How Do American Workers Feel About the CEO-to-Worker Pay Ratio?
What's Your Earning Potential?
What's Your Earning Potential?
To get a sense of how the average American worker feels about the CEO-to-worker pay ratio, PayScale surveyed more than 22,000 people across industries, job functions and income levels between June 9, 2016 and July 10, 2016. We asked these workers if they knew what the CEO of their company is paid, if they believed that this salary is appropriate, and whether knowing the CEO's pay negatively impacts their view of their employer.
Overall, we found more than half of employees don't know what their CEO is paid, which makes sense considering that of the roughly 27 million businesses in the U.S., less than 1 percent are publicly traded. Private companies don't have to follow the same disclosure laws as public companies, and executive pay is therefore generally not public knowledge.
But unexpectedly, among employees who did have knowledge of their CEO's salary, only 21 percent thought it was excessive, leaving 79 percent who didn't see a problem.
Even among employees who disapproved of their CEO's salary, 43 percent said the information didn't negatively impact their opinion of their company.
As expected, the general trend is that the higher employees move up the corporate ladder, the less inclined they are to disapprove of high CEO pay; at the director and executive level, approval ratings of CEO pay stand at 84 percent and 82 percent, respectively. But the approval rating is high even at the individual contributor job level, where—of employees who know what their CEO is paid—79 percent approve of the figure.
Mirroring the job level data, employees who are paid a higher salary are more likely to approve of high CEO pay, with workers making at least a six-figure salary reporting an 82 percent approval rate. At the other end of the pay scale, workers who make under $25,000 a year report 72 percent approval of their CEO's pay, though at that pay level only 37 percent of employees are aware of their CEO's salary.
Perhaps more interesting regarding the future of CEO pay, more Millennials than Generation X or Baby Boomer employees report that their CEO's perceived excessive compensation negatively affects their view of the company. Maybe we'll see a reduction in the CEO-to-worker pay ratio once these Millennials start running things.
Even though it seems only a small percentage of American workers disapprove of the pay of their company's CEO, there are still practices employers can adopt to improve office morale and employee retention, and they don't necessarily involve changing pay structure.
Click here for Part Three: What techniques improve worker happiness, and thoughts from CEOs in regard to compensation structure and communication around pay.
