The finding from The Associated Press adds to the evidence of growing inequality—and helps explain worker dissatisfaction with the economy, as wages fail to rise alongside executive pay, an expert said.

The median compensation of chief executives at major U.S.-listed firms increased by 12.6% to $16.3 million in 2023, far outpacing the growth in worker wages and widening the CEO-to-worker pay gap to nearly 200-to-1, according to new reporting by the Associated Press on Monday.

The increase in CEO compensation came as private sector workers’ pay increased just 4.1% last year, according to the U.S. Department of Labor. Among hundreds of surveyed firms for the AP analysis, the median gap between CEO pay and median employee pay was 196—up from 185 in 2022.

Experts said the analysis showed that the economic hardship that Americans face and the dissatisfaction they feel with the economy is due to unnecessary wage stagnation, with profits diverted upwards, and not just inflation.

“Most of the focus here is on inflation, which people are really feeling, but they’re feeling the pain of inflation more because they’re not seeing their wages go up enough,” Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies (IPS), told the AP.

The AP has conducted this analysis annually for the last 14 years, working with business intelligence firm Equilar, which included in the analysis the 341 S&P 500 firms that submitted a proxy statement between January and April 2024. Their work comes on top of a raft of recent academic and nonprofit research on income inequality, including the CEO-to-worker pay ratio.

It’s possible that Equilar in fact underestimated the pay gap. Some researchers have found a higher ratio, including the Economic Policy Institute, which found it to be 344-to-1 in the most recent year studied—compared to just 21-to-1 in 1965—using a standardized methodology to determine median worker pay, rather than letting a firm declare its median salary. EPI found that CEO pay soared an astonishing 1,209.2% from 1978 to 2022 while worker pay increased just 15.3% over the same period.

In her work for IPS, Anderson has shown that the S&P 500 CEOs make more in one day than the average American makes in a year.

The rise in CEO compensation in 2023 came primarily because of an increase in stock awards, Equilar found. The S&P 500 rose more than 24% in 2023, after going down in 2022, leading to higher executive compensation.

Hock Tan, the CEO of Broadcom Inc., a semiconductor manufacturer, led the CEO list with pay of about $162 million last year. Tim Cook of Apple Inc. was third at $63.2 million.

Sen. Bernie Sanders (I-Vt.) has led federal legislative efforts to address the CEO-to-worker pay gap. He reintroduced the Tax Excessive CEO Pay Act to the U.S. Senate in January, which would impose a tax penalty on companies with ratios higher than 50 to 1. While popular with workers and progressive economists, critics have dismissed the proposal by calling it a “messaging bill with little chance of becoming law.”

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