Pay Pressure Increasing

12 June 2018

The private sector cannot blame weak profits for the lack of wage growth to its employees. As the chart illustrates, operating and reported margins have doubled since 1994, at least for the S&P 500 companies.

Total wages account for 57 percent of total revenue today compared to 65 percent in 1975. While the US economy has expanded over the past decades, the portion earmarked for workers has declined.

One group has defied that trend: CEOs. The compensation for top executives at the 350 largest US corporations has skyrocketed, with the average CEO in 1978 earning 30 times the salary of a typical worker versus a hair-raising 271 times today.

 

Extract from article: Companies have no choice now but to raise wages (CNBC/Karen Firestone)