It's (really) good to be the boss in the US

The pay gap between workers and employers in the US remains enormous, with the typical chief executive officer (CEO) of a top firm earning more in a single workday than the average US worker takes home in an entire year, according to a new study on executive compensation released on Aug. 29. Not only do top CEOS receive a total income that is about 364 times that of the average worker, their earnings also far outstrip those of government leaders, nonprofit executives, and even their European counterparts, the study found. These findings come as politicians in the US and Europe increasingly debate CEO pay, an issue that for many has come to exemplify the pitfalls of an economy that has produced impressive growth while seemingly failing to improve the fortunes of the bulk of the population. The study, which was released by the Institute for Policy Studies (IPS) and United for a Fair Economy (UFE) to coincide with the Labor Day holiday in the US, found that CEOs of the 500 largest US companies earned an average of $10.8 million in total compensation in 2006, and the CEOs of the 20 largest companies earned an average of $36.4 million. By comparison, the average worker in the US earned $29,544 in the same time period. The $36.4 million earned by the top 20 US CEOS also far exceeded the average earnings of the 20 highest-paid European CEOs ($12.5 million), US non-profit leaders ($965,698), members of the US executive branch of government ($198,369), and generals in the US military ($178,542). Sarah Anderson of the Institute for Policy Studies, the lead author of the study, said that the vast pay gap between the top private-sector and public-sector jobs creates serious problems for the country. "First of all, [the lower compensation] is a serious disincentive to take government and not-for-profit jobs, and thus drains leadership talent out of the not-for-profit world," she told IPS. "Second, it contributes to a 'revolving door' between government and the private sector" as policymakers often opt for more lucrative business and lobbying jobs. But being the CEO of a large company is not the most lucrative job in United States, the study found. That honor went to the managers of the country's top hedge funds, which are exclusive investment groups that operate in a largely unregulated environment. The average income of the 20 top-earning hedge fund and private equity managers was $655.5 million in 2006, the study found. Four such managers earned over $1 billion in the last year alone. Although recent changes to the rules for reporting income make it difficult to precisely compare this year's CEO-worker wage gap to previous years, Anderson said that the trends had not changed significantly. "We certainly haven't seen any real retreat on CEO pay," she said. "Even companies that are heading towards crisis are continuing to pay huge sums." This year's 364-to-1 CEO-to-worker pay gap remains a massive increase from previous decades: in 1990, the rate was 107-to-1, and in 1980, it was only 40-1, according to the study. The findings about CEO pay come in the context of a larger debate over growing income inequality in the US. Defenders of the Bush administration's economic policies point to robust levels of growth in recent years, while critics contend that most if not all of the gains have gone to the richest citizens. Research published by the economists Emmanuel Saez and Thomas Piketty earlier this year showed that the wealthiest US citizens have increased their share of national income to levels unseen since the 1920s. The top 10 percent now account for 48.5 percent of income, and the top one percent for 21.8 percent of income. And although the total reported income in the US increased by almost 9 percent in 2005, Saez and Piketty found that the incomes of those in the bottom 90 percent of earners actually decreased slightly that year.