American workers are not benefiting much from their contributions to their firms’ profits and the country’s economic growth. Economic output per person has nearly doubled over the past four decades, but the vast majority of these gains have gone to those at the very top. Wages for the typical private-sector worker, adjusted for inflation, are still about where they were in the 1970s, even as inequality and corporate profits are at near record levels.
The basic outlines of these problems are well-known, but the specific facts are still shocking. In 1973, the typical CEO of the top publicly traded companies made around $1.1 million, or about 22 times what the typical worker made. Today, the average CEO makes $15.5 million, or about 275 times what the typical worker makes. CEO pay increases have been astronomical, but others near the top have also seen sharp income gains—with incomes for the richest 1 percent more than tripling over the past four decades. In stark contrast, incomes for the bottom 90 percent have grown by just more than 2 percent in that same time span. Not surprisingly, the share of the nation’s total income that the middle class receives is about as low as it has ever been, and the share of income going to the top 1 percent is approaching record heights. The U.S. economy has become much more productive over recent decades, but most workers have not received much, if any, of these gains.
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Senior Fellow; Senior Adviser, American Worker Project