Aug 21, 2020

Are CEOs Really Earning That Much More Than The Average Worker?

Kristin Kerr

ou’ve been with the same company for over 10 years now. You’ve been promoted twice, had the opportunity to travel to several business conferences and you were even recognized for your hard work at the last company town hall. You’re really happy with your career progress until you find out that the average CEO pay is 271 times the nearly $58,000 annual average pay of the typical American worker. Sorry? What you’re saying is that the average CEO brings home over 15 million? We’ve talked about the gender pay gap, but the gap between a CEO and a typical worker? Well, that’s a whole different ball game.


CEOs Really Are Earning More

A report released by the Economic Policy Institute examined the average CEO compensation in 2019 at one of America’s top 350 companies. Results show a 14% increase in CEO pay in the last year. Doesn’t seem terrible, right? Well, this number is a 1,167% increase from 1978. The average American worker? Yeah, their salary increase over the years doesn’t show numbers like these. Since 1978, American workers have seen an 11.2% increase in compensation.

Is This a Problem?

Some people may look at the numbers and immediately think that CEO's are grossly overpaid, and that they are being short-changed at their jobs. While this is a typically common perspective, it's important to consider the responsibilities of a CEO. The fact is most people aren't even aware of what a CEO does and instantly think they do nothing and collect a massive paycheck. While that is certainly the case for some, it's not fair to paint them all with the same brush.

The best CEOs in the world are a rare breed of person. They are often well educated, intelligent, very fit, and incredibly driven. They need to be effective at multi-tasking and have a vision for the future of their respective companies and how to get there. The problems CEOs have to solve are massive, and can affect thousands of people's livelihood.

In comparison most employees have focused roles and concentrate on a small number of often repeated tasks which translates into smaller overall responsibility.

“The job of a CEO is a difficult one that has a heavy impact on the economy and the company’s employees. With this in mind, businesses want to lure in the best possible candidate and one way to do that is through salary.” - A statement from Stanford’s economic professor, Nicholas Bloom.

The high CEO pay doesn’t necessarily mean higher output, it means more responsibility. The more critical you are to your workplace, the more value you add, and in turn, the more pay you recieve. Most people think that the measure of value at the workplace is the same across all employees and is measured by output, this is simply not true. Different work requires different metrics on how value is determined.


Not all CEOs are created equal

When people here the title CEO they immediately go to their bias and picture a fat-cat boss type person rolling in money as their employees toil around the clock for little to no pay, this is a fallacy. There are many great CEOs out there who have done nothing but sacrifice for their companies and employees. These CEOs are the ones no one ever hears about. These are the ones who pay attention to their employees and get involved in their lives. There have been incredibly compassionate CEOs who have bought employees cars, put their kids through college, or have become life-long friends with who they employ.

While it's easy to throw all CEOs under the same bus, there's always two sides to an argument. People rarely consider the incredible amount of education many CEOs have had to get through, sometimes sacrificing everything to do so. They don't see the failed businesses, the personal debt, the struggles.

Work Smarter Not Harder

Many people are stuck in a mindset that says "if I work harder it will be recognized and I will get a raise". For some jobs this approach can pay off, but it can't be applied to all jobs. By concentrating on adding value to your job, you can not only make more money but take on more responsibility.

If you find a more efficient way of doing things and want to oversee the change, and the people carrying out that change, your conveying that you are smart and capable of managing other people. This is far more likely to lead you to earning more money than simply increasing your output in your old role while taking on no additional responsibility. Being bitter about CEOs making millions in bonuses every year isn't going to change your circumstances, learning how to work smarter will.

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