A survey of 350 companies sheds light on the pay gap between executives and rank-and-file workers in different industries.
The survey, conducted by Equilar, a firm that specializes in compensation, finds that the largest gap exists in the retail sector, where the median employee only makes $13,000 a year, 669 times less than the typical retail CEO, who makes $8.7 million a year. Granted, much of that disparity is due not just to low wages in the retail sector but its large number of part-time workers.
There is also a large disparity in the health care sector, where the typical CEO makes 150 times more than the median employee. Health care features a wide range of compensation: highly paid executives of insurance companies and health care providers, doctors who make well into the six figures, nurses with solid middle class salaries and low-wage home health care aides.
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The energy sector showed the lowest pay disparity. CEOs in the industry only made 72 times as much as the median worker. The Wall Street Journal notes that the smaller pay gap is due to the high number of skilled employees in the industry, such as engineers and scientists.
The larger the company, the larger the disparity. Companies worth less than $700 million had an average pay ratio of 45-to-1, while those worth more than $25 billion had pay ratios of 250-to-1. The larger gap was almost entirely due to the fact that CEOs at big companies are paid a lot more than leaders of small companies; mid-level employees at large companies make roughly the same as their counterparts at smaller businesses.
The survey comes in advance of company filings that for the first time will have to disclose the pay ratio between executives and rank-and-file employees, in accordance with the 2010 Dodd-Frank bill passed in response to the 2008 financial meltdown.
Corporate leaders are worried that disclosing a large pay disparity could depress their workforce and lead to a political backlash against corporate executives, ala Occupy Wall Street.
"Unions will be very focused on this disclosure," Jim Kohler, a Willis Towers director, tells Industry Week, adding that a high pay disparity could also be an obstacle for companies trying to recruit in an already-tight labor market.
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