CEO of the company earns 6,666 times more than an average employee
In a recent report, the AFL-CIO has highlighted the growing income inequality at the top levels of corporate America, with the S&P 500 CEO-to-median worker pay ratio reaching an alarming 285:1 in 2024. This significant disparity in compensation, the report suggests, is largely due to the permanent extension of lower individual income tax rates initially introduced in the 2017 Tax Cuts and Jobs Act.
According to the report, the average CEO in S&P 500 companies earned approximately $18.9 million in 2024, a 7% increase from the previous year. In stark contrast, the typical US worker's median pay was around $66,000, representing a modest 3% growth in the private sector.
The report further reveals that the highest-paid CEO, Patrick Smith of Axon Enterprise, received a package worth nearly $165 million. On the other hand, the typical CEO at the largest public companies in the US, including Starbucks, received an average of $49,500, a figure that is 285 times less than the CEO's pay.
In the case of Starbucks, CEO Brian Niccol earned $97.9 million in 2024, a staggering 6,666 times more than the typical Starbucks employee's pay of $14,999. The pay gap between Starbucks' CEO and its median worker was the widest among the 500 largest public companies listed in the AFL-CIO's Executive Paywatch report.
The report did not mention any comment from Starbucks regarding the union's demands or the pay gap. However, it is known that some Starbucks employees have formed a union, Starbucks Workers United, and have staged strikes at various locations, with one of their primary demands being a wage increase for employees.
Among the CEOs' total pay, nearly half is restricted stock awards, and another $4 million are bonuses. The report, however, did not specify the impact of the tax breaks on the pay gap between CEOs and employees.
Fred Redmond, AFL-CIO's secretary-treasurer, expressed support for the union's efforts, citing the wide pay gap between CEOs and employees. The report also highlighted that the tax and spending cuts package signed by President Donald Trump will provide CEOs with larger tax breaks than workers.
The report further notes that the typical employee would have had to work since 1740 to earn what the average CEO received in 2024. This historic escalation in the pay gap, driven largely by stock incentives and bonuses, reflects a growing disparity in compensation that raises concerns about income inequality in corporate America.
The report suggests that the wide pay gap between CEOs and employees, such as the 285:1 ratio at S&P 500 companies, is influenced by factors like finance, including tax cuts, and business decisions. The growing income inequality in corporate America, as highlighted by the AFL-CIO, is a concern that intersects with the larger political discourse on general-news topics like income distribution and economic fairness.
