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Recently a chart appeared on Facebook and elsewhere showing CEO pay compared to the pay of the average worker in different countries. If the figures you had seen before made you angry, this chart would have made your head explode. It listed CEO pay in the United States as 475 times greater than the pay of the average worker. Now the chart has gone viral; it appears all over the place and is cited as evidence of the radical unfairness of our economic system.
We’re grumpy skeptics at Critical Pages. We’re skeptical even when what we read confirms us in our grumpiness. The chart about CEO and average worker pay appeared to have no author. It had no dates or sources. It turns out we had reason to be skeptical.
PolitiFact, the online project of the St. Petersburg Times that seeks the facts behind statements by politicians, has completed a study of the US figures on the chart. It turns out that the numbers were produced by three graduate students some six years ago. “So what we’re left with,” says PolitiFact, ” is an unsourced, undated chart with numbers that, at best, were only correct (approximately) in 1999 and 2000 according to one measure, and wrong according to a different measure.” According to PolitiFact, “The latest number for the U.S. is 185 to 1 in one study and 325 to 1 in another — and those numbers were not generated by groups that might have an ideological interest in downplaying the gaps between rich and poor.”
There’s no question that the ratio of the CEO’s pay to the pay of the average worker is shamefully large. Such disparities of pay are bad for everyone and bad for the economic system itself. No need to exaggerate.