Digging Deeper Into Executive Pay: Most CEOs don't make what you think they do
Thanks to the media and the AFL-CIO, it may be difficult for some to believe that most CEOs are not the fat cats living high on the hog that people think they are.
By Peter List, Editor | June 28, 2024
When people read about executive pay in the mainstream media, they often come across cherry-picked data used to sell a partially-true narrative. While some CEOs do earn a hefty amount of compensation, according to the Bureau of Labor Statistics, most CEOs don’t make nearly as much as is often portrayed in the media.
In early June, for example, the Los Angeles Times ran a headline that reads: CEOs got hefty pay raises in 2023, widening the gap with the workers they oversee.
As the title suggests, the Times' article focused on excessive executive compensation, specifically examining the “typical compensation packages for chief executives of companies in the Standard & Poor's 500.”
“The median pay package for CEOs rose to $16.3 million, up 12.6%, according to data analyzed for the Associated Press by Equilar,” noted the Times. “Meanwhile, wages and benefits netted by private-sector workers rose 4.1% through 2023.”
Likewise, the AFL-CIO, from which many reporters cull their compensation articles, runs Executive Paywatch. However, like the Times article, it too focuses on a small number of the highest-paid CEOs while comparing them to the “average” worker.
To a reader who may want to dig deeper, though, one must go all the way to the bottom of the AFL-CIO’s Executive Paywatch page to find where the data comes from.
On its Terms and Data Sources page, the AFL-CIO states:
The data from the AFL-CIO Executive Paywatch database draws from company proxy statements that are filed with the U.S. Securities and Exchange Commission and collected by pay-gap.com. The database includes data for some 3,000 corporations, including most of those listed in the Russell 3000 Index. Industry classifications are based on North American Industry Classification System codes. [Emphasis added.]
In other words, the data most used by the AFL-CIO is from roughly 3,000 corporations. Like the L.A. Times, the AFL-CIO uses a small subset of CEOs to help push a narrative that paints all CEOs as overpaid.
Apples and Oranges.
According to the U.S. Census Bureau, as of 2021, there are millions of corporations across the United States. Even if one were to only use employers with more than 500 employees, there are still nearly 19,700 of them across the U.S.—a much larger potential data set than the mere 3,000 used by the AFL-CIO, or the Los Angeles Times.
Most CEOs Don’t Make Even Close To What People Think
According to the Bureau of Labor Statistics, in May of 2023, there were 211,230 Chief Executives across America. Of those, the mean annual wage is $258,900.
Although a mean is not an average, regardless of how one views it, CEO pay (which includes union executives) is much less than what is often portrayed by the AFL-CIO and the media.
The BLS breaks it down even further here:
While the AFL-CIO’s agenda in highlighting excessive CEO pay at the top against workers’ average pay may be to foment class warfare or social justice, one would hope that, when “journalists” are writing a story about executive pay, they might dig a little deeper.