Although a hot job market pushed up pay for low-wage workers, the average pay gap between those workers and the chief executives of their companies widened even more last year.
The median pay for workers at companies that tend to pay low wages last year was up by 17%, to $24,000, a jump that more than doubled the rate of inflation, according to a study out Tuesday from the Institute for Policy Studies, a left-leaning think tank. The report examined pay at companies including Lowe’s, Target, Best Buy and Amazon.
Still, those rising wages did not outpace those corporations’ CEO pay gains, which rose by 31%, to an average of $10.6 million.
“We do have to acknowledge there was some good news last year,” said Sarah Anderson, lead author of the “Executive Excess” study. “But this could have been a time when companies used rising profits to level the pay playing field. Instead, we haven’t seen a very big shift in pay equity.”
The study underscores the tight labor market and inflationary pressure that companies have been facing over the past year. That pressure has benefited lower-wage workers for the first time in years. The institute’s study last year, which looked at a different set of companies, found that median pay for all workers fell by 2% in 2020. This year’s study looked at the lowest-paying 300 firms in the Russell 3000, an index of publicly traded stocks that includes mega firms as well as midsized and smaller public companies, and found that at nearly 60% of them, chief executives’ pay rose faster last year than for the average worker.
CEOs did even better at companies where salaries did not keep pace with inflation. Median workers’ wages at about a third of the companies in the IPS study did not keep pace with inflation. At those companies, the average CEO pay was up by 65%, or more than double the increase at all of the companies in the study.
Among the companies highlighted in the report was Best Buy, where median pay fell 2% last year to $29,999, while CEO Corie Barry received a 30% pay increase to $15.6 million. Best Buy said in a financial filing that its executive compensation was “focused on pay for performance” and that the company’s management delivered “strong results in its most recent fiscal year.”
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