The ratio of CEO pay to worker pay is almost 300 to 1. Are we really supposed to believe CEOs work 300 times harder or create 300 times more value than us?

As an abstract value at least, equality is generally seen as a good thing in most liberal democratic societies. Outside certain fringes of the Right, in fact, it’s exceptionally rare to see people defend inequality as an end itself. This is why most arguments for the unequal distribution of wealth or power rhetorically adopt an egalitarian guise or try to make the case that inequality actually benefits the least well-off. Advocates of so-called trickle-down economics, for example, might in practice support economic policies that have greatly exacerbated the gap between rich and poor, but they nonetheless like to insist that there’s some wider populist benefit to those policies (the wealth, after all, is ultimately supposed to “trickle down”).

Other defenses of inequality argue from grounds of efficiency or deservingness — and, when it comes to executive compensation, the two rationales often appear in tandem. A CEO making hundreds (or even thousands) of times more than an average worker at the same company might sound unfair — or so the argument generally goes — but the gap is simply a reflection of the greater value they have created. If that’s the case, it might actually follow that a 500:1 ratio of CEO to worker pay is justifiable: the CEO has earned their salary, and it reflects a reward commensurate with good performance (not to mention an incentive for that performance to continue).

This argument has always been a myth, but that has not stopped the average ratio of CEO to worker pay from widening tremendously. In 1965, America’s average CEO to worker pay ratio was 21:1. According to a 2022 analysis conducted by the AFL-CIO, it is now 272:1, with the average wages of CEOs and workers at $16.7 million and $61,900 respectively. It’s already pretty hard to make a moral case for inequality on this scale — but, as it turns out, the efficiency and desert arguments for it don’t hold water either.

Read more at The Guardian