Culture
Education
Environment
Executive Pay
Gender Inequity
Health
Housing
International
Labor
Philanthropy
Policy
Racial Equality
Taxes
Technology
Wealth Concentration
All Articles
Articles
Facts
Inequality and Covid-19
Income Inequality
Wealth Inequality
Racial Economic Inequality
Global Inequality
Gender Economic Inequality
Inequality and Health
Inequality and Taxes
Inequality and the Care Economy
Inequality and Philanthropy
Resources
Inequality Weekly
Organizations
Inequality Quotes by Historic World Leaders
Books
Our Work
Reports
Books
Policy Development
Action
CEO-Worker Pay Resource Guide
The growing movement to crack down on corporations that reward top executives at worker expense.
Since 2018, U.S. publicly held corporations have had to annually report the ratio between their CEO and median worker compensation. Corporate lobby groups and allied Republicans fought hard to repeal, delay, or water down this disclosure mandate, a measure initially enacted as part of the 2010 Dodd-Frank financial reform legislation. But institutional investors weighed in heavily to defend pay ratio disclosure, as did hundreds of thousands of individuals outraged about the extreme pay gaps at the vast majority of large U.S. corporations.
CEO-worker pay ratio disclosure has boosted momentum behind efforts to use tax, contracting, and subsidy policy to narrow our compensation divides. In 2016, the city of Portland, Oregon, adopted the world’s first tax penalty on corporations that pay their CEO more than 100 times their median worker pay. In November 2020, voters in San Francisco overwhelmingly approved a similar tax.
These landmark precedents have the potential to turn every level of government into a battleground over corporate pay policies that fuel inequality. Lawmakers in at least nine U.S. states and in the U.S. Congress have also introduced pay ratio taxes. India and the UK are also now requiring pay ratio disclosure.
General Resources on CEO-Worker Pay Ratios
Resources on the Portland CEO Pay Pax
Resources on the San Francisco CEO Pay Tax
Federal Proposals Related to CEO-Worker Pay Ratios
State Legislative Proposals Related to CEO-Worker Pay Ratios
Letters to the SEC in Support of CEO-Worker Pay Ratio Disclosure
Inequality.org Analysis and Coverage of CEO Pay Excess
Media Coverage of the CEO Pay Surtax and Other Similar Proposals
Academic Resources and Research About CEO-Worker Pay Gaps
Videos
General Resources on CEO-Worker Pay Ratios
Poll: Voters Across the Political Spectrum Support CEO-Worker Pay Gap Taxes
Executive Excess 2025
(IPS report on the “Low-Wage 100” corporations, looking at their CEO-worker pay gaps and spending on stock buybacks)
All 30 previous annual IPS
Executive Excess reports
Sarah Anderson,
Testimony Before the Senate Budget Committee
, June 12, 2024
AFL-CIO Paywatch
(includes searchable database)
Sarah Anderson,
Testimony Before the Senate Budget Committee
, March 17, 2021
Fact Sheet: CEO Pay Reform is a Transpartisan Issue
How Taxpayers Subsidize Giant Corporate Pay Gaps
(IPS report analyzing pay gaps at the federal government’s top 50 contractors and top 50 subsidy recipients)
Resources on the Portland CEO Pay Tax:
Article in the Oregonian
with revenue figures through 2020 and a listing of top companies paying the tax.
Article in The Nation
with Portland surtax 1st year revenue figures
Institute for Policy Studies Backgrounder
on the Portland CEO-worker Pay Ratio Surtax
Text of the Portland legislation
City of Portland Bureau of Revenue assessment of the legislation
List of the
more than 500 publicly traded businesses
that “do business” in Portland that may be subject to the surtax.
Resources on the San Francisco CEO Pay Tax:
Tax revenue from the first 1.5 years
higher than expected and more resilient than other local revenue sources
Institute for Policy Studies Backgrounder
, including comparison of San Francisco and Portland models
City of San Francisco revenue assessment of the legislation
San Franciscans Vote Overwhelmingly to Rein in Overpaid CEOs
Federal Proposals Related to CEO-Worker Pay Ratios:
The Tax Excessive CEO Pay Act would apply graduated tax increases on corporations with large CEO-median worker pay gaps, beginning with 0.5 percentage points on corporations with pay ratios of 50 to 1 and rising to 5 percentage points on firms with ratios above 500 to 1. In the 119th Congress:
S.2818
H.R. 5298
Support materials
The CEO Accountability and Responsibility Act (
H.R. 5019
) imposes similar tax penalties for large pay ratios.
This bill would also offer preferential treatment in federal contracts to companies with pay ratios below 50:1.
The
Curtailing Executive Overcompensation (CEO) Act
would apply an excise tax to publicly traded and private companies that have above a CEO-to-median-worker pay disparity of more than 50 to 1.
S. 3176
H.R. 6191
in the 118th Congress)
Explainer: The CEO Pay Problem and What We Can Do About It
. This joint Institute for Policy Studies-Congressional Progressive Caucus Center report describes numerous federal proposals to narrow CEO-worker gaps and marks progress to date.
Rep. Jan Schakowsky introduced the Patriotic Corporations of America Act (
H.R. 4186
) in 2021 to extend tax breaks and federal contracting preferences to companies that meet good behavior benchmarks, including CEO-worker pay ratios of 100-1 or less.
Sen. Sanders (I-Vt.) and Rep. Ro Khanna (D-CA) authored a bill in the 116th Congress (
S. 3640
) that would prohibit stock buybacks where CEO pay exceeds 150 times the compensation that goes to a company’s median pay.
Sen. Jeff Merkeley (D-OR) introduced a bill in the 116th Congress, the Equity in Compensation Act (
S. 2312
), which would apply graduated surtaxes on corporate income tax liabilities, beginning with 2% on corporations with pay ratios of 30 to 1 and rising to 10% on firms with with ratios above 1,000 to 1.
Rep. Nydia Velázquez (D-NY) introduced a bill, the Greater Accountability in Pay Act (
H.R. 4242
), which would require publicly held corporations to annually disclose the ratio between pay raises for top executives and median employees.
State Legislative Proposals Related to CEO-Worker Pay Ratios:
California (
SB 37
Connecticut (
HB 6373
) (A separate state general assembly bill,
HB 6747
, would disqualify companies with CEO-worker pay ratios of more than 100 to 1 for state subsidies and grants.)
Hawaii (
SB 747
Illinois (
HB 3335
Massachusetts (
H.3261
S. 2026
Michigan (
HB4603
Minnesota (
HF 65
New York (
S.1659
and
A.7454)
Rhode Island (
H. 5141
and
S. 0318
) (A separate RI state senate bill,
S. 0211
, would give preferential treatment in state contracting to corporations that pay their CEOs no more than 25 times their median worker pay)
Washington (
HB 1785 and SB 5638
Letters to the SEC in Support of CEO-Worker Pay Ratio Disclosure:
A wide range of institutional investors, policymakers, and academics have pressed the SEC for clear and strong federal regulations on CEO pay ratio disclosure. For a full list, see
2017 submissions
and
2013/2015 submissions
State Treasurers Press SEC Nominee, Congress on CEO Pay Disclosure Rule
Rep. Keith Ellison, et al., Members of Congress
Senator Robert Menendez and 8 other senators
Senator Tammy Baldwin
100 investors representing $3 trillion in assets under management
CALSTRS
Network for Sustainable Financial Markets
Religious Society of Friends
SharePower Responsible Investing, Inc.
Trillium Asset Management
US Social Investment Forum
Walden Asset Management
AFL-CIO
Lynne Dallas, Professor of Law, University of San Diego
Sue P. Ravenscroft, Roger P. Murphy Professor of Accounting, Iowa State University
Institute for Policy Studies
Stay up-to-date on CEO excess
Subscribe to our newsletter today!
Inequality.org Analysis and Coverage of CEO Pay Excess:
CEOs with lowest-paid US workers ‘focused on own short-term windfall’ – report
Low-Wage Employers Spent Billions Inflating CEO Pay Through Stock Buybacks
Our Outrageous CEO-Worker Pay Gap: Unfair and Unwise
From France, an Unexpected Call for a Ceiling on CEO Pay
Biden Budget Pushes Back Against CEO Pay-Inflating Buybacks
How Excessive CEO Pay Undermines Enterprise Effectiveness and Efficiency in the 21st Century
Taxpayers are Subsidizing Soaring CEO Pay at Pentagon Contractors
Four CEO Pay-Related Taxes in Play on Capitol Hill
To Break the Corporate Tax Logjam, Tax Overinflated CEO Pay
Tying Equity Strings on the Semiconductor Subsidies
How Corporations Pumped Up CEO Pay While Their Low-Wage Workers Suffered in the Pandemic
Executive Excess: How Taxpayers Subsidize Giant Corporate Pay Gaps
Taxpayers Are Footing the Bill for Sky-High CEO Salaries
Rep. Keith Ellison Takes a Hard Look at New Pay Ratio Data
Historic CEO Pay Tax Passes in Portland
Tracking Corporate Responses to the Tax Scam
How to Track CEO-Worker Pay Ratios
Del Monte’s Pay Ratio is Largest to Date at 1,465:1
Eleven ‘Small’ Banks that Would Gain from the Senate Banking Bill Sport Hefty Pay Gaps
Bloomberg Q&A on New CEO-Worker Pay Ratio Data
A New Landmark in CEO-Worker Pay Ratio Disclosure
For Minimum Decency, a Maximum Wage
Media Coverage of the CEO Pay Surtax and Other Similar Proposals:
Insider:
How to Crack Down on Greedy CEOs
The Hill:
To break the corporate tax logjam, tax overinflated CEO pay
The Guardian:
US millionaire CEOs saw 29% pay raise while workers’ pay fell, report finds
Wall Street Journal:
Bernie Sanders Targets CEO Pay in Effort to Keep Spotlight on Workers
CNN.com:
Some CEOs earn 1,000 times more than their workers. Here’s how to stop that.
Detroit Free Press:
The US should tax excessive CEO compensation
(by Rep. Tlaib)
Washington Post:
Bernie Sanders pushes new tax targeting large companies where CEOs earn far more than workers
Marketwatch:
Paying the boss 1,000 times more than a worker encourages reckless corporate behavior
Robert Reich:
Former Labor Secretary calls for tax on corporations with CEO-worker pay gaps above 100 to 1
Vox:
A plan to fix inequality would target CEOs who make 100 times more than their employees
The Nation:
When Corporations Pay CEOs Way More than Workers, Make Them Pay
The Financial Times:
US companies reveal pay gap between bosses and workers
The Guardian:
Study finds extreme CEO-worker pay disparity at taxpayer-supported companies
USA Today:
CEO vs. worker pay: Federal contractors have big compensation gaps
The Guardian:
No CEO should earn 1,000 times more than a regular employee
Orange Country Register:
Here’s how much CEOs’ pay has gone up and down — but mostly up and up
New York Times:
Portland Adopts Surcharge on CEO Pay in Move vs. Income Inequality
The Nation:
This City Just Came Up With a Novel Way to Fight Inequality: Taxing Corporations With Extreme Pay Gaps
Fast Company:
Why Portland’s Tax On CEO Pay Matters
Moyers & Company:
Local Governments Aren’t Waiting for a Federal Fix for Runaway CEO Pay
Bloomberg:
CEO Pay Targeted in San Francisco, Rhode Island
Bloomberg:
Income Inequality Battle Brewing At State-Level
Fortune:
Donald Trump Needs to Do Something About High CEO Pay
American Prospect:
Corporate Allies in Washington Take Aim at CEO Pay Reform
Academic Resources and Research About CEO-Worker Pay Gaps:
Trevor Watkins,
The Executive-Worker Pay Gap Isn’t Without Consequences
Psychology Today
, March 21, 2023. References studies indicating that fair pay practices
boost productivity,
while employees who perceive that others are paid more without proper justification
get angry and disengage from their work
and may even be likelier to
steal
from their employer.
Yihui Pan, Elena S. Pikulina, Stephan Siegel, and Tracy Yue Wang,
Do Equity Markets Care about Income Inequality? Evidence from Pay Ratio Disclosure
Journal of Finance
, February 6, 2022. Analysis of reactions to the first-time disclosure of the CEO-worker pay ratio in 2018 indicates that equity markets are concerned about high within-firm pay dispersion, and investors’ inequality aversion is a channel through which high pay ratios negatively affect firm value.
Ethan Rouen,
Rethinking Measurement of Pay Disparity and its Relation to Firm Performance
Harvard Business School
, 2017. This study of S&P 1500 firms looked at pay gaps within firms over a multi-year period. The findings indicate that large disparities harm the bottom line, particularly when a gap reflects an “overpaid” CEO and “underpaid” employees — in other words, when pay levels don’t reflect objective economic factors. Companies with these overpaid CEOs and underpaid workers saw significantly higher levels of employee dissatisfaction and turnover, as well as lower sales.
Samuel Block,
Income Inequality and the Intracorporate Pay Gap
MSCI
, 2016. Labor productivity, measured by sales per employee, was lower for companies with higher intra-corporate pay gaps on average during the study period.
Peter Drucker,
The Changing World of the Executive
(Drucker Library) 2010. In a 1982 essay in this collection, Drucker wrote that no executive should make more than 20 times the compensation of their workers. “I have often advised managers that a 20-to-1 salary ratio is the limit beyond which they cannot go if they don’t want resentment and falling morale to hit their companies,” he added in a
1998 interview
Douglas M. Cowherd and David I. Levine,
Product Quality and Pay Equity Between Lower-Level Employees and Top Management: An Investigation of Distributive Justice Theory
Administrative Science Quarterly
, 1992. Finds that narrower pay gaps are positively related to business unit product quality.
George A. Akerlof and Janet L. Yellen,
The Fair Wage-Effort Hypothesis and Unemployment
The
Quarterly Journal of Economics
, 1990. The Fair Wage-Effort theory posits that pay disparity causes resentment among lower-level employees, leading them to take actions, such as shirking or quitting, that undermine enterprise effectiveness. “The theory conforms to common sense, and to sociological and psychological theory and observation,” Yellen and her co-author observed.
Yihui Pan, Elena S. Pikulina, Stephan Siegel, and Tracy Yue Wang,
Do Equity Markets Care About Income Inequality? Evidence from Pay Ratio Disclosure
The Journal of Finance
, 2022. Results suggest that equity markets are concerned about income inequality and assess high within-firm pay dispersion negatively.
Andrew Chamberlain and Ruoyan Huang,
What Makes a Great CEO?
Glassdoor
, 2016. Analysis of 2016 data from 1.2 million employed individuals suggests a statistical link between high CEO pay and low CEO approval ratings among employees.
James B. Wade, Charles A. O’Reilly, III, and Timothy G. Pollock, (2006)
Overpaid CEOs and Underpaid Managers: Fairness and Executive Compensation
Organization Science
, 2006. Evidence suggests that CEOs serve as a key referent for employees in determining whether their own situation is “fair,” and this influences their reactions to their own compensation. When lower-level managers are underpaid relative to the CEO, they are more likely to leave the organization.
Bhavya Mohan, Michael I. Norton, and Rohit Deshpande,
Paying Up for Fair Pay: Consumers Prefer Firms with Lower CEO-to-Worker Pay Ratios
Harvard Business School Marketing Unit Working Paper
, 2015. Six studies analyzed in this paper show that pay ratio disclosure affects purchase intention of consumers via perceptions of wage fairness. The disclosure of a retailer’s high pay ratio (e.g., 1000 to 1) reduces purchase intention relative to firms with lower ratios (e.g., 5 to 1 or 60 to 1). Lower pay ratios improve consumer perceptions across a range of products at different price points, increase consumer ratings of both firm warmth and firm competence, and enhance perceptions of Democrats and Independents without alienating Republican consumers. A firm with a high ratio must offer a 50% price discount to garner as favorable consumer impressions as a firm that charges full price but features a lower ratio.
Deniz Anginer, Jinjing Liu, Cindy A Schipani, and H. Nejat Seyhun,
Should the CEO Pay Ratio be Regulated?
The Journal of Corporation Law
, 2019. Finds that the Pay Ratio variable is more informative about the agency costs excessive CEO power imposes on shareholders than the Pay Slice variable (i.e. the ratio of CEO’s pay to top five executives’ compensation). The cost of capital increases significantly as Pay Ratio increases and Pay Ratio dominates and eliminates the explanatory power of Pay Slice. Their research suggests that to understand the costs imposed on shareholders by excessive CEO power, one also need to pay attention to the Pay Ratio variable.
David I. Levine,
Reinventing the Workplace: How Business and Employees Can Both Win
Brookings Institution Press
, 1995. Finds that narrow differences in wages and status help develop an atmosphere of trust and confidence between workers and management, reinforcing the atmosphere of participation. Employees often feel large wage differentials are unfair, and employees who feel disadvantaged are less supportive of the goals of the highly rewarded group.
Eileen Applebaum, Thomas Bailey, Peter Berg, and Arne L. Kalleberg,
Manufacturing Advantage: Why High Performance Work Systems Pay Off
Cornell University Press
, 1999. Finds that “extreme wage differentials between workers and management discourage trust and prevent employees from seeing themselves as stakeholders.”
Matt Bloom and John G. Michel,
The Relationships Among Organizational Context, Pay Dispersion, and Among Managerial Turnover
Academy of Management Journal
, 2002. Two Notre Dame researchers analyzed turnover rates, over a five-year period, among executives at nearly 500 firms. Senior executives at companies with wide management pay gaps, they found, appear twice as likely to exit as senior executives at companies where pay was more equally distributed.
Steven S. Crawford, Karen K. Nelson & Brian R. Rountree,
Mind the Gap: CEO‐Employee Pay Ratios and the Shareholder Say on Pay Votes
, January 2016. Finds a positive association between shareholders’ dissent on “say on pay” proposals and higher levels of CEO-employee pay ratios.
Jeffrey Pfeffer,
Human Resources from an Organizational Behavior Perspective: Some Paradoxes Explained
Journal of Economic Perspectives
, Vol. 21 (2007): Finds that organizations with a high disparity of pay between top earners and those at the bottom suffer a decline in employee morale and commitment to the organization.
Videos:
Inequality.org co-editor Sarah Anderson on how CEOs are profiting during the pandemic and what we can do about it.
Inequality.org co-editor Sarah Anderson calls on President Biden to take action on excessive CEO pay.
The Institute for Policy Studies and Patriotic Millionaires co-hosted this discussion on the need for public policy to rein in CEO pay with Abigail Disney, Gravity Payments CEO Dan Price, IPS expert Sarah Anderson, Patriotic Millionaires President Erica Payne, and CBS contributor Jamal Simmons.
Inequality.org co-editor Sarah Anderson shares research on corporate boards that rigged rules during the pandemic to inflate CEO pay, bolstering the case for tax policy to incentivize narrower pay gaps.
Inequality.org co-editor Sarah Anderson shares findings from an Institute for Policy Studies report on CEO-worker pay gaps at top federal contractors and subsidy recipients.
Inequality.org co-editor Sarah Anderson explains how to build on CEO-worker pay ratio disclosure by linking this inequality indicator to tax and contracting policies.
Inequality.org co-editor Sarah Anderson discusses CEO-worker pay ratio policies on The Zero Hour with RJ Eskow.
Stay informed
Subscribe to our weekly newsletter
Subscribe Now
Inequality.org
→ In Your Inbox
Get the indispensable guide to the latest on our unequal world, in your inbox every Wednesday.
You can unsubscribe any time. We do not sell or share your information with others.
Click to close
Inequality.org
→ In Your Inbox
Get the indispensable guide to the latest on our unequal world, in your inbox every Wednesday.
You can unsubscribe any time. We do not sell or share your information with others.
Click to close
Inequality.org
→ In Your Inbox
Get the indispensable guide to the latest on our unequal world, in your inbox every Wednesday.
You can unsubscribe any time. We do not sell or share your information with others.
Click to close
Inequality.org
→ In Your Inbox
Get the indispensable guide to the latest on our unequal world, in your inbox every Wednesday.
You can unsubscribe any time. We do not sell or share your information with others.
Click to close
Inequality.org
→ In Your Inbox
Get the indispensable guide to the latest on our unequal world, in your inbox every Wednesday.
You can unsubscribe any time. We do not sell or share your information with others.
Click to close