The pay gap between CEOs and employees has widened even as workers risked their health during the pandemic

The pay gap between CEOs and their workers has widened over the past year at the lowest-paying companies.

According to a new report from the Institute for Policy Studies (IPS), a progressive think tank based in Washington DC, the average gap between CEO salaries and average worker salaries increased to 670 to 1, up from 604 to 1 in 2020’s 300 U.S. public corporations with the lowest median wages in 2020. Among the 300 companies, 49 had CEO-to-employee ratios greater than 1,000 to 1.

Wage increases for workers have not kept pace with inflation at more than a third of the companies in the study. In fact, a typical worker’s wages fell at 69 of these companies.

The average worker salary increased on average by $3,556, or 17%, to $23,968 per year, while the average CEO salary at the report’s 300 companies increased by $2.5 million, or 31%, to $10.6 million per year.

Those seen as essential workers during the pandemic, including call center operators and warehouse workers, were paid the lowest wages, according to the IPS.

“So much for the hope that the heroic sacrifices made by low-wage workers in the pandemic era would lead to a rethink of corporate pay equity,” write the study’s authors Sarah Anderson and Sam Pizzigati. “Instead, executive pay has continued to soar into the stratosphere while inflation has wiped out the earnings gains of most U.S. workers.”

Of the 106 companies where average employee salaries have not kept pace with inflation, 67% spent money on stock buybacks totaling $43.7 billion, a strategy that continues to boost stock-based compensation for executives drives, the researchers added.

“Throughout the pandemic, essential workers have worked heroically. But while the workers risked their lives, the bosses reaped the rewards,” wrote Anderson and Pizzigati.

Lowe’s LOW,
spent the most last year on share buybacks while cutting average wages for its employees. “With the $13 billion Lowe spent on share buybacks alone, the company could have given each of its 325,000 employees a $40,000 raise,” the report said.

Lowe’s did not immediately respond to a request for comment.

The researchers also said that federal contracts have helped increase CEO salaries and widen the wage gap to workers. Those contracts included agreements to service federal student loans and operate Obamacare and Medicare call centers, the report said.

Maximus MMS,
and Amazon AMZN,
had the most government funding of the 300 companies surveyed. They had CEO-to-worker pay ratios of 208-to-1 and 6,474-to-1, respectively.

“Our employees are our top priority. Since becoming CEO, Bruce Caswell has worked to improve compensation, reduce out-of-pocket health care costs and improve the work environment for employees,” a Maximus spokesperson told MarketWatch. A separate Maximus statement too explained his methodology for determining executive compensation based on performance, market price and experience.

Amazon spokeswoman Kelly Nantel said the IPS calculation of CEO Andy Jassy’s 2021 salary included stock awards Andy Jassy received when he transitioned from AWS CEO to Amazon CEO last year.

“The way the SEC rules work, we are required to report this grant as total compensation for 2021 when in fact it vests over the next 10 years,” Nantel told MarketWatch. “What this means from an annual compensation perspective is competitive with CEOs of other large companies and has been approved by the Amazon board of directors.” The pay gap between CEOs and employees has widened even as workers risked their health during the pandemic

Brian Lowry

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